On the occasion of the adoption of the State Budget for the fiscal year 2000 [1420/1421 H], the Ministry of Finance and National Economy is pleased to highlight the main features of the national economy and the budget.

Recent economic developments in 1999

Gross Domestic Product (GDP):
The GDP is estimated to have grown by 8.44 percent in current prices in 1999 mainly as a result of the recovery of oil prices specially in the second half of the year, reaching SR 521.3 billion [U.S. $ 139.01 billion] compared to SR 480.8 [U.S. $ 128.21 billion] in 1998. Private sector GDP is estimated to have grown by 2.4 percent in current prices and by 2.0 percent in constant prices with a share of 38 percent of the total GDP in current prices and 48 percent in constant prices.

The non-oil industrial sector is estimated to have grown by 6.3 percent and construction by 2.1 percent in current prices. The utilities sector (electricity, gas and water) is estimated to have grown by 3.9 percent, and the transport and communications sector by 2.4 percent in current prices. This indicates continued expansion of the private sector, an increase in its efficiency, and less dependence on government spending. The non-oil industrial sector in particular has been witnessing robust growth for several years.

General price level:
Inflation, as measured by the cost of living index, is estimated to have dropped by 1.2 percent in 1999, while the non-oil GDP deflator is estimated at 0.98 percent.

Balance of payments:
The deficit in the current account is estimated to have dropped by 70.3 percent in 1999, amounting to SR 14.6 billion [U.S. $ 3.89 billion] compared to SR 49.2 billion [U.S. $ 13.2 billion] in 1998; this is the result of the increase in oil prices, government policies to rationalize spending, and the decline in private transfers. Non-oil exports are estimated to have grown by 1.6 percent in 1999 totaling SR 23.8 billion [U.S. $ 6.35 billion] due mainly to improvement in petrochemical prices. Imports are estimated to have dropped by 0.2 percent amounting to SR 102.8 billion [U.S. $ 27.41 billion].

Monetary trends:
The government's financial and monetary policies continue to be directed by the objective of maintaining stable prices and a stable exchange rate. The broad money supply during the first ten months of 1999 grew by 0.9 percent to reach SR 284.7 billion [U.S. $ 75.92 billion]. The growth in money supply is attributable to the increase in oil prices and the decline in private sector balance of payment deficit. This modest growth coincided with a decline in the consumer price index.

Banking sector:
Banks are continuing to strengthen their financial positions; their capital and reserves increased by 4.7 percent in the first ten months of fiscal year 1999, reaching SR 42.1 billion [U.S. $ 11.23 billion] by the end of October 1999. The average risk-weighted capital to assets ratio is 21.1 percent, which is about 2.5 times the international standard.

Stock market:
The stock market improved considerably during 1999 as compared to 1998. The NCFEI share index stood at 1,974 as of December 16, 1999, compared to 1,413 at the beginning of 1999. This represents an increase of 39.7 percent.

Privatization:
Consistent with the government's policy towards the private sector, the cabinet approved the final stage of privatizing the power sector, and initiated the privatization of the utility services currently provided by the Royal Commission for Jubail and Yanbu. The ministerial committee for privatization is reviewing other proposals.

Current balance of accounts for fiscal year 1999 [1419/1420]:

Salient Features of the State Budget for the year 2000 [1420/1421]

New programs and projects amount to: SR 8 billion [U.S. $ 2.13 b.]

Appropriations
The main appropriations for the development and public service sectors for the fiscal year 2000 [1420/1421 H] are as follows:

SR 49.4 billion [U.S. $ 13.17 b.] for education including vocational training
SR 19.9 billion [U.S. $   5.31 b.] for health services and social development
SR   7.1 billion [U.S. $   1.89 b.] for municipality services and water authorities
SR   5.6 billion [U.S. $   1.49 b.] for transportation and communications
SR   9.1 billion [U.S. $   2.43 b.] for infrastructure and industry
SR   5.5 billion [U.S. $   1.47 b.] for social transfers, subsidies and programs

Specialized development institutions
In addition, the specialized development institutions (Industrial Development Fund, Agricultural Bank, Real Estate Development Fund, Credit Bank, and Public Investment Fund) will continue to provide loans to development projects and services in the areas of industry, agriculture, and real estate. The loans to be provided by these institutions in the fiscal year 2000 are projected at over SR 6 billion [U.S. $ 1.6 billion].

Three royal decrees were issued December 20, 1999 [12/09/1420 H] promulgating the State Budget for the fiscal year 2000 [1420/1421 H]. They cover the revenue and expenditure of public institutions, and fix January 1, 2000 as the date of commencement of the State Budget.

