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Deducing Budgetary Priorities in Saudi Arabia: The Impact of Defense Expenditures on Allocations to Socio-Economic Programs

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The 1990 Saudi budget, set at just over that for 1989, and the 1990-95 five year plan, with spending targets on the current price equivalent of five times the 1990 budgetary figure, indicate fairly clearly that Saudi Arabias days of priming the non-oil economy are essentially over, but that its commitment to price stability remains. The five year plan has proposed growth targets averaging 3.2 percent a year between 1990 and 1995, roughly in line with what might be expected to be the population growth rate. The oil sector is expected to grow at a real rate of 2.7 percent a year, but the oil and gas sector combined by only 2.2 percent. The domestic non-oil economy is expected to grow at 3.6 percent. The overall growth rate in the non-oil sectors is likely to improve when the contraction in government services has flattened out. Over the medium term, the plans spending targets suggest a very heavy bias towards defense, social services, and Subsidies, with extra revenue to be used to rebuild reserves. As with the 1989 budget, the governments 1990 spending plans anticipate that increased overall revenues would reduce, the governments borrowing needs, eliminating the necessity for any further reductions in the countrys foreign reserves. The intention of the budget is to increase the already large human resources development. To meet this objective, reductions in funding must be made in most other sectors. However, these cuts have been minimized in the areas of defense, administration, health and social development.

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  • Economics and Cost Analysis
  • Government and Political Science

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