With a spurt in oil output, coupled with greater state spending commitments, the Saudi economy looks set to expand 5.5 per cent in 2011 in real terms, up from a previous forecast of 4.2 per cent, said a report.

As a result of more favorable energy market environment, Saudi Arabia should achieve fiscal revenues of SR904 billion ($241 billion), enabling it to post SR61.7 billion surplus, or 3.1 per cent of GDP, the Arab News reported citing a forecast by Banque Saudi Fransi.

The Kingdom's store of net foreign assets hit a record level of SR1.67 trillion ($444.88 billion) as of the end of January, easing slightly in February, it added.

On account of the burst in spending, the top Saudi bank said it has raised the 2011 state expenditure forecast by 24.5 per cent to SR842.4 billion. This represents a substantial 34.5 per cent jump over 2010 figures.

The revised forecast also constitutes overspending of 45 per cent on the expenditure target set out in this year's budget, which would be the fastest pace of overspending in three decades, it added.