Riyadh-Amlak
The volume of spending on projects in 2013 reaches 285 billion riyals compared to 264 billion riyals last year, which gives the state flexibility in spending and provides it with opportunities to expand the implementation of projects in the medium term, noting that the current year's budget witnessed an increase in allocations for vital sectors that have an impact on the construction sector.

Flexibility in implementation
This was explained by an economic expert, pointing out that the current and capital spending on projects by the state and characterized by activity will continue, which helps support growth in the non-oil sectors, especially the construction and industrial sectors, expecting the volume of growth in the construction sector in 2013 to reach 10%, explaining that the sector last year was one of the fastest growing sectors, stressing that the overlap of the sector with many other sectors has a positive impact on the overall economy.

Dr. Saeed Abdullah Al-Sheikh, chief economist and head of the economic department at the National Bank, said in a lecture ”The general budget of the state and its role in the projects of the construction industries” organized by the Industrial Committee of the Riyadh Chamber recently that the multiple projects included in the budget will contribute to the volume of investments, explaining that the contracts awarded amounted to 235 billion riyals last year, stressing that intensive investments in the energy and petrochemical sectors boosted the rising demand for construction materials and equipment and human capital, adding that the contracts awarded by sectors between 2008 and 2012 amounted to one trillion riyals. Huge contracts
He added: ”I expect the volume of spending to continue so that we will be closer in the coming years to the same numbers that were allocated to the sectors during the past period, pointing out that the value of contracts awarded in the electricity sector amounted to 47.1 billion riyals in last year's budget, petrochemicals 47.2 billion riyals and 29.8 billion riyals in the oil and gas sector and the industrial sector 17.8 billion riyals.8 billion riyals, indicating that the percentage of the construction component in these projects between 10 to 15%, he said that the new projects that will be awarded will be added to the previous projects that will be implemented in 2014 and the coming years, which confirms the continuity in spending, especially in light of the lack of any indication of the state's tendency to reduce spending on He pointed out that in the event of changes in the region or the decline in oil prices, the state can set a balanced budget within the limits of 75 dollars per barrel of oil, indicating that in this case the pace of spending will decrease so as not to deplete the reserves achieved in the coming years.
Financing projects
With regard to project financing opportunities, he explained that the continuation of mega projects provides lending opportunities for local and international financiers, and stressed that bank lending and government funds are the most available to finance construction projects, and said that banks face some dilemmas in light of the increased demand for financing, pointing in this aspect to the mismatch between assets and liabilities where banks face difficulty in supporting long-term assets with short-term liabilities, adding that the role of banks in financing is large as the volume of financing in 2012 reached 75 billion riyals to the construction sector, stressing that the volume of money injected into the economy helps in continuing to grow credit. Construction sector
Regarding the challenges facing banks with regard to financing the construction sector, Al-Sheikh said that they are represented by the semi-monopolistic structure of the sector, lengthy payment schedules, the ambiguity of the contractor classification system and the awarding of projects to the lowest bidder without considering efficiency, adding that contractors, on the other hand, suffer from some issues such as the 51T ratio He added that contractors suffer from some issues, including the 5% percentage that is required when awarding the project in order to obtain 10% as a down payment of the contract value, in addition to the banks” request to cover 100% on the issuance of the performance guarantee when the contractor opens a credit for the supply of construction materials where the bank requires a margin on the value of the credit from 25 to 100%.
At the end of the lecture, the Sheikh suggested some solutions to speed up the payment process for contractors, including depositing project allocations for ministries with banks so that the payment process is not delayed to the contractor or other parties, indicating that this method contributes to avoiding the complex procedures that are followed to obtain funds from ministries, and suggested establishing a fund to finance contracting companies, especially small and medium-sized ones, stressing that this helps in the development of the sector.