Saudi Arabia awards contracts worth $5.6bn in Q1

Saudi Arabia awarded development contracts worth $5.6 billion in the first quarter, down almost 50 percent 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 $400 billion 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 $10.8 billion.

John Sfakianakis, chief economist, Banque Saudi Fransi, Riyadh, said: "The government is seeing clear signs of a recovery so it could be that spending is less spread over the full year more evenly."

He added: "It is hard to sustain high spending from one quarter to the next but the government's announced spending program is on course."

In the fourth quarter the value of contracts had risen to $8.5 billion versus $5.3 billion in the same period a year ago, he added.

The largest chunk, 479 contracts worth $4.7 billion, went to construction projects such as building roads, schools or hospitals, SPA cited the finance ministry as saying.

The government spent $1.2 billion on building schools, $959.9 million on health or water projects, $639.9 million on city and town development and $453.3 million on road works and transport, SPA said.

Saudi Arabia said in December it plans to to raise investments by 16 percent to $69.3 billion 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 percent this year after 0.15 percent in 2009. (Reuters)