* Finmin says spending can be maintained in medium term and
* Analysts see spending this year exceeding record actual
* IMF sees budget break-even oil price at $85/bbl in 2013
RIYADH, Jan 22 Saudi Arabia can maintain its
current high level of government spending for years to come,
Finance Minister Ibrahim Alassaf said on Tuesday.
Riyadh has been boosting spending recently on welfare and
housing construction partly as a reaction to unrest in the Arab
world in order to ease domestic political tensions. It also
wants to diversify the economy away from heavy dependence on
oil, in case of a future plunge in global oil prices.
Asked whether strong growth in government spending was
sustainable, Alassaf told reporters: "We have the ... ability to
continue this scale of spending.
"We have the reserves, as well as we are reducing our debt
almost to zero. So we can continue in the medium term and even
beyond that," he said on the sidelines of the Arab Summit for
Economic and Social Development.
The world's No.1 oil exporter has set state budget
expenditure of 820 billion riyals ($219 billion) for 2013, 19
percent higher than the amount initially budgeted for 2012.
It is slightly below the record estimated 853 billion riyals
that the government actually spent in 2012, but analysts have
said actual spending is set to continue climbing in 2013.
The oil-rich desert kingdom has overspent its annual budget
plans by 24 percent on average over the past decade.
The International Monetary Fund said in September that Saudi
Arabia, which has been running big budget surpluses thanks to
high oil prices, is expected to see those surpluses shrink
gradually in coming years and could post a small deficit as
early as 2016.
In October, Alassaf called the IMF prediction a "doomsday
scenario" which he did not agree with.
The Saudi government spending has been rising by 12 percent
on average in 2002-2012. As a result, the oil price it needs to
balance the budget is expected to shoot up to $85.2 per barrel
in 2013 from as low as $37.6 in 2008, the IMF said in October.
However, the kingdom has a substantial buffer that would
allow it to keep spending even if crude prices were to fall in
the future. Its net foreign assets in the central bank, where it
stores receipts from oil sales, rose to a record 2.4 trillion
riyals in November.