RIYADH, 8 February 2003 — The Saudi Arabian Monetary Agency (SAMA) has said that it does not expect any flight of funds from banks as a result of a possible US-led war on Iraq.
Mohammed Al-Jasir, deputy governor of SAMA, said his organization is well prepared to meet any emergency need for liquid funds in case of a war.
“We have set out an emergency plan to meet banking sector requirements,” he added.
SAMA would not intervene to provide loans to banks affected by a flight of funds except as a last resort, Jasir said.
“Saudi Arabia has adequate financial capabilities to face any emergency,” he added.
Jasir expects no repeat of the scare that affected depositors following Iraq’s occupation of Kuwait since the situation was different.
“We don’t expect the flight of funds that occurred in 1990 and 1991,” he said. “Our experience has provided us with the ability to give the public confidence in the Saudi banking system.”
“Depositors have shown tremendous confidence in the Saudi banking system, and this can be seen clearly from the growth in assets and liquidity,” he pointed out.
Banker Saud Al-Saleh also highlighted the strength of the Saudi banking system, adding that it would encourage depositors and investors to keep their money in the country if war breaks out.
Economist Dr. Yaseen Al-Jefry said the local market had proved its capability to accommodate major events and absorb more funds returning from abroad.
According to Matsher Al-Murshid, another banker, funds are coming into the Kingdom rather than going abroad as a result of pressure on Arabs in Western countries. Deposits in Saudi commercial banks grew by 16.8 percent to SR328.3 billion by the end of last year from SR281.1 billion in the previous year.
