VZCZCXRO4541
PP RUEHDE RUEHDIR
DE RUEHRH #0573/01 0971253
ZNR UUUUU ZZH
P 061253Z APR 08
FM AMEMBASSY RIYADH
TO RUEHC/SECSTATE WASHDC PRIORITY 8138
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUEHJI/AMCONSUL JEDDAH PRIORITY 9469

UNCLAS SECTION 01 OF 02 RIYADH 000573 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/IFB/OMAFOR ASNOW AND RFIGUEROA 
STATE FOR NEA/RA FOR JPALLARES AND JSCOVITCH 
 
E.O. 12958 N/A 
TAGS: ECON EAID PREL SA
 
SUBJECT: FISCAL TRANSPARENCY REPORT FOR SAUDI ARABIA 
 
REF: STATE 16737 
 
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Summary 
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¶1.  (U)  Saudi Arabia's annual budget is publicized through 
government sources, analyses by local banks, and the local media. 
Officially-released budget data is timely, but not highly-detailed. 
Most information is limited to broad sectoral allocations. 
Officially-available information is typically posted on official 
government websites of the Ministry of Finance and SAMA, the central 
bank.  National newspapers provide coverage of the budget, tending 
to highlight education and health spending of interest to the Saudi 
public.  More current information is available in Arabic than 
English.  The Saudi Basic Law and Council of Ministers' Law provide 
the legal foundation for budgetary disclosure and final budgetary 
approval by the government. 
 
--------------------------------------------- - 
Official Sources of Information on the Budget 
--------------------------------------------- - 
 
¶2.  (U)  The Minister of Finance (MOF) has responsibility for 
drafting and announcing the annual Saudi budget. Upon its 
announcement, the MOF issues a public statement, which is published 
on the MOF website, at www.mof.gov.sa.  His press release typically 
includes commentary on the previous year's budget implementation, 
highlights of appropriations for the forthcoming fiscal year, and an 
overview of recent economic developments.  The MOF also publishes 
very general budget appropriations by sector on its website. 
Substantially more current information is available in Arabic than 
English on the MOF website (3-4 years more current).  The MOF 
statement regarding the budget is also typically summarized and 
published on the Royal Saudi Embassy in Washington DC at 
www.saudiembassy.net; the Saudi Embassy also publishes additional 
information on royal decrees which are pertinent to the composite 
budget picture. 
 
¶3.  (U)  More detailed budget information is available through the 
Saudi Arabian Monetary Agency (SAMA), the central bank, at 
www.sama.gov.sa.  In particular, SAMA publishes an Annual Report 
which covers the state of the Saudi and world economy, the banking 
sector, banking supervision, public finance, capital markets, cost 
of living, and key developments across various sectors, including 
petroleum 
 
¶4.  (U)  The Public Finance portion of the annual SAMA report 
specifically addresses the annual budget.  The SAMA report outlines 
budget allocations by sector (e.g., human resource development, 
municipal services, defense and security). Budget figures are not 
broken down by sub-category.  Allocations for individual ministries 
are not broken out, but appear to be subsumed under these sectoral 
allocations.  Allocations to specific national institutions, 
"semi-autonomous institutions," e.g., the Saudi Ports Authority, 
King Saud University, the Royal Commission of Yanbu and Jubail, are 
also outlined. 
 
¶5.  (U)  The SAMA report also offers details on budget projections 
versus actual revenues and expenditures for a three-year 
retrospective period, and tracks percentages of oil revenue versus 
non-oil revenue.  (Oil has typically accounted for about 90% of 
government revenue during the recent period of high oil revenues.) 
The SAMA annual report also tracks other useful data, such as 
current and capital expenditures, and the ratio of budget surplus to 
GDP. 
 
¶6.  (U)  Note: Mission finds that utility and timeliness of 
information provided by the Ministry of Economy and Planning's 
Central Department of Statistics typically lags that of data 
provided by SAMA and the MOF.  End note. 
 
