Saudi Arabia may be ready to increase IMF resources

Davos: Saudi Arabia's Finance Minister Ebrahim Al Assaf said the world's top oil exporter may be willing to raise its contribution to the International Monetary Fund, aided by an "extremely solid" fiscal position.

"We have been there for the IMF for a long time; over 35 years we have been providing loans to the IMF. Also we have a large shareholding," Al Assaf said yesterday in a Bloomberg Television interview in Davos, Switzerland.

"We like to maintain that or increase it."

The IMF, which is co-financing loans to Greece, Ireland and Portugal, identified a potential global financing need of $1 trillion (Dh3.67 trillion) in coming years and is seeking $500 billion in new lending resources from its members to address potential loan demand. Managing Director Christine Lagarde has called on other countries to contribute to avoid a worldwide depression.

Mexican President Felipe Calderon also said on Thursday that more nations should raise funding for the IMF.

Next month's meeting of the Group of 20 in Mexico will help determine "some issues that have not been settled with regard to the role of the Europeans versus the role of the rest of the world," Al Assaf said on the sidelines of the World Economic Forum.

Moving forward

"We will see how we can move forward, whether in sequence: the Europeans and then the rest of the world, or together, and what are the contributions of the countries, is it going to be through the quota increase or through bilateral loans," Al Assaf said.

"I really cannot answer exactly who is going to contribute, and for that matter, Saudi Arabia's contribution."

US Treasury Secretary Timothy Geithner on Friday urged the euro area to boost its cache of bailout cash and protect Italy and Spain against the threat of a market rout.

"The only way Europe's going to be successful in holding this together, making monetary union work, is to build a stronger firewall," Geithner told the World Economic Forum's annual meeting on Friday. "That's going to require a bigger commitment of resources."

Foreign assets held by the Saudi Arabian Monetary Agency, the country's central bank, rose to just over 2 trillion riyals (Dh1.9 trillion) in December, official data show. The kingdom's economy expanded 6.8 per cent last year, with industry growing about 15 per cent, Al Assaf said.

"The fiscal side is extremely solid, with healthy reserves and almost no debt," he said. "Given these basic fundamentals, I am confident that the growth prospect of this year is going to be a very good one," he added, forecasting an expansion of more than 6 per cent.

Saudi Arabian Oil Minister Ali Al Naimi said in a January 16 interview with CNN that Saudi Arabia hopes to "stabilise" the price of oil at about $100 a barrel this year. Oil for March delivery fell 0.2 per cent on Friday to $99.47 a barrel at the close of floor trading in New York.

"Our main export, oil, has not been affected by the European crisis and the stagnation of growth," Al Assaf said. "Oil demand is healthy and the price is reasonable now for both consumers and producers."

Saudi Arabia is rated Aa3 by Moody's Investors Service, the fourth-highest investment grade. The government doesn't have international bonds in foreign currencies.

The kingdom's General Authority of Civil Aviation raised 15 billion riyals from the sale of Islamic bonds, a banker familiar with the transaction said on January 15. The government, which guaranteed the sale, "might" sell more sukuk — Islamic bonds — for specific projects "if they are productive," Al Assaf said.