JEDDAH, 12 October 2005 — The Council of Ministers yesterday instructed authorities to establish a secondary market for government bonds and demanded greater financial transparency from public departments.
The Cabinet, chaired by Custodian of the Two Holy Mosques King Abdullah, also called for strengthening the Saudi stock market and setting up a regulatory system for real estate mortgages.
Saudi bankers welcomed the move to establish a market for government bonds but said the Kingdom has issued no new bonds in the last four months.
“The fact they are endorsing a secondary market is great, but without supply it will be difficult,” the Reuters quoted one banker as saying.
Another banker said the Saudi Arabian Monetary Agency (SAMA) had already had talks with several banks about setting up a “primary dealership” involving three or four banks, which would buy bonds from SAMA and sell to other institutions.
Addressing the Cabinet meeting, King Abdullah said Saudi Arabia, which economists predict is set to beat last year’s budget surplus of SR107 billion ($28.5 billion), would continue to use part of the extra revenue to pay down public debt, SPA said.
The Kingdom has slashed debt as a proportion of GDP from 119 percent five years ago to under two-thirds last year. It is now estimated at nearly SR600 billion. Saudi Arabia is trying to open up and diversify its oil-dominated economy and give the private sector a greater role in driving growth.
In a series of economic decisions taken yesterday, the Cabinet also urged all government agencies to cooperate with the General Statistics Department by regularly providing it with their economic statements.
“The concerned authorities should ensure greater transparency while preparing the aforesaid statements,” Culture and Information Minister Iyad Madani said after the meeting.
King Abdullah highlighted the Kingdom’s economic achievements during 2004 as a result of sound economic policies and positive oil market developments. The Kingdom’s gross domestic product (GDP) grew by 5.3 percent last year.
Saudi Arabia has introduced a series of political and economic reforms in recent years as part of efforts to join the World Trade Organization (WTO) by the end of this year.
The Cabinet also authorized the minister of transport to hold talks with his Turkish counterpart to work out an agreement for cooperation in the field of shipping.
The meeting assigned the governor of the Saudi Arabian General Investment Authority (SAGIA) to sign an agreement with Switzerland for investment promotion and protection.
The Cabinet appointed Mohammed ibn Omar Al-Eisae as a member of the board of directors of the Supreme Commission for Tourism replacing Adel Fakeeh. It appointed Fahd ibn Mohammed Al-Jubeir assistant undersecretary for technical affairs at the Ministry of Municipal and Rural Affairs, and Mohammed ibn Abdul Rahman Al-Mutlaq minister plenipotentiary at the Foreign Ministry.
It also authorized the secretary-general of King Abdul Aziz Center to conduct talks with Iran to prepare a memorandum of understanding with the Center of Archives and Research Services at the Iranian Foreign Ministry.