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Press Publicizes the Budget 
---------------------------- 
 
¶7.  (U)  During the annual budget publication period, local press 
publicizes the budget figures in both Arabic and English, and in the 
broadcast and print media.  Al-Riyadh and other national newspapers 
provide coverage of the budget, tending to highlight education and 
health spending, areas of significant interest to the Saudi public. 
 
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Growing Private Research Capability 
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RIYADH 00000573  002 OF 002 
 
 
¶8.  (U)  In recent years, banking institutions such as the Saudi 
Arabian British Bank (SABB), Riyadh Bank, Samba Bank, and a new 
class of Saudi-licensed investment banks, such as Jadwa Investments 
and JP Morgan, have refined their research capabilities, and now 
publish monthly analyses for their clients and the economic 
community. During the recent budget cycle, these banks provided 
well-researched analyses of the budget for their clients, with more 
detailed and current information than that available through public 
sources.  Bank analyses of the budget are also disseminated via 
independent organizations such as SURIS, the Saudi-U.S. Relations 
Information Service, at http://www.saudi-us-relations.org. 
 
-------------------------------- 
Laws Governing the Saudi Budget 
-------------------------------- 
 
¶9.  (U)  Articles 72-78 of the Saudi Basic Law of Government contain 
statutory provisions for the disclosure of budget revenues and 
expenditures.  The Basic Law stipulates that projections for the 
following year's budget revenues and expenditures should be 
announced during the last month of the fiscal year.  Expenditures 
must be in accordance with budget allocations.  The Law also defines 
the fiscal year, which runs from December to December on the 
Gregorian calendar.  The Ministry of Finance (the "competent body") 
must prepare a statement of account of the year's budget at the 
conclusion of the fiscal year for submission to the King. 
 
¶10.  (U)  Articles 25-28 of the Council of Ministers' Law stipulate 
that the Council of Ministers study and approve the state budget 
upon submission.  After approval by the Council of Ministers, the 
King also approves the budget.  A royal decree is necessary to 
increase state budget allocations.  A royal decree can also alter 
the budget and specify how unanticipated budget surpluses are 
allocated. 
 
¶11.  (U)  Saudi Arabia observes International Monetary Fund-endorsed 
standards and codes in the following areas: 
 
--Banking Supervision (June 5, 2006) 
--Monetary and Financial Policy Transparency (June 5, 2006) 
--Payments Systems (June 5, 2006) 
 
All were published as part of the Financial System Stability 
Assessment. (http://www.imf.org/external/np/rosc/rosc.asp ) 
 
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USG Technical Assistance on Budgets 
Long Since Wrapped Up 
------------------------------------- 
 
¶12.  (U)  The USG had wide-ranging programs to assist the Ministry 
of Finance and SAMA from the early 1970s to the early 1990s through 
the U.S. Department of the Treasury-administered Joint Economic 
Commission of Riyadh (JECOR) program.  At its peak, more than 300 
American advisors resided in Saudi Arabia to assist the SAG to 
design a modern and efficient finance ministry and central bank. 
These programs were wrapped up in the early 1990s when both 
governments concluded the SAG had developed the ability to manage 
its own fiscal and monetary affairs. 
 
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Comment 
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¶13.  (SBU)  Generally, economists in the region believe, and we 
concur, that the SAG is exercising substantially more fiscal 
prudence during this oil boom than it did during the previous oil 
boom of the 1970s, when off-budget spending flourished unchecked. 
Saudi budget figures are promptly released, widely-publicized, and 
broadly discussed, but are not highly specific.  They provide few 
grounds for citizens to question a specific allocation, simply 
because publicly-available figures are too generalized to identify 
specific programs, or even budgets for specific ministries. 
Additionally, large numbers of royal family members exact support 
from government coffers, a patronage-based system of government 
continues, and funds are flowing freely to modernize key government 
sectors.  These factors ensure that the published government budget 
figures are probably not the full and final word on what the SAG is 
actually spending. 
 
 
FRAKER