Inflation expectations reduced by 7%

In addition, Saudi Arabia has successfully reduced its general debt index to GDP rate to SR237bn in 2008, despite the damaging effects of the global financial crisis.

Saudi financial experts anticipate a reduction of 7% in the inflation of the public sector due to the variance in dollar exchange with other currencies, the decline of some local product prices, especially construction materials, and the decline of oil prices, which in turn leads to reduced transportation and shipping costs, and ultimately the restoration of reasonable pricing standards.

Sheikh Abdullah Fahid Al Shakrah, Al Hanoo Holding Chairman, said:

"The new budget confirms the solidity of the Saudi economy, the sound judgment of the Saudi decision-makers, and their ability to fulfill sustainable growth requirements. It proves that the Kingdom of Saudi Arabia will remain in competition as one of the biggest investment destinations in the region. The economy has become solid due to the important role played by the different sectors in the KSA, led by the energy sector. High oil prices have made returns of SR1100bn against costs of SR510bn, reaping net returns of SR590bn."

Al Shakrah, whose company is developing Al Nujoom Islands and Emirates Industrial City in the emirate of Sharjah, UAE, added: "The announcement of the new budget serves as a strong statement that funds were not affected by the global financial crisis, and that it has the ability to develop new projects, raise growth rates in the property sector, fulfill property sector requirements in order to complete current projects, and to create new projects and opportunities that will contribute to the KSA's vision in the short and long terms."

The Saudi Ministry of Finance has announced the overall budget of 2008, noting that a surplus of SR590bn was achieved. Many professionals are expecting a budget insufficiency of SR65bn in 2009 due to the high expenditure rate of the last five years, while others believe that this high rate of expenditure will be reduced, with plans aimed at lowering the expenditure leading to the restoration of the economy from recession.