The first royal decree approved allocations in the budget as follows:

• Revenues are estimated at SR 157 billion [U.S. $ 41.87 billion] and expenditures at SR 185 billion [U.S. $ 49.33 billion].
• Revenues to be collected are to be paid wholly to the Saudi Arabian Monetary Agency (SAMA) or its branches in the account of the Ministry of Finance and National Economy.
• The Ministry of Finance and National Economy is delegated to borrow funds in order to cover the difference between expenditure and revenues.
• The transfer of allocations from one chapter of the budget to another shall be approved by the Prime Minister according to a joint report to be prepared by the minister concerned, or by the head of a department having an independent budget, and the Minister of Finance and National Economy.
• The transfer of allocations from chapters one and two of the budget shall be made in line with a resolution from the minister concerned, or from the head of a department with an independent budget, provided that the transferred allocations shall not exceed half of the original allocations in the budget, except for that pertaining to salaries from which transfer shall be made only according to the previous paragraph of this article.
• It is not permitted to use the fund for other than its purposes or issue payment orders exceeding the allocations; nor is it permitted to commit to any expenditure without an approved allocation in the budget.
• It is permissible to issue a decision or conclude a contract resulting in an obligation against an upcoming fiscal year, with the exception of the following: (a)ongoing or periodic implementation contracts such as rental contracts, services, supply of medical appliances and advisory services contracts the allocations for which are customarily made each year; (b)supply contracts, the costs of which are allocated in chapter two of the budget. These are the contracts with periods over one year, with annual values within the limits of the budget allocations of the first fiscal year being used as a standard for defining the value of the contract; and (c) indivisible project contracts provided that commitment shall be made within the framework of costs approved for each project.
• The concerned control departments shall follow up implementation of the contents of cabinet resolution no.52 dated 7/3/1420 H as well as article 3/c of the law for government procurements and implementation of its projects. In the event that the division of procurements and works is clearly justifiable, this shall be made in prior coordination with the Ministry of Finance and National Economy.
  If amounts committed to during the previous fiscal years appear during the current fiscal year and exceed the approved allocation, this must be submitted to the cabinet, if the excess is unjustified; otherwise, the Minister of Finance and National Economy may give authorization for the payment of such amounts from the allocations of the current fiscal year.
• It is absolutely not permitted to appoint or promote employees on jobs other than those approved in the budget and according to the conditions and provisions set out in the laws and rules in force.
  Except for the appointment of ministers, it is not permitted to create new jobs or job-grades during fiscal year 2000 [1420/1421] other than those approved in the budget and according to the temporary job regulations, nor is it permitted to modify the grades approved in the budget. However, the grades may be reduced by the Minister of Civil Service based on a recommendation from a committee composed of representatives from the Ministry of Finance and National Economy, the Minister of Civil Service, and the concerned party.
• Administrative organizations and structures of each body are approved according to what has been issued in the budget. Job titles can be modified according to job classification requirements as per a resolution from the Minister of Civil Service in line with a recommendation from a committee formed from representatives of the Ministry of Finance and National Economy, the Ministry of Civil Service, and the concerned party.
• The Minister of Finance and National Economy shall issue the instructions necessary for implementation of the budget according to the rules and regulations mentioned in the decree.
  The Deputy Prime Minister and all the cabinet ministers shall carry out the decree according to their respective fields of specialization.

The second royal decree approves the budget of municipalities. water departments:

• The expenditures of the municipalities and water departments for the fiscal year 2000 [1420/1421] are estimated at SR 6,658,643,000 [U.S. $ 1,775,638,133.33].
• The revenues of the municipalities and water departments for the fiscal year 2000 [1420/1421] are estimated at SR 1,352,662,000 [U.S. $ 360,709,866.67].
• The difference between the expenditures and the revenues is to be incorporated in the state budget and is estimated at SR 5,305,981,000 [U.S. $ 1,414,928,266.67].
• The municipalities and water departments are to collect their revenues in accordance with existing laws and regulations, the concerned authorities to follow this matter up.
• The expenditures are to be spent according to the financial rules and regulations.
• The budgets of the municipalities and water departments are to be governed by articles 5, 6, 7, 8, 9, 10, 11 and 12 of the royal decree number M/17 dated 12/9/1420 H, approving the state budget for the fiscal year 2000 [1420/1421].
• Surplus funds can be transferred from the allocations of sub-municipalities with the approval of the Prime Minister in accordance with a recommendation from the Ministers of Municipal and Rural Affairs and of Finance and National Economy.
• The Minister of Finance and National Economy shall issue the necessary guidelines for implementation of these budgets within the rules stipulated in this royal decree.
• The Deputy Prime Minister, the Minister of Finance and National Economy and the Minister of Municipal and Rural Affairs are to carry out this royal decree.

