SHARJAH, 16 January 2005 — The International Monetary Fund (IMF) has given high marks to moves adopted by Saudi Arabia in the economic and capital market sectors and said the Kingdom’s real gross domestic income in the year 2004 was envisaged to increase by 17 percent, one of the highest in the world.
In an annual report, the IMF also welcomed the Kingdom’s affirmation that it remains committed to ensure oil market stability and its renewed pledge that it would continue to meet higher world oil demand by pumping more.
The IMF described the recent establishment of the Saudi Capital Market Authority under the new capital markets law as a move that would strengthen management and operations of the Kingdom’s stock market.
The acknowledgements were made in the annual IMF report about Saudi Arabia that was released this week.
The report on Saudi Arabia made the following points: Strong growth in oil revenue generated substantial fiscal and current account surpluses and resulted in a large reserve accumulation. The Kingdom’s fiscal position improved considerably on account of record-high oil revenues, with the overall balance switching from a deficit of 5.9 percent of GDP in 2002 to a surplus of 1.2 percent of GDP.
Gross domestic product grew by 7.2 percent in the year 2003 while inflation remained subdued.
Government debt declined by 15 percentage points to 82 percent of GDP and the external current account surplus more than doubled to about 14 percent of GDP.
The Saudi Arabian Monetary Agency’s net foreign assets increased to an equivalent of around 11 months of imports of goods and services.
The stock market remained buoyant. Interest rates continued a decline while the average riyal-US dollar interest rate differential remained stable.
The 2004 Financial System Stability Assessment (FSAP) concluded that the Saudi banking system is stable, profitable, and effectively supervised. Reflecting the depreciation of the US dollar against other major currencies, the Saudi riyal depreciated by about 20 percent in real effective terms during 2002 to August 2004, enhancing the competitiveness of non-oil exports.