Spending by the Kingdom of Saudi Arabia in 2012 will likely be higher than budgeted, but the country will still run a fiscal surplus of 4 percent of GDP, says Fitch Ratings. Spending growth will moderate in 2012 compared with last year, a Fitch statement said. In 2011, it said spending growth reached 24 percent, the highest in a decade. The government raised public sector wages, created government jobs, injected capital into state-owned lenders and pledged more resources for housing. Capital spending — mainly on infrastructure — exceeded 12 percent of GDP. Saudi budgets typically underestimate both revenue and spending, Fitch Ratings says. In 2002-2011, central government spending exceeded the budget by an average of 24.8 percent. But in each year other than 2009, oil prices lifted revenues beyond expectations, giving the government room to spend more without running a deficit. In its national budget released December 26, the Ministry of Finance projected total revenues of SR702 billion and government expenditure of SR690 billion, giving a surplus of SR12 billion. This appears to be based on a conservative oil price assumption, Fitch Ratings says. Assuming Saudi Arabia reduces oil output to an average of 9mbd in 2012, the breakeven oil price would be around $60/barrel. However, a budget overspend in line with the recent historical average would result in spending of SR846 billion and push up the breakeven oil price to $75/barrel. At Fitch\'s oil price assumption of $100/barrel, revenue would reach SR907 billion, giving a surplus of SR61 billion, or around 4 percent of GDP. Over the medium term, there is still a possibility of Saudi Arabia running a deficit by 2015. Assuming 7 percent spending growth — which would be lower than the annual average of 12.5 percent in 2002-2011 — modest oil output growth, and an average oil price of $100/b, the country would run a deficit of 1 percent of GDP by 2015. Fitch rates Saudi Arabia \'AA-\' with a Stable Outlook. Fitch Ratings says the high investment grade rating largely reflects the very strong sovereign and external balance sheet. The sovereign balance sheet improved further in 2011, despite the highest spending growth in a decade. Sovereign net foreign assets grew by over $100 billion to 112 percent of GDP. Fitch Ratings added: \"With Brent averaging $110/barrel, the general government surplus for the year was 14 percent of GDP, higher than our expectation of 7.5 percent when we affirmed the rating on April 8, 2011. That estimate was based on an assumption of $100/barrel.\" Meanwhile, Reuters reported that Saudi Arabia is ready to fill any oil supply gaps in the market if needed. \"Saudi Arabia remains ready to fill any supply gaps if they happen, our production is dictated by demand,\" said the source, according to Reuters. EU countries buy about 450,000 barrels per day (bpd) of Iran\'s 2.6 million bpd in exports, making the bloc collectively the second largest market for Iranian crude after China.