Saudi Arabia forecasts a budget surplus of 12bn Saudi riyals ($3.2bn) for the next fiscal year, despite announcing record government spending of 690bn riyals.
The projected spending for 2012 is 19pc higher than the budgeted spending for the current fiscal year.
The Saudi government tends to spend 20pc more than what it announces in annual budget projections, but this year actual spending is expected to reach 804bn riyals – 38pc higher than originally planned.
The extraordinary jump in government expenditures comes mainly from increased spending on social and educational projects, according to a statement carried by state-owned Saudi Press Agency. King Abdullah bin Abdel-Aziz announced in February and March a massive increase in welfare packages worth $129bn to stave off possible political protests.
The total government revenues this year are projected to be 1,110bn Saudi riyals, which means the government will still end up with a healthy surplus of 306bn riyals.
Saudi's spending has increased steadily since 2003, with Riyadh focusing on improving defence, health care and education. Reliance on the oil sector for most government revenues has gradually pushed up the price of crude that Riyadh needs to realize in order to balance its budget.
Saudi Arabia will probably need to see at least $74/bl for its oil to be able to balance its budget in 2012, according to investment house Jadwa. By comparison, the budget break-even price in 2006 was around $30/bl.
“The budget puts emphasis on … giving priority to projects that ensure balanced development as well as more employment opportunities and job creation,” the government said. “Specifically, focus will be on education, health, social services, security services, municipal services, water and sewage services, and roads and highways.”
Saudi GDP rose 6.8pc in 2011 in real terms, according to government estimates. The government sector grew by 6.7pc while the private sector, which accounted for 48.8pc of total GDP, grew by 8.3pc.