Saudi Arabia may opt to cut domestic investment and keep current spending high in the next three years to avert any political turmoil despite an expected decline in its oil export earnings, according to a key bank in the Gulf Kingdom.
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A steady growth in the country’s oil revenue over the past decade is projected to be reversed by lower crude prices in the coming three years and this could prompt the world’s dominant oil exporter to curb spiraling public expenditure, the Saudi American Bank Group (SAMBA) said in a study on the Kingdom’s 2013 budget.
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It noted that actual spending in 2012 grew by 3.2 per cent compared with a whopping 26 per cent in 2011. SAMBA said it believes the main increase in spending in 2012 was on the current side, including the extension of unemployment benefit to Saudis, adding that project spending was flat in nominal terms and declined in real terms.
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“We think this pattern will persist for the next three years. Our oil price and production assumptions suggest that oil revenue will decline each year in 2013-2015. This is a fairly major departure from the past decade, which saw revenues grow by an annual average of 25 percent,” the study said.
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Read more: http://www.gulfbase.com/news/saudi-may-cut-capital-spending/228693
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A steady growth in the country’s oil revenue over the past decade is projected to be reversed by lower crude prices in the coming three years and this could prompt the world’s dominant oil exporter to curb spiraling public expenditure, the Saudi American Bank Group (SAMBA) said in a study on the Kingdom’s 2013 budget.
.
It noted that actual spending in 2012 grew by 3.2 per cent compared with a whopping 26 per cent in 2011. SAMBA said it believes the main increase in spending in 2012 was on the current side, including the extension of unemployment benefit to Saudis, adding that project spending was flat in nominal terms and declined in real terms.
.
“We think this pattern will persist for the next three years. Our oil price and production assumptions suggest that oil revenue will decline each year in 2013-2015. This is a fairly major departure from the past decade, which saw revenues grow by an annual average of 25 percent,” the study said.
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Read more: http://www.gulfbase.com/news/saudi-may-cut-capital-spending/228693
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