Saudi fi­nan­cial po­si­tion re­mains strong: Min­is­ter As­saf ad­mits pres­sure on bank liq­uid­ity

Kuwait Times - - BUSINESS -

Saudi Ara­bia’s fi­nan­cial po­si­tion re­mains strong de­spite sink­ing oil prices, al­though there is “some pres­sure” on bank liq­uid­ity, the fi­nance min­is­ter has said. The king­dom projects a bud­get deficit of $87 bil­lion this year as a re­sult of the fall in oil rev­enues, which still ac­count for most of its in­come.

Among mea­sures to cover the fis­cal gap, Riyadh has drawn on its for­eign re­serves, is­sued do­mes­tic bonds and last week raised $17.5 bil­lion in its first in­ter­na­tional bond of­fer­ing. “We have been able to main­tain a good po­si­tion in pub­lic fi­nances,” Ibrahim Al-As­saf told a sem­i­nar, the of­fi­cial Saudi Press Agency re­ported late on Tues­day.

“We have been able to main­tain the sta­bil­ity of gov­ern­ment re­serves as they are still high. The level of debt re­mains low.” The king­dom’s banks still have strong bal­ance sheets and rel­a­tively high lev­els of cap­i­tal ad­e­quacy and liq­uid­ity ra­tios, “de­spite some pres­sure on liq­uid­ity at the sys­tem level in gen­eral,” he said. A tight­en­ing of bank liq­uid­ity after the is­suance of do­mes­tic bonds was the main rea­son Saudi de­cided to bor­row abroad, an econ­o­mist has said. Saudi banks’ loan-to-de­posit ra­tio rose for the fifth con­sec­u­tive month in Au­gust, reach­ing 90.8 per­cent, be­cause of faster growth in credit rel­a­tive to de­posits, Riyadh’s Jadwa In­vest­ment said in a re­port this month.

Bor­row­ing abroad also re­duces the drain on the king­dom’s for­eign re­serves. Of­fi­cial fig­ures show those re­serves de­clined to $562 bil­lion in Au­gust from $732 bil­lion at the end of 2014.

As­saf said of­fi­cials “con­tinue to pe­ri­od­i­cally re­view our poli­cies re­lat­ing to fi­nan­cial sta­bil­ity”.

Saudi Ara­bia has taken a series of aus­ter­ity mea­sures, in­clud­ing sub­sidy cuts and re­duc­tions in gov­ern­ment salaries. Ear­lier this year, it an­nounced a wide-rang­ing plan to di­ver­sify its econ­omy.

As­saf and his Gulf coun­ter­parts were to meet in Riyadh later yes­ter­day with In­ter­na­tional Mon­e­tary Fund chief Chris­tine La­garde. On Sun­day, Saudi Oil Min­is­ter Khaled Al-Falih said the cur­rent cy­cle of fall­ing crude prices is close to an end as mar­ket fun­da­men­tals im­prove. Oil prices are hov­er­ing around $50 per bar­rel after hit­ting a 10-year low of less than $30 in Jan­uary, down from a peak of more than $100 in mid-2014. —AFP

REN­TON: This file photo taken on De­cem­ber 8, 2015 shows Boe­ings first 737 MAX named the “Spirit of Ren­ton” parked on the tar­mac at the Boe­ing fac­tory in Ren­ton, Wash­ing­ton. Boe­ing re­ported higher third-quar­ter earn­ings and lifted its full-year fore­cast Oc­to­ber 26, 2016 fol­low­ing a solid per­for­mance in its com­mer­cial air­plane de­liv­er­ies. —AFP

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