JEDDAH — Three hot issues — revaluation of Saudi riyal against the US dollar, rising inflation and a GCC common currency — will be the focus of today’s discussion between the 150-member Shoura Council and Finance Minister Dr. Ibrahim Al-Assaf. Dr. Osama Abu Gharara, deputy chairman of the Financial Committee at the Shoura Council, said the discussions would also deal with the Kingdom’s financial and monetary policies and its efforts to contain inflation.
“So far we have not seen any solution to control inflation,” Gharara told Al-Eqtisadiah business daily, a sister publication of Arab News. Inflation in the Kingdom surged to a record high of 6.5 percent last December.
“We’ll also discuss the possibility of revaluing the riyal against the dollar in tune with its devaluation against other international currencies,” the Shoura member said. He emphasized the need for reviewing the riyal’s exchange rate with the falling American dollar.
Other topics to be discussed with Al-Assaf will include the need for continuing subsidies for essential commodities as being the best solution to control inflation.
“We’ll also explore the possibility of the Finance Ministry cooperating with traders to import products from countries that are less affected by inflation,” he said. Inflation is partly driven by a rise in global commodity prices and a weak American currency.
The Shoura met with two senior ministers — Culture and Information Minister Iyad Madani and Labor Minister Dr. Ghazi Al-Gosaibi — earlier this month in order to discuss important issues facing society.
Hamad Al-Sayari, governor of Saudi Arabian Monetary Agency (SAMA), the Kingdom’s central bank, will also attend Al-Assaf’s talks with the Shoura which advises the government on policy matters.
Last month the Council of Ministers approved a 17-point program to offset the impact of price rises on the country’s 25 million people. It included a five percent inflation allowance for government employees and 10 percent increase in social insurance allocations for three years.
Like most of its neighbors in the world’s biggest oil exporting region, Saudi Arabia’s dollar peg means it has been forced to track US monetary policy at a time when the Federal Reserve is cutting interest rates to help ward off recession.
Inflation has overtaken official borrowing costs in the largest Arab economy, where the central bank raised bank reserve requirements twice in two months in order to force lenders to keep more money in their vaults in a bid to slow down credit growth.
The Cabinet also decided to revise subsidies for essential commodities every three years, and activate the law for promoting fair competition as well as establishing a Consumer Protection Association and preventing monopolies.
The Cabinet measures also addressed the issue of increasing house rents by deciding to establish a General Housing Authority next year. The move follows increases in house rents by 30 to 50 percent in some areas.
Other major decisions to control prices have been: a 50 percent cut in port charges on imports and a 50 percent reduction in charges of some government services. Shops were urged to place lists of product prices in a prominent place.
“The state will bear 50 percent of charges relating to passports, travel, vehicle licenses, transfer of vehicle ownership, and for the renewal of residential permits (iqama) of domestic workers for three years,” the Cabinet said explaining the program.
The Cabinet also instructed relevant ministries and agencies — such as the Ministry of Commerce and Industry, the Finance Ministry and the Economy and Planning Ministry — to conduct weekly and monthly surveys to monitor prices in the market. “The government will continue to review prices of medicines and speed up studies related to health insurance for Saudis,” the Cabinet said. The Kingdom will also facilitate the recruitment of skilled workers without affecting Saudization, it added.
