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Saudis have ample funds for investment
Saudi Arabia, which unveiled plans to launch a $400 billion development programme, has ample funds for more investment spending over the next few years despite global financial turmoil, a central banker said on Sunday.
- Reuters
- Published: 23:50 November 16, 2008
Dubai: Saudi Arabia, which unveiled plans to launch a $400 billion development programme, has ample funds for more investment spending over the next few years despite global financial turmoil, a central banker said on Sunday.
Mohammad Al Jasser, the central bank's vice-governor, said the kingdom's economy was well-protected from the "vagaries" of financial markets.
"We are receiving the winds flowing with contagion but we do not have the crisis that is swirling in Wall Street," the central banker said in Dubai.
Saudi Arabian Finance Minister Ebrahim Al Assaf said on Saturday in Washington that the kingdom planned to implement a $400 billion development and investment programme in the oil and government sectors over the next five years.
The world's biggest oil exporter also rebuffed talk it would hand more cash to the International Monetary Fund, saying there needed to be equitable burden-sharing between all IMF member states.
In Dubai, Al Jasser said potential investments would cover multiple sectors. "We have enough in our war chest to deploy all of the necessary investment in infrastructure, youth, education, mining and petrochemicals," he said. "Our development budget is robust."
The global financial crisis has prompted Gulf states, like the rest of the world, to enact a slew of policy measures to combat tight credit conditions and negative investor faith.
Steps
Saudi Arabia has cut interest rates, lowered bank reserve requirements, guaranteed bank deposits and poured billions in long-term deposits into the banking system.
The central bank vice governor said yesterday that Gulf countries were working together to mitigate the effect of the crisis on the region, even if there were few public signs of such co-ordination.
He added that Saudi Arabia's 1.3 trillion riyals (Dh1.26 trillion) in foreign reserves was in "very liquid, very safe, minimal risk" international assets.
"Our bank exposure to international markets is extremely small," he added.
Outlook: Credit growth to slow
Credit growth in Saudi Arabia, which more than tripled in the last year, was likely to slow down, a top central banker said yesterday, as private investors rethink borrowing plans during the global financial crisis.
Still, Saudi Arabia's non-oil private sector would grow in 2009, on par with this year, as the kingdom pushes ahead with major expansion plans, Mohammad Al Jasser, vice-governor of the Saudi Arabian Monetary Agency, said.
Credit growth of 37 per cent in the first nine months of the year compared to just 12 or 13 per cent in the prior-year period, he said.
"Thirty-seven per cent is a very high rate that will probably slow down in the years to come," Jasser told Reuters in an interview. "The main reason is that this year was an extraordinary year of borrowing and spending by the private sector."
While growth of the oil sector could decline as output is slashed, the non-oil private sector would expand six per cent this year and "hover close to that" in 2009, Jasser said.
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