RIYADH, 30 April 2005 — Saudi Arabia’s M3 money supply grew five percent in the first quarter of this year to SR506.6 billion ($135.1 billion), central bank statistics showed, extending last year’s sharp rise fueled by oil export revenues.

M3 grew 3.46 percent in March after a slight fall of 0.47 percent in February and a 1.99 percent rise in January, figures on the Saudi Arabian Monetary Agency (SAMA) website showed.

Monthly growth has been skewed by surges in borrowing to fund share applications in recent public offerings of telecoms and banking stock, economists say.

Half of all Saudis applied for shares in Bank Albilad’s IPO which closed in early March.

But the first quarter figures suggest the trend of steep money supply growth is continuing into 2005.

Last year Saudi M3 money supply grew by 17.2 percent — the highest level since the last oil boom a quarter century ago — as revenues flowed into the world’s biggest crude exporter.

High levels of liquidity in the Kingdom have helped drive the Saudi stock index higher for a third successive year.

Saudi Arabia has increased production in an effort to bring world oil prices below $50 a barrel, and could pump 10 million barrels a day next month for the first time since 1980, industry sources say, reaping even higher state revenues.

SAMA’s first quarter balance sheet also showed the central bank’s foreign assets grew 10.7 percent in the first three months of the year to SR363.4 billion.

SAMA investment in foreign securities rose 18.0 percent to SR232.8 billion while deposits with banks abroad were barely changed since December at SR48.7 billion and foreign currencies convertible to gold eased slightly to 81.8 billion.

SAMA’s foreign securities investment has now doubled in the last six months.

The central bank gives no details of those investments though economists believe much of the money has been put into US treasury bills.

The SAMA figures also showed that bank lending to the private sector continued to grow sharply in the first quarter, rising 8.22 percent to SR339.7 billion.

It has grown 40.8 percent in the year to March.

But the ratio of the banks’ private sector loans-to-deposits grew more modestly in the three months to March to 75.86 percent from 74.34 percent.

SAMA says it wants banks to watch the ratio carefully but says they are well covered for now.