VZCZCXYZ0000
OO RUEHWEB

DE RUEHRH #0096/01 0201346
ZNR UUUUU ZZH
O 201346Z JAN 10
FM AMEMBASSY RIYADH
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2340
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS RIYADH 000096 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR NEA/ARP, EEB 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV SA
SUBJECT: SAUDI BUDGET CONTINUES TO BE TRANSPARENT 
 
REF: A. SECSTATE 1923 
     ¶B. RIYADH 76 
     ¶C. 09 RIYADH 572 
 
¶1. (SBU) Post appreciates the opportunity to provide input 
into this year's review of budget transparency.  The 
government publishes both its income and its expenditures 
each year, as well as information about the economy (e.g., 
inflation, growth, GDP, etc.).  In addition, the central 
bank, the national oil company (Aramco) and most SAG agencies 
publish annual reports.  Those of parastatal companies, like 
Aramco, are audited.  Saudi Arabia's high dependence on oil 
revenues (more than 80 percent of budget revenue) can affect 
the pace of revenues and expenditures, especially when prices 
are volatile.  Saudi officials issue corrections for previous 
years' revenue and expenditures as part of their annual 
public statements, in addition to periodic public updates. 
Post does not believe Saudi Arabia merits inclusion on this 
year's list. 
 
¶2. (SBU) In response to the specific questions raised in ref 
A: 
 
-- Is the central government expected to receive funding 
under the FY 2010 SFOAA? 
 
Yes, Saudi Arabia is expected to receive $65,000 of IMET 
funding and $300,000 of NADR funding in FY2010. 
 
-- Is the host country's annual national budget publicly 
available? 
 
The SAG publicly releases an annual budget statement in late 
December for the following fiscal year (which corresponds to 
the calendar year).  This statement includes a general 
breakdown by sector, as well as a more detailed list of 
allocations for government organizations, including 
universities and independent government bodies (such as the 
investment promotion authority, the Saudi Red Crescent, the 
tourism commission, the port authority, etc.).  The 2010 
budget listed 46 of these more specific allocations.  Many of 
these organizations (e.g., the SFD) publish their own annual 
reports with very detailed income and expenditure 
information.  These are readily available to the public.  The 
Saudi Arabian Monetary Agency (SAMA) also publishes an 
extremely detailed breakdown of the Saudi budget, including 
detailed sector information and consolidated balance sheets 
for public funds.  SAMA also publishes monthly updates of the 
public balance sheet, including overseas assets. 
 
-- Are incomes and expenditures included in the 
publicly-available budget? 
 
Both income and expenditures are included in the public 
budget information.  Supplemental public information, such as 
the central bank's annual report, and Aramco's audited 
report, are also readily available. 
 
-- What is post's assessment of the xtnt to which the 
publicly-available budget accurately reflects actual 
government incomes and expenditures? 
 
The SAG derives most of its income from the national oil 
company, Aramco, which releases an audited annual report. 
Aramco's reported production numbers track closely with 
industry estimates of Saudi production.  Differences between 
the SAG's budgeted income and actual income are a function of 
global oil prices and unanticipated production fluctuations 
based on OPEC decisions and other external factors beyond SAG 
control.  The government is generally conservative when 
generating its budget estimate in December of the previous 
year, but publishes actual income figures at the end of the 
year.  Senior officers regularly comment publicly on the 
status of unanticipated budget deficits or surpluses as the 
end of the year approaches. 
 
Expenditures are reported in three categories:  sector 
allocations such as "transportation and communication," 
specific line-item allocations for government agencies and 
universities, and a broad "Other" category, which makes up 
approximately 50 percent of the budget and is predominantly 
defense, intelligence, and related security expenditures. 
The central bank's annual report provides extensive, detailed 
information on these sectors.  Many of these agencies, 
including the Saudi Fund for Development, the Saudi Red 
Crescent, and Saudi Arabian Airlines, publish detailed annual 
reports which include breakdowns of revenue and expenditures. 
 
While the SAG typically overspends its annual budget by 15 to 
30 percent, it reports what these expenditures were for at 
the end of the year.  For example, in December 2009, the SAG 
reported that its cost overruns for 2009 were spent on 
renovations to several mosques, including those in Mecca and 
Medina, food and welfare subsidies, the transfer of temporary 
employees to permanent status, increased student enrollment 
in universities, and increased scholarships for study abroad. 
 Throughout the year, Saudi and regional press regularly 
report on SAG contract awards, which are also available on 
many ministry websites. 
 
-- Have there been any events since the 2009 review that may 
have affected fiscal transparency? 
 
King Abdullah directed the General Auditing Bureau to 
implement its second strategic plan to increase financial 
auditing and performance monitoring, which is explicitly 
linked to increasing public awareness and trust of the 
activities of SAG entities.  The Saudi cabinet also directed 
all ministries and agencies that lacked them to set up 
internal audit bureaus. 
 
-- Since last year's review, what efforts has the host 
government undertaken to improve fiscal transparency?  What 
progress has been made, pursuant to the 2009 demarches on the 
subject? 
 
The SAG has stepped up its efforts to combat waste, fraud, 
and abuse.  There has been extensive media reporting on 
efforts of the General Auditing Bureau to hold SAG agencies 
accountable for spending and performance.  The GAB annual 
report includes the results of audits of financial statements 
and budgets, as well as reports of violations.  The GAB 
report pointed out cases of over-invoicing, project delays, 
and malfeasance. 
SMITH