The Saudi Ministry of Educations plans to build 3,200 new schools for some 1.7 million children.
Under the King Abdullah Project for the Development of General Education, $5.3 billion will be spent raising the country's education system to international standards.
"At the moment a vast majority of the schools are housed in unsuitable buildings," a Saudi businessman told The Media Line on the condition of anonymity. "They are not purpose-built schools."
"They [Ministry of Education] have been renting buildings from private individuals and turning them into schools," he said. "It has been a longstanding problem and is something the government is anxious to rectify. This is the most comprehensive initiative yet, though the estimation is that they need some 4,000-5,000 new schools."
In addition to the schools' construction, the Ministry of Education will be in charge of their management and maintenance.
The school curriculum has also undergone a major overhaul over the last couple of years, as the Ministry of Education develops a curriculum to tackle deficiencies in computer technology, engineering and the sciences.
Under the purview of the religious establishment, the curriculum has traditionally had a strong focus on religious studies.
According to some estimates about 30% of the annual budget is spent on education.
A recent United Nations study on education in the Arab World found that despite 20% of national budgets going towards education over the past 40 years, literacy levels remain very low. The report found 60 million Arabs to be illiterate, two-thirds of them women.
The Saudi government currently sponsors some 60,000 scholarships for studies at colleges and universities abroad despite the number of universities in Saudi Arabia having grown from 9 to 25 over the last few years.
Inaugurated two months ago, King Abdullah University of Science and Technology is the latest addition. Built with an endowment of $10 billion, KAUST is one of the wealthiest universities in the world.