The third royal decree approves the budgets of bodies included in the State Budget:

The revenues and expenditures of these organizations are as follows:

• Ports Authority: the revenues and expenditures are set at SR 526,049,000 [U.S. $ 140,279,733.33].
  Saudi Arabian Airlines (SAA): SR 10,171,000,000 [U.S. $ 2,712,266,666.67] for both revenues and expenditures.
• The Saudi Electricity Company (SEC): SR 539,020,000 [U.S. $ 143,738,666.67] for both revenues and expenditures.
• The General Organization for Grain Silos and Flour Mills: SR 995,000,000 [U.S. $ 265,333,333.33] for revenues and SR 345,583,000 [U.S. $ 92,155,466.67] for expenditures.
• Saline Water Conversion Corporation (SWCC): SR 3,739,993,000 [U.S. $ 997,331,466.67] for both revenues and expenditures.
• Saudi Railway Organization (SRO): SR 202,238,000 [U.S. $ 53,930,133.33] for revenues and expenditures.
• Petroleum and Minerals Public Corporation (PETROMIN): SR 33,250,000 [U.S. $ 33,250,000] for both revenues and expenditures.
• Royal Commission for Jubail and Yanbu: SR 1,657,581,000 [U.S. $ 442,021,600] for both revenues and expenditures.
• Saudi Arabian Standards Organization (SASP): SR 68,680,000 [U.S. $ 18,314,666.67] for both revenues and expenditures.
• King Saud University (KSU): SR 1,862,204,000 [U.S. $ 496,587,733.33] for both revenues and expenditures.
• King Abdul Aziz University (KAAU): SR 1,208,561,000 [U.S. $ 322,282,933.33] for both revenues and expenditures.
• King Fahd University of Petroleum and Minerals (KFUPM): SR 460,061,000 [U.S. $ 122,682,933.33] for both revenues and expenditures.
• Imam Muhammad Ibn Saud Islamic University: SR 998,405,000 [U.S. $ 266,241,333.33] for both revenues and expenditures.
• Islamic University of Madinah: SR 237,354,000 [U.S. $ 63,294,400] for both revenues and expenditures.
• King Faisal University: SR 547,000,000 [U.S. $ 145,866,666.67] for both revenues and expenditures.
• Um Al-Qura University: SR 593,353,000 [U.S. $ 158,227,466.67] for both revenues and expenditures.
• King Khalid University (KKU): SR 305,239,000 [U.S. $ 81,397,066.67] for both revenues and expenditures.
• General Organization for Technical Education and Vocational Training: SR 1,287,393,000 [U.S. $ 343,304,800] for both revenues and expenditures.
• King Abdul Aziz City for Science and Technology (KACST): SR 255,469,000 [U.S. $ 68,125,066.67] for both revenues and expenditures.
• Institute of Public Administration: SR 208,707,000 [U.S. $ 55,655,200] for both revenues and expenditures.
• Saudi Red Crescent Society: SR 238,346,000 [U.S. $ 63,558,933.33] for both revenues and expenditures.
• General Corporation for Military Industries: SR 551,101,000 [U.S. $ 146,960,266.67] for both revenues and expenditures.
• Pension Fund: SR 24,188,200,000 [U.S. $ 6,450,186,666.67] for revenues and SR 12,300,170,000 [U.S. $ 3,280,045,333.33] for expenditures, the revenues of the fund to be deposited in its account at SAMA while its expenses are paid from its revenues according to the approved rules and regulations.
  The excess amounts of revenues and expenditures shall be paid at the end of fiscal year to the Saudi Arabian Monetary Agency (SAMA)
• The revenues shall be collected and expenditures spent according to the approved rules and instructions.
• Provision of articles 5, 6, 7, 8, 9, 10, 11 and 12 of royal decree no. 17 dated 12/9/1420 H for approval of the general budget for fiscal year 2000 [1420/1421] shall apply to the budgets of all public organizations except for Saudi Arabian Airlines the budget of which shall be prepared according to the principle of business accounting systems.
• The Ministry of Finance and National Economy shall issue the instructions necessary for implementation of the budget according to the rules and regulations stipulated in this decree.
• The Deputy Prime Minister and all concerned ministers shall carry out the decree according to their respective fields of specialization.

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