Highlights of King Abdullah's second economic package
However, we do not expect the full amount to be disbursed this year, reflecting a likely lag between announcing and implementing new housing initiatives and overcoming bureaucratic bottlenecks. In addition, the impact on the public finances will be mitigated by the recent spike in oil prices and a ramping up of Saudi oil production to compensate for stoppages in Libya (although this production rise will probably be smaller than originally envisaged). As a result, we expect the fiscal account to return a wide surplus this year, of 10.4% of GDP. However, Saudi Arabia's fiscal performance is likely to deteriorate rapidly in subsequent years, as the knock-on impact of the wage rises, welfare benefits and house-building programme announced this year, combined with steadily falling average international oil prices, is felt. As a result, we expect the fiscal account to record a much smaller surplus in 2012, of just 0.4% of GDP, and to return deficits equivalent to an average of 6.4% of GDP in 2013-15.