Previous Issues

This study is timely and important because Saudia Arabia has faced a budget deficit since 1983. the facts according to the author are painful: 75% of Saudi Arabian income is derived from the export of oil, which is affected by international market forces and political and military situation in the Gulf. Government employee salaries and government agency operating costs account for 58.8% of the budget, while 14.25% is spent on infrastructure.

According to Melhem budget reform requires measures to lessen dependence on oil as the main source. These include investments in productive projects, education, training of Saudia citizens, encouragement of private sector investment in industrial, and service projects. These are the only projects that could help in the future employment of Saudia nationals. The author argues that government services should be privatized, and subsidies of basic commodities should be reduced. Melhem suggests that real-estate, and personal and corporate income taxes could be set with improved accounting and management controls, reorganization of the government. Many important decisions are awaiting Saudi Arabia during the coming five years.