Saudi Arabia awarded development contracts worth 20.9 billion riyals ($5.6bn) in the first quarter, down almost 50 per cent from last year, as the oil exporter pursues a five-year infrastructure programme.
The biggest Arab economy and top oil exporter has like other nations boosted spending on infrastructure, health care and education to underpin economic growth and has warned against early exits of stimulus packages.
Saudi Arabia, a member of the group of biggest economies G20, plans to spend more than $400bn until 2013 for projects such as roads, hospitals or other infratructure to serve its mainly young population of 18 million nationals.
State news agency SPA gave no comparison but in May Finance Minister Ibrahim Alassaf put the value of contracts in the first quarter of 2009 at 40.6bn riyals.
“The government is seeing clear signs of a recovery so it could be that spending is less spread over the full year more evenly,” said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.
“It is hard to sustain high spending from one quarter to the next but the government’s announced spending program is on course,” he said.
In the fourth quarter the value of contracts had risen to 32bn riyals versus 20bn riyals in the same period a year ago, he added.
The largest chunk, 479 contracts worth 15.7bn riyals, went to construction projects such as building roads, schools or hospitals, SPA cited the finance ministry as saying.
The government spent 4.7bn riyals on building schools, 3.6bn riyals on health or water projects, 2.4bn riyals on city and town development and 1.7bn riyals on road works and transport, SPA said.
Saudi Arabia said in December it plans to to raise investments by 16 per cent to 260bn riyals this year.
Central bank governor Muhammad al-Jasser told Reuters in March the local lending growth is set to recover this year as the local banking system is liquid and confidence in the global economy rises.
The IMF expects the Saudi economy to grow by 3.7 per cent this year after 0.15 per cent in 2009.