Prince Al Waleed slams Saudi ministry over budget
In a rare attack, Saudi billionaire Prince Al Waleed bin Talal slammed the finance ministry for creating a fiscal deficit by largely overshooting spending in 2014, warning of a catastrophe if the Gulf kingdom’s financial assets are drained.
The Prince, one of the richest people on earth, made the virulent attack in a letter he sent to his uncle King Abdullah bin Abdul Aziz, according to newspapers, which said excerpts of the letter were published by the Prince on his Twitter page.
The Prince also challenged finance minister Ibrahim Al Assaf to a TV debate to talk about the budget and other domestic economic issues. He also called for the creation of a sovereign wealth fund to tap the country’s massive overseas assets.
“The big fear, or let’s say the big disaster, is that the ministry will continue withdrawing from the state financial reserves until they are totally depleted as was the case long time ago, when we were forced to borrow from abroad,” Al Waleed said in his letter, a copy of which was also sent to Crown Prince Salman bin Abdul Aziz as well as to the ministers of finance, and economy and planning, and to the governor of the Saudi Arabian Monetary Agency (central bank) and the head of the securities market.
Al Waleed said actual expenditure soared by nearly 28 per cent to SR1.1 billion (Dh1.1bn) in 2014 against budgeted spending of SR855bn.
“How could there be such a massive increase in state spending and a deficit of SR55 billion….how did this happen when there had been expectations that oil prices would decline through 2014…why there had been no attempts to control spending,” he said.
Addressing King Abdullah, Al Waleed said:”You have recently stated that this is the people’s money….so how could we waste this money.”
Announcing budget results for 2014 last week, the Saudi finance ministry said actual expenditure stood at SR1,100bn against budgeted spending of SR855bn while actual revenue surged to SR1,046bn from a budgeted SR855bn.The larger increase in spending created a shortfall of SR54bn.
Al Waleed said the shortfall could have turned into a surplus of SR191bn had the finance ministry stuck to the defined spending in 2014.
The Prince also criticized the finance ministry for announcing a sharply higher budget for 2015, when spending was projected at SR996bn. Revenues were estimated at SR715bn, leaving a deficit of SR147bn.
He recalled that King Abdullah had recently asked the ministry to control spending through 2015 to cope with the drop in crude prices.
“Wouldn’t it be better for the ministry to apply the Monarch’s words on the 2015 budget?....instead of this massive increase in 2015 expenditure, it could have been increased by only about SR5bn to SR860bn so that we can boast to say it is the highest budget in the Kingdom’s history,” he said.
“Is it a source of pride that we sharply increase spending at a time when crude prices have plunged by nearly half and oil provides nearly 90 per cent of the budget revenue.”
In his letter, Al Waleed proposed the creation of an “advisory council” comprising prominent economists and politicians to manage the financial reserves of the Kingdom, the world’s dominant oil exporter and largest Arab economy.
“There is also a need for the establishment of a SWF, which has become more imperative than ever…this fund is needed to increase our financial resources and cover fiscal deficits when they occur,” he said.
“I have to say that these issues should not be delayed because we have reached a dangerous point by withdrawing from the reserves…we need to discuss all these issues and I am now ready to meet the finance minister within a work meeting attended by others…we can also have a TV debate if the minister wish.”
Saudi Arabia, which pumps nearly a third of Opec’s crude supplies, has taken advantage of strong oil prices over the past decade to rebuild its overseas assets, which more than tripled to a record high of SR2,830 billion at the end of October.
Local economists have urged Riyadh to control spiraling spending to during periods of low oil prices to safeguard those assets.
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