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Overview on the Economy of the Kingdom of Saudi Arabia

The free market economy of the Kingdom of Saudi Arabia depended heavily on oil since the discovery of oil fields in 1938, especially since the start of the great hike in oil prices in 1973. The kingdom is one of the largest oil producers and exporters in the Middle East and it is expected that it continues to occupy this standing in the future.
Saudi Arabia has passed through the period from 1970 to 1980 in a remarkable development and economic promotion as a result of the rise in oil prices. During that period, it has built the infrastructure that allowed the Saudi society today to advance in the fields of education, health, industry, and agriculture, as well as the development and in the other fields.
Economic growth rates have decreased during 1981 when the kingdom’s government prepared its first five-year development plan. This required rationalization of the country’s expenditure until the plan’s completion. The boost in economy and development of the kingdom continued until it reached its peak in 1985. However, economic growth rates recurred with the beginning of the second development plan in 1986. That plan reduced the state’s expenditure significantly in order to direct spending towards development in other fields and to give these fields a larger share of the state’s attention. Examples of such fields included the agricultural and industrial fields.
Among the fruits of the comprehensive development in the kingdom is a widespread economic uplift in all fields and sectors. Although the oil sector comprises as the main part of the gross domestic product; the non oil sectors continue to grow. The state strives to diversify its economic base.
The public budget in Saudi Arabia continued in 2008 to increase the public expenditure on the basic services such as health, education & municipal services to enhance the living standard of the citizens and residents in the kingdom.
The government estimated its revenues in 2008 at SR 450 billion; while expenditures are estimated at SR 410 billions. This means that the kingdom will raise its estimated expenses in the amount of SR 7 billion against its actual expenses in 2007 which amounted to SR 443 billions.
The actual revenue for the year 2007 was recorded at SR 621.5 billion with an increase in the amount of SR 221.5 billion over the estimated revenues. Such increase was directed to the real estate development fund in the amount of SR 25 billions and the state’s reserve in the amount of approximately SR 100 billions and the balance (about SR 96 billions) was directed to settle the general debt which decreased to SR 267 billions representing about 19 % of the gross domestic product compared to 28 % at the end of the last year.