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Custodian of the Two Holy Mosques King Fahd Ibn Abdul Aziz received the annual report of the Saudi Arabian Monetary agency (SAMA) during a meeting at his office at Al Yamamah Palace in Riyadh with the Minister of Finance and National Economy Dr Ibrahim Al Assaf, Governor of SAMA Hamad Al Sayari and SAMA'S senior officials.

Crown Prince Abdullah Ibn Abdul Aziz, Deputy Prime Minister and Commander of the National Guard also received a copy of the report during his meeting at his office at the National Guard headquarters with the Minister of Finance and National Economy Dr Ibrahim Al Assaf, Governor of SAMA Hamad Al Sayari and SAMA'S senior officials.

During the meeting with the Custodian of the Two Holy Mosques, Al Sayari presented SAMA'S 36th annual report to King Fahd.

In front of the Monarch, Al Sayyari delivered a speech in which he said Saudi Arabia's gross domestic product (GDP) grew by 8.8 percent while its oil and non-oil sectors recorded positive growth rates of 23,7 percent and 2.5 percent, respectively, during the fiscal year 1999. The private sector grew by 2.4 percent while the government sector advanced by 2.6 percent during the same year.

This was disclosed by the Saudi Arabian Monetary Agency in its 36th annual report which was presented to Custodian of the Two Holy Mosques King Fahd by SAMA Governor Hamad in the presence of Finance and National Economy Minister Dr Ibrahim Al-Assaf.

He disclosed that the Kingdom was expected to maintain strong economic growth in the year 2000 after solid gains last year on the back of high world oil prices. "The increase in the Kingdom's oil revenue in 1999 resulted in a notable reduction in the budget deficit and a surplus in the balance of payments."

"It is expected that the improvement in the budget position will continue during the current year due to strong oil prices and the procedures adopted by the government for increasing domestic revenue and rationalizing expenditure," he said.

The SAMA governor, pointed out that the world economy grew by 3.4 percent during 1999 compared to 2.6 percent the previous year. He expected that the world economic growth rate would touch 4.7 percent during the current year. "As our economy is closely linked with world economy and international financial and trade markets, the growth and prosperity of the world economy will strengthen the national economy," he added.

Spelling out the growth rate achieved by non-oil sectors during 1999, Al Sayyari said the downstream industrial sector achieved a positive growth rate of 3.1 percent, electricity, water and gas sectors 3.7 percent, building and construction 1.8 percent, transport and communications 1.7 percent, financial and real estate services 1.8 percent and agriculture 1.4 percent.

The report showed that actual government revenue rose by 4.2 percent in 1999 to SR 147.5 billion ($39.33 billion). While expenditure declined by 3.3 percent to SR 183.8 billion. As a result the budget deficit dropped to SR 36.3 billion, or seven percent of GDP, form SR48.4 billion. Economists in the Kingdom expect oil revenue in the world's largest oil exporter to rise by more that 60 percent this year more than enough to achieve the year 2000 actual budget surplus of more than SR35 billion.

Saudi Arabia has forecast a fiscal deficit of SR28 billion in its 2000 budget, based on a 30 percent income hike to SR157 billion and a 12 percent spending rise to SR185 billion. The implicit oil price in the budget was forecast at a modest $9 a barrel. World oil prices are hovering at over $30 a barrel.

SAMA said the Kingdom's balance of payment recorded substantial improvement in 1999, with the latest data indicating a surplus of SR1.5 billion in the current account compared with a deficit of SR49.2 billion the previous year. It said the surplus was due to the rise in the value of oil exports following the marked improvement in prices of oil and petrochemical products in the world markets.

The value of oil exports, excluding bunker oil, increased by 38 percent to SR167.8 billion in 1999 while non-oil exports dropped by seven percent to SR 21.8 billion, SAMA said. "Indicators point to further economic activity in the current fiscal year and it is expected that average real growth will increase considerably," the report pointed out. It put the growth rate achieved by the country in 1999 at 1.9 billion percent in fixed prices.

The report indicated the formation of the Supreme Economic Council, the Supreme Council for Petroleum and Mineral Affairs, the General Investment Authority and the Higher Tourism Authority as well as the issuance of the new foreign investment law would boost the country's economic development.

