King Fahd receives SAMA Annual Report

Riyadh, 27th November 2001--The Custodian of the Two Holy Mosques King Fahd bin Abdul Aziz received last night at his office the 37th annual report of the Saudi Arabian Monetary Agency (SAMA) during a reception of Minister of Finance and National Economy Dr. Ibrahim al-Assaf and SAMA 's Governor Hamad al-Sayyari.

During the audience, the SAMA Governor handed the annual report to King Fahd. He also presented SAMA's gold medal to King Fahd on the occasion the 20th anniversary of King Fahd’s accession to the throne.

The Governor delivered a speech before the King which is as follows:

“It is a great honor for me to present to your majesty the 37th annual report of the Saudi Arabian Monetary Agency. The report reviews Saudi economic developments during the fiscal year 1420/21AH (2000) and latest economic developments during the fiscal year 1421/22 AH (2001).

First of all, I would like to congratulate your Majesty on the Kingdom's remarkable achievement in the management of the oil policy as well as the handling of negotiations with international companies on exploration activities for natural gas in the Kingdom and development of its production and exploitation. The current stage of the gas initiative has resulted in specifying three pivotal projects to be carried out jointly by eight world companies with an initial investment estimated at $25 billion.

The projects will have deep and far-reaching effects on the development and progress of the Saudi economy. They are also expected to contribute to generating clean energy for electricity, water desalination and the existing industry and the establishment of new projects in the areas of energy production, water desalination and petrochemicals, which depend on exploiting natural gas. While reducing domestic consumption of crude oil, and increasing the volume of oil exports, the new investments will strengthen the structure of the Saudi economy and provide more job opportunities for qualified Saudi citizens.

I would like to pay tribute to the Council of Ministers' decision issued on the 5th of Rabi'1, providing for the publication of economic and financial data, including those on national product, prices, government revenue and expenditure, external account position, public debt and other data related to foreign investment flows. This measure will actively contribute to increasing the transparency of the Saudi , an issue of vital importance to domestic and foreign businessmen and investors, economy international financial institutions as well as for the W.T.O. Negotiations.

Custodian of the Two Holy Mosques, under your able leadership, the Kingdom has acquired a significant position among the comity of nations. Its political stability and sound economic practices have offered to it opportunities for growth, development and the accommodation of modern technologies. The Kingdom is an active member of a number of international institutions and organizations, such as the International Monetary Fund, the World Bank Group and Bank for International Settlements. Its economy is classified as one of the fast-growing emergent economies affecting the global economy. That is why the Kingdom has been chosen to be among the Group of Twenty, which was established in 1999. This group includes important emerging market countries in addition to major industrial countries, such as the U.S.A., Japan, a number of countries of the European Union, and international financial organizations. It aims at discussing and exchanging views on issues related to international economic and financial stability.

Hence, raising the degree of disclosure and transparency of financial and economic data on the Kingdom and finalizing legislation and reforms adopted by the Supreme Economic Council will boost the Kingdom's status regionally and internationally and enhance its capability to attract capital and investment needed to achieve further growth and advancement.

Custodian of the Two Holy Mosques, let me now review briefly the salient economic developments. Oil prices rose sharply during 2000 in continuation of the trend set in the second quarter of 1999. Prices have come under pressures during the current fiscal year: they have fallen sharply, exceeding the minimum level of the pricing mechanism, due to the present unfavorable circumstances witnessed by the world economy.

At the domestic level, gross domestic product (GDP) at constant prices recorded a high growth of 4.5 per cent during the fiscal year 1420/21 (2000) due to growth rates of 8.5 per cent and 2.6 per cent registered by the oil and non-oil sectors respectively. Among important sectors mining and quarrying, manufacturing, construction, and wholesale and retail trade sectors recorded growth rates of 9.6 per cent, 3.2 per cent, 3.5 per cent and 3.0 per cent respectively. The finance and business services sector also registered a growth rate of 2.5 per cent. It is hoped that positive growth rates would continue to be recorded during the current fiscal year 1421/22 AH.

The balance of payments recorded a surplus in 2000 which considerably exceeded that recorded in the preceding year, owing to a substantial improvement in the trade balance. It is expected that the surplus in the balance of payments would continue during the current fiscal year. The Riyal exchange rate, wholesale and retail price indices and consumer prices remained remarkably stable because of continued balance between domestic supply and demand.

As for the monetary and banking sector, broad money (m3) expanded by 4.5 per cent during 2000. Bank deposits increased by 7.1 per cent. Loans and advances to the private sector went up by 6.2 percent. Bank's capital and reserves rose by 2.8 percent, reinforcing their financial position. The ratio of capital adequacy reached 21 per cent as compared with the minimum of 8.0 per cent prescribed by Basel Committee. In the current year, bank deposits, loans and advances and profits have maintained their up-trend, reflecting the continuous strength and efficiency of the banking system.

In your speech delivered on the 12th Rabi 1 of this year, inaugurating the third session of the Consultative (Shoura) Council, you pointed to the very important issues related to the domestic economic affairs. This emphasizes your commitment to face the challenges of encouraging development, the most important of which is the considerable annual increase in the number of graduates seeking employment. You hit the nail on the head when you stated that the citizens, before anyone else, are responsible for building the country and maintaining the development projects achieved so far and keeping them intact. Developments in the labor market require that educational qualifications should be associated with on-the-job training: the Government and the private sector should make concerted efforts to build the national economy, increase investment and employment opportunities, privatize some sectors with the aim of increasing the private sector's activity and providing more opportunities for citizens to participate in productive assets.

Custodian of the Two Holy Mosques, the Kingdom is celebrating this year the twentieth anniversary of your assumption of the reins of Government : the era which has truly witnessed the most magnificent achievements throughout the country's history. The most salient achievements in the field of economic and social development have been the large expansion in education and training programs and health services; expansion and development of the infrastructure including the construction of roads, bridges, airports and sea ports; electricity and water desalination projects; the development of industrial cities in Jubail and Yanbu' and other places in the Kingdom, which have accommodated huge industrial enterprises in the field of petrochemicals and related intermediate and manufacturing industries. The Government has also finalized the acquisition of Aramco and transformed it into the largest oil company in the world under the name 'Saudi Aramco’. Under your direct supervision and guidance, the Two Holy Mosques have witnessed the largest expansion throughout Islamic history. This expansion has contributed to the accommodation of millions of pilgrims, performers of Umrah and visitors from the countries of the Islamic world.

Among your greatest achievements has been the issue of regulations and legislations which aim at maintaining the country's political and economic system and promoting the growth of the society in such a way as to ensure the well-being of Saudi citizens and expand their participation in the country's progress and advancement. The most prominent achievements in this regard have been the issue of the Governance Charter, the Consultation (Shoura) Council regulation, the Administrative Region regulation, updating other rules and regulations related to commerce, finance and investment, the formation of Councils of high authority, such as the Supreme Council for Petroleum and Mineral Affairs, the Supreme Economic Council, the Saudi Arabian General Investment Authority, the Supreme Tourism Authority and others. They all aim at accelerating the implementation of decisions and policies related to fostering the country's development and advancements in all fields. May God guide your steps to greater success.”