• budget;
  • budget systems;
  • fiscal policy;
  • growth;
  • Saudi Arabia


This article describes and evaluates the budgetary institutions in Saudi Arabia. The primary sources of information for this study are publications from the Saudi Ministry of Finance and a survey implemented to investigate the different aspects of budget formulation and execution. We find that the Saudi budget experiences difficulties associated with incremental annual line-item budgeting systems. Although capital expenditures in the education and health sectors are guided by five-year plans developed by the Ministry of Planning, the rest of the budget preparation procedure is mainly driven by requests from government agencies to increase spending (i.e. a bottom-up approach), instead of being based on an early determination of the macroeconomic constraints and the acceptable level of deficit (i.e. a top-down approach). The result is an exacerbation of tragedy of the commons problems associated with information asymmetry and conflict-avoidance strategies. We discuss possible reasons for this finding and offer budgetary reform proposals. Copyright © 2014 John Wiley & Sons, Ltd.