By Isa Al-Holyan, Okaz
THERE have been severe fluctuations intermittently in government revenue and spending over the past half a century.
The state income shot up in 1981 to reach SR368 billion, registering the highest hike in a decade from 1973. After this, the revenues suffered a steady decline hitting merely SR76 billion in 1986. This means that the revenues registered a fall of more than five times in value in five years. Later, the revenues began to increase with a sharp rise in oil prices, reaching SR673 billion in 2003. This figure maintained a steady growth over the succeeding years, reaching its peak at SR1,100 billion in 2014. This was the record figure of revenues registered in the history of Saudi Arabia. However, this did not last long and the state income continued to decline in 2015-16.
In such a scenario, how is it possible to implement plans and programs to ensure sustainable growth as well as a decent living for the people in the wake of such severe fluctuations, especially when the state depends excessively on a single source of revenue? The sharp fluctuations in revenues produce a negative impact on overall economic activities as well as the nation building process. The fluctuations in the government spending also affect the performance of the private sector.
During the period between 1975 and 1992, the oil revenue constituted 40 to 50 percent of the gross domestic product (GDP), but it then declined to 30 percent during 1993-99, before stabilizing at around 37 percent. The subsequent increase in oil prices had resulted in a surge in revenue and government spending once again until 2014.
These fluctuations produced overall negative results on the local economy. The rate of economic growth witnessed sharp fluctuations ranging from 1 percent to 7.5 percent between 2000 and 2015. Subsequently, the Kingdom’s non-oil exports recorded a negative growth over the last three years, reaching 44 percent in 2015.
It is unfortunate that severe fluctuations in the Kingdom’s revenues and government spending have become a recurring process, thus inflicting irreparable damage to the economy.
This happens at a time when most other countries were able to achieve steady strategic progress and growth with a basket of financial resources. These countries neither have oil as their main source of income nor any other diverse economic opportunities that the Kingdom boasts of. I hope that the Council of Economic and Development Affairs would examine this serious issue facing the nation.
