JEDDAH, 4 March 2004 — Saudi Arabia’s monetary reserves, minus gold, have returned to levels last seen in the 1980s, reaching the equivalent of $24.46 billion last November, according to the Saudi Arabian Monetary Agency (SAMA). US dollars accounted for the lion’s share with $19.62 billion, SAMA reported.
In 1992, the total reserves, minus gold, had plunged to $2.9 billion.
Dr. Said Al-Shaikh, chief economist at the National Commercial Bank, said that the growing foreign reserves indicated that the economy was very sound and would give a very positive signal to foreign investors.
“As Saudi Arabia is liberalizing and trying to attract foreign investment, the soaring reserves will help get more foreign investment into the country,” he said.
“The rising reserves will also help the Saudi riyal peg and protect the riyal from any speculation,” he added. “Last year there was a fear that the Kingdom’s monetary situation would go out of control due to the war in Iraq and other international developments, but this was proved wrong and the rising reserves make it clear that the Kingdom’s economy is sound and gearing up for further growth.”
Generally, reserves are maintained at four to eight months worth of imports, but Dr. Al-Shaikh said that current reserves exceeded that benchmark.
Brad Bourland, chief economist at Samba Financial Group told Arab News that due to a substantial increase in oil prices, Saudi foreign assets grew $17 billion in 2003, giving the government the opportunity to pay back some debt and accumulate more foreign assets. “I think the most positive thing the government is doing is building assets abroad which will boost confidence in the economy,” he said.
According to SAMA’s monthly statistical bulletin for December 2003, the reserves began at $21.23 billion in January 2003, falling slightly to $21.18 billion in February before climbing to $23.11 billion by April. They dropped steadily in the following months and bottomed out at $20.64 billion in August. The following month they bounced back and continued to increase, hitting $24.46 billion in November.
Dollar reserves also increased in 2003. From $17.31 billion in January, the reserves increased to $18.94 in April, but fell again over summer. The figures for August were down to $16.19 billion. From this, they gradually rose again and stood at $19.63 billion in November.
Gold reserves also increased from $219 million in 2002 to $233 million by the end of November 2003.
