RIYADH: Saudi Arabian Monetary Agency (SAMA) Gov. Hamad Al-Sayari said yesterday that his organization has adopted measures to curb inflation in the Kingdom, such as withdrawal of liquidity from the market, privatization of government projects and providing more employment opportunities.
Annual inflation in Saudi Arabia eased off from a peak of at least 30 years to 10.9 percent in August as gains in key components — rent and food prices — steadied. The Saudi cost of living index was 117.9 points on Aug. 31, compared to 106.3 points a year earlier, according to Central Department of Statistics data carried by the Saudi Press Agency.
Food and beverage prices gained an annual 15.8 percent in August, down from 16 percent a month earlier, while the rent index — which includes rents, fuel and water — added 18.5 percent, down from 19.8 percent in July.
“We anticipate a steadier growth in the Saudi economy. It’s going from strength to strength,” Al-Sayari said, pointing out that SAMA records reveal a strong growth in loans, money supply, additional deposits and no scarcity in liquidity.
“Saudi banks are strong enough to face any challenge in their sector,” he added.
While presenting SAMA’s 44th annual report, Al-Sayari said the Kingdom’s foreign investments are safe since they have been invested in low-risk sectors following its traditional economic policy.
He did not reveal the names of institutions where the Saudi government has made its investments.
According to the report, the Kingdom’s manufacturing activity, including oil refining, registered a growth of 6.5 percent. The public utilities activity grew by 4.7 percent. Building and construction grew by 7.1 percent.
The wholesale and retail trade was up by 6.2 percent. The transport, storage and telecommunications sectors increased by 10.6 percent. The finance, insurance, real estate and business services activity depicted a growth rate of 3.7 percent.
The community, social and personal services activity rose by 3.5 percent. The government services sector activity grew by 1.3 percent.
Broad money increased by 19.6 percent to SR789.8 billion in 2007 compared to an increase of 19.3 percent in the preceding year.
The banking sector witnessed many significant developments in 2007 in comparison with the preceding year. Total bank deposits rose by 21.4 percent to SR717.6 billion in 2007 against an increase of 20.8 percent in the preceding year. Bank deposits constituted 90.9 percent of aggregate money supply at the end of 2007 as compared to 89.5 percent at the end of the preceding year.
Total foreign assets of commercial banks increased by 13.7 percent to SR147.7 billion during 2007 compared to a rise of 42.0 percent in the preceding year. Foreign liabilities of commercial banks went up by 77.7 percent to SR105.2 billion in comparison with a decline of 9.0 percent in the preceding year. Net foreign assets of commercial banks registered a decline of 39.8 percent to SR42.5 billion compared to an increase of 167.5 percent in the preceding year. In pursuance of a royal decree providing to form a committees from the ministries of Finance, Transport and Economy and Planning to prepare a study for imposing tolls on users of expressways and for utilizing an investment system in building, managing and operating roads by the private sector.
For example, the Qassim-Madinah-Yanbu-Rabigh highway project was financed by the private sector.
With regard to the Cooperative Health Insurance Scheme applied in the middle of 2005 on non-Saudi workers in the private sector, about 3.3 million workers in the private sector have been insured.
This was accompanied with the rehabilitation of 24 hospitals belonging to the Ministry of Health to provide health insurance services on a commercial basis as in the private sector. Moreover, 16 specialized insurance companies were licensed. At a later stage, the application of this scheme will cover all citizens.
The Ministry of Health has prepared a project called Palsam to develop the health sector in the Kingdom.
The project has been submitted to the Royal Court for consideration. It aims at converting all hospitals of the Ministry of Health into institutional entities operating on a commercial basis with a legal status, and an autonomous financial liability with no direct finance by the State budget.
The General Investment Authority supervises a number of economic cities that aim at achieving balanced economic development throughout the regions of the Kingdom and creating job opportunities for citizens.