Austerity budget? Not in Saudi Arabia

The 2012 government spending budget in Saudi Arabia was set at a conservative $184 billion, government authorities said. While many countries reeling from the recent recession are pulling back on spending, Saudi Arabia is going the opposite direction in part due to record revenues and in part to quiet potential social unrest, the Financial Times reported Wednesday. The spending figure is considered conservative because, as much of it is based on oil revenues, the government often spends far more than what is allocated in the budget. Spending in 2011, for example, went 39 percent over what was written into the original budget, as the government sought to head off potential social unrest, which swept through the region, toppling longstanding leaders in Libya and Egypt. In 2011, the government granted about $9.5 billion in raises for government employees and hired 60,000 additional workers. The government also dug into its deep pockets to fund a $66 billion housing project that was not in the original budget -- all of this affordable thanks to a budget surplus of $81.5 billion. In 2012, "We expect a strong focus on government spending on meeting social needs, education and health, and upgrading infrastructure, including housing," Monica Malik, chief economist at EFG-Hermes, told the Times. "Very strong spending levels … will provide a strong stimulus to growth," Malik said.