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Review of Saudi economy
Riyadh, 9 December 2000

Due to the improvement in the performance of the Saudi economy, the deficit in the budget declined in 1999 by 25 percent compared to the deficit in 1998. Meanwhile, the deficit in the current account balance of payments declined by 78.1 percent in the same period.

According to the Annual Report issued by the Saudi Arabian Monetary Agency (Sama), prices remained stable in 1999 and the performance of the stock markets improved remarkably.

To hasten economic development and the diversification of the economic base, in 1999-2000 the Kingdom of Saudi Arabia established a number of important organizations like the Supreme Economic Council, the Supreme Council for Petroleum and Mineral Affairs, the General Investment Commission and the Higher Tourism Commission.

The Report pointed out that the initial estimations for the gross national product (GNP), at 1970 prices, indicated that the GNP increased in 1999 by 0.4 percent, compared to 1.5 percent in 1998. Meanwhile the non-oil GNP increased by 1.2 percent in 1999, compared to 1.2 percent in 1998. In 1999 the agricultural sector increased by 1.4 percent compared to one percent in 1998.

The manufacturing sector increased 3.1 percent in 1999, and by 2.9 percent in 1998.

Meanwhile the sectors of electricity and gas, and building and construction increased by 3.7 and 1.8 percent respectively in 1999, compared to 2.1 percent and 0.9 percent respectively in 1998.

As regard to the sector of wholesale and retail, hotels and restaurants, it increased by 0.6 percent in 1999 compared to 0.5 percent in 1998.

As regard to cost of living, the Report said the prices in the Kingdom of Saudi Arabia are characterized by stability. In 1999 the cost of living declined by 1.3 percent compared to decline of 0.2 percent in 1998 and 0.4 percent in 1997. The Report said that Sama had adopted a policy that aimed at preserving price stability. The banking sector steadily grew and the banking deposits increased by 3.8 percent in 1999 to reach SR nine billion, compared to an increase of 4.8 percent in 1998.

Deposits in Saudi riyals 1999 constituted about 79.9 percent of the total deposits, compared to 78.7 percent in 1998. Meanwhile, the foreign assents of the commercial banks increased by 6.4 percent to SR 91.5 billion. The capitals and reserves of the banks in 1999 increased by 5.2 percent to SR 42.3 billion, while the profits of commercial banks increased by 2.3 percent compared to the profits in 1998 to about SR 9.1 billion in 1999.

The report noted that some legislative and organizational statutes were issued in 1999, relating to the stock market. These statutes included allowing non-Saudis, whether resident in the Kingdom or not, to invest in investment funds through local shares managed by the Saudi commercial banks. In 1999, the local stock market witnessed significant activity due to the improvement of the economic situation. In this year the value of the circulated shares increased to SR56.6 billion compared to SR51.5 billion in 1998.

The Report pointed out that the general revenues of the state increased remarkably in 1999 compared to the previous year due to the improvement of the oil prices. The general revenues increased in the fiscal year 1419/1420 (1999) to SR147.5 billion, compared to SR141.6 billion in 1998. The expenditures in 1999 amounted to about 183.8 billion, compared to about SR190 billion in 1998. The total deficit in the general budget declined from SR48.4 in 1998 to about SR36.3 billion in 1999. The revenues for the fiscal year 1420-1421 were estimated at about SR157 billion, and the expenditures were estimated at about SR185 billion, and subsequently the deficit was estimated at about SR28 billion. This figure is less than the deficit in 1999 by about SR8.3 billion (22.8 percent).

With regard to the balance of payments and foreign trade, the initial statement indicated a significant improvement in the current account and the balance of payments in 1999. The deficit declined from SR 49.2 billion in 1998 to SR 6.4 billion in 1999, as a result of the improvement in oil exports whose value increased in 1999 by 30.9 percent compared to a decrease of 38.9 percent in the previous year. The total exports increased by 24.9 percent in 1999, following a decrease of 36.1 percent in 1998, while the imports declined by 6.6 percent in 1999, compared with an increase of 4.4 percent in 1998. As a result there was an increase in the surplus of the commercial balance of the Kingdom of Saudi Arabia of SR84.8 billion in 1999.

Source: SPA

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 June 28, 2001 15:42:40