By Abdulateef Al-Mulhim
Just a few weeks prior to the announcement of Saudi national budget for the fiscal year 2015, the oil prices plunged to a five-year low. Since 1938, the price of an oil barrel has been the deciding factor in the Kingdom’s national budgets.
Oil exports amount to around 90 percent of the Saudi national income due to which media was abuzz with speculations about the 2015 budget. Severe impact of declining oil prices on various countries provided the basis for speculations and analyses but the Saudi budget rubbished all those speculations. Spending in the budget for the next fiscal is projected at SR860 billion, up from last year’s SR855 billion.
Once again the budget proved the strength of the Saudi economy amid all the political and economic turmoil around the globe particularly in our region. Despite enjoying this strong position, we have to keep into consideration the unpredictable length of the era of cheap oil.
As per the budget, despite the sharp decline in oil prices, the Kingdom will continue spending heavily during the year 2015. This is why some analysts believe that Riyadh is comfortable with the plunge in oil prices, which is viewed as a way to squeeze out competing producers in non-OPEC nations. But the Saudi announcement of its national budget was overtaken by two announcements made by Saudi Finance Minister Ibrahim Al-Assaf.
He told the Saudi television, “We have the ability to endure low oil prices over the medium term.” And that “Saudi Arabia does not need to create a sovereign wealth fund to manage its oil wealth.”
So, the question many people in the Kingdom and abroad are asking is: How the Saudi economy fare in the next five years or in the era of cheap oil, no sovereign wealth fund and no national income diversifications in the near future?
It is true that the announcement of the largest annual budget in Saudi Arabia’s history is comforting to all Saudis but the majority of the Saudi population is very young. Half of the Saudi population was born after the Iraqi invasion of Kuwait in 1990 and Saudi Arabia still has the highest fertility rate in the world.
As we know, the needs of the younger generation are higher than that of the elders like education, health care, future family planning, employment, housing and recreational facilities etc. It is true that these needs are for all segments of the population but the youths always demand more. They don’t like to wait and don’t take a no for an answer. The young ones don’t like to hear about plans, they want to see results. This is why all ministries, government agencies and private companies should put the Saudi youths on top of their priority list particularly in employment.
At this stage, there is a great need for Saudi Arabia to find ways to diversify its sources of income, to eradicate or reduce corruption, to ensure transparency in spending and to introduce strict rules to protect public funds. The Saudi government has allocated around one-third of the national budget for health care and education.
This shows the seriousness of the government to raise the living standards of all Saudis. There is enough money and resources to make many changes but it requires a sense of patriotism and honesty from all Saudis. We all have the duty to ensure a better future for future generations.
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