The average general cost of living index for all cities registered a fall of 1.3 percent in 1999 as against a decline of 0.2 percent in the previous year. According to the latest data, the average cost of living index dropped further by 0.5 percent during this year.

SAMA said the monetary growth accelerated during 1999, with broadly defined money supply increasing by 6.8 percent as compared with a rise of 3.7 percent in 1998. As for the monetary policy, the report said the general cost of living index recorded a fall of 1.3 percent during 1999, and the riyal exchange rate against the US dollar remained stable at SR 3.75 per dollar. Major instruments of monetary policy used by SAMA during 1999 included repose facilities against treasury bills, government bonds, and floating rate notes, and foreign exchange swaps.

The report said the commercial banks increased their foreign assets and liabilities by SR 5.5 billion and SR 8.0 billion during 1999 to SR91.5 billion and SR51.2 billion respectively. Thus, net foreign assets of the banks went down by SR2.5 billion to SR40.3 billion during the year. Commercial banks increased their foreign assets and liabilities during the first half of 2000 by SR6.7 billion and SR6.1 billion to SR98.2 billion and SR40.9 billion at the end of June 2000.

Commercial banks increased their capital and reserved by SR2.1 billion to SR42.3 billion during 1999. The ratio of capital and reserves to total bank deposits and total assets of the banks stood at 17.2 percent and 10.2 percent respectively at the end of 1999. The number of commercial banks operating in the Kingdom stood at 10 at the end of 1999 following the merger of the Saudi American Bank and the Saudi United Bank in early July 1999 under the name of Saudi American Bank. The number of bank branches operating in the Kingdom reached 1.196 by the end of 1999. The number of branches increased by 4 to 1.200 during the first half of 2000.

The number of investment funds managed by commercial banks rose by 14.9 percent from 114 in 1998 to 131 in 1999. Their total assets increased form SR24.4 billion in 1998 to SR34.6 billion in 1999, registering a rise of 41.8 percent. The number of subscribers to these funds also rose from 70.200 in 1998 to 79.000 in 1999. During the first half of 2000, the number of funds increased by 3.1 percent to 135. Their total assets rose by 12.4 percent to SR38.9 billion and the number of subscribers was up by 15.4 percent to 91.200.

Regarding banking technology, the report said the number of automated teller machines rose form 1.808 in 1998 to 1.997 in 1999 and to 2.048 in June 2000. The number of payments cards also increased form 3.648.881 in 1998 to 4.969.342 in 1999 but declined to 4.657.098 by the end of June 2000.

On the exchange rate, it said the riyal, stable against the US dollar, witnessed some fluctuations but within tolerable limits against other major currencies. The exchange rate remained stable during the first half of 2000, it said. The report added that commercial banks claims on the private sector rose by 1.0 percent or SR1.5 billion to SR162.2 billion in 1999 as compared with the increase of 20.2 percent or SR27.0 billion in the pre ending year.

The ratio of bank claims on the domestic private sector to total bank deposits declined form 67.8 at the end of December 1998 to 65.9 percent at the end of December 1999. During the first half of 2000, bank claims on the private sector declined by SR2.0 billion or 1.2 percent to SR160.2 billion.

The report said Saudi Stock Market recorded considerable improvement during 1999 in response to the upsurge in world oil prices and the good performance of most domestic joint stock companies. The market capitalization rose by 43.1 percent from SR160 billion in 1998 to SR229 billion last year.

The meeting with King Fahd was attended by Prince Ahmed Ibn Abdul Aziz Deputy Interior Minister, Prince Saud Ibn Fahd Ibn Abdul Aziz Deputy Chief of the General Intelligence, Prince Abdul Aziz Ibn Fahd Ibn Abdul Aziz, Minister of State, Cabinet Member and Chief of the Court of the Council of Ministers' Presidency, Chief of the Royal Court Muhammad Al Nuwaiser, Private Advisor to the Custodian of the Two Holy Mosques Ibrahim Al Anqari, Minister of State and Cabinet Member Dr Abdul Aziz Al Khuwaiter, Chief of the Royal Protocol Muhammad Al El Sheikh and Chief of the private office of the Custodian of the Two Holy Mosques Muhammad Al Sulaiman.

Source: Ain-Al-Yaqeen - November 24, 2000 - Article 2


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 June 28, 2001 15:36:47