Budgetary Priorities in Saudi Arabia: The Impact of Relative Austerity Measures on Human Capital Formation

Abstract

Throughout the 1980s, Saudi Arabia experienced a period of relative fiscal austerity. Falling oil revenues forced a number of significant budgetary cutbacks. By early 1989, however, the situation had stabilized to the point where the Saudi Government announced that its 1989 budget would be equal to that of 1987 - 140 million Saudi riyals. To many observers, this signalled a welcome end to the deflationary effects of successive reductions in Government budgetary expenditure over the previous few years. In practice, it allowed Ministries to prepare sufficient projects for implementation, in the event that revenue constraints did not force cutbacks during the year.