Top oil exporter Saudi Arabia, which projected a budget deficit in 2011, is likely to post a SR77 billion ($20.5 billion) surplus based on an oil price of $80 a barrel, according to a research note on Sunday.

State-owned National Commercial Bank predicted the kingdom would also surpass its spending and revenues forecasts, saying both were 'understated.'

Last week, Saudi Arabia said it would spend 580 billion riyals next year in a push to create jobs for a fast growing population. It projected revenues of 540 billion riyals, resulting in a 40-billion-riyal deficit.

Gulf states typically base their budgets on a very  conservative oil price, which they do not reveal.

NCB forecast revenues of 753 billion riyals and expenditures of 677 billion riyals, based on an average oil price of $80 a barrel for the Arabian light crude and an oil output of 8.5 million barrels per day (bpd) on average.

'This would lead in turn to a budget surplus of SR77 billion, or 4.2 per cent of estimated GDP in 2011,' the bank said.

Benchmark US crude futures, which hit a 26-month high of $91.63 on Thursday, did not trade on Friday with the Nymex floor closed for Christmas while Opec's reference crude basket, which includes Saudi's Arab light, was at $90.02 a barrel on Wednesday.

Opec's most influential oil minister, Saudi Arabia's Ali al-Naimi said on Friday he was still happy with an oil price of $70-80 a barrel.

The Saudi economy is heavily dependent on oil - it accounted for about 85 per cent of its budgetary revenue in 2009 and around 31 per cent of its GDP - leaving the kingdom exposed to price volatility.

The kingdom, the biggest Arab economy, has accumulated huge reserves during a six-year oil price boom and is planning to spend more than $400 billion over the five years to 2013 to upgrade infrastructure, including airports and roads.

Net foreign reserves held by the Saudi central bank rose to $429 billion in the first 10 months of this year, from $405 billion at the end of 2009, leaving official foreign reserves able to cover more than 59 months of imports.

NCB forecast the central bank's net foreign assets will grow based on higher oil revenues in 2011. 'These assets will continue to provide an important buffer to protect the Saudi economy from volatility of oil prices or external financing difficulties.'

The bank also said non-oil revenues may hit SR83 billion, 25 per cent above actual levels in 2010.-Reuters