Custodian of the Two Holy Mosques,
It gives me great pleasure to present the 54th Annual Report of the Saudi Arabian Monetary Authority. The report reviews the economic and financial developments in the Kingdom of Saudi Arabia during fiscal year 2017.
Custodian of the Two Holy Mosques,
In 2017, the Saudi economy witnessed a number of positive indicators despite the contraction of GDP by about 0.86 percent. This was attributable to the decline of the oil sector GDP by 3.09 percent. On the other hand, the non-oil sector GDP recorded a positive growth of 1.05 percent. The average general consumer price index decreased by 0.9 percent in 2017, compared to a rise of 2.0 percent in 2016. Other positive indicators included the noticeable improvement of the current account of Saudi Arabia's balance of payments. The current account registered a surplus of SAR 57.1 billion in 2017, against a deficit of SAR 89.4 billion in 2016. As for the stock market, the Saudi Stock Exchange (TADAWUL) has recently joined several global stock indices, such as MSCI Index, S&P Dow Jones Indices (S&P DJI), and FTSE Index for emerging markets. This move is expected to bolster the efficiency of the capital market and foster an attractive investment climate for local and foreign investors.
We expect, Allah willing, that the Saudi economy would continue to adjust to economic reforms adopted over the last two years and achieve good economic growth rates that will contribute to promoting the objectives of Saudi Vision 2030.
Custodian of the Two Holy Mosques,
Economic policies in Saudi Arabia have recently witnessed many developments aimed mainly at strengthening the economic structure and heading toward a diversified and sustainable economy. At the beginning of 2018, a plan was approved to implement the Financial Sector Development Program in order to develop a diversified and effective financial sector to support the development of the national economy, stimulate savings, finance and investment, and increase the effectiveness and ability of the financial sector to address future challenges. In addition to its functions, SAMA is responsible for enhancing the growth of the domestic financial sector. This is particularly important in achieving the developmental and economic objectives stemming from the Saudi Vision 2030 and its programs.
Custodian of the Two Holy Mosques,
There were several positive indicators that contributed to the development of the financial sector in 2017. Moreover, the monetary policy adopted by SAMA has continued to foster the stability of exchange rate and provision of necessary liquidity to support economic activities. This was achieved through broad money supply (M3) that rose by 0.2 percent.
Furthermore, the banking sector achieved outstanding performance indicators. Total assets of commercial banks grew by 2.2 percent to over SAR 2 trillion. Bank capital and reserves went up by 6.3 percent to SAR 318 billion. The average capital adequacy ratio (Basel Standard) stood at 20.4 percent, which would support the resilience of financial sector and its capability to withstand financial crises. These indicators encouraged commercial banks to continue playing a vital role in economic development in Saudi Arabia.
As for SAMA's foreign assets, SAMA has continued its approach by following prudent investment policies, utilizing the latest technologies, and adopting international best practices in asset, risk and performance management. Consequently, return on assets grew significantly in 2017, promoting SAMA's financial position.
Custodian of the Two Holy Mosques,
SAMA's Annual Report reviews a number of positive indicators for 2017, which prove the ability of Saudi economy to adapt to changes and confirm the robustness of its financial and banking sectors in particular. Banks have continued to provide modern and comprehensive banking and financial services across Saudi Arabia. SAMA continuously seeks to develop the infrastructure of payment systems in Saudi Arabia. The goal of such efforts is to enable domestic banks to provide comprehensive payment instruments for individuals as well as commercial and public sectors.
A number of significant projects were launched during this year. Such projects were aimed at enhancing the e-payment infrastructure in Saudi Arabia and stimulating the engagement of the banking system.
A number of initiatives were released. They included supporting electronic payment services and developing the technical and operational environment, with a view to encouraging driving toward a cashless society. One of the promising initiatives inaugurated was the FinTech Saudi initiative. This initiative is intended to support the future of electronic payment sector and financial technology in Saudi Arabia.
Custodian of the Two Holy Mosques,
Under your wise leadership and the vigilant follow-up by His Royal Highness the Crown Prince, the Kingdom of Saudi Arabia is currently experiencing one of the most important phases of economic transformation in its history. This phase will constitute a new and solid base for transforming the Saudi economy to be more diversified and achieve sustainable economic growth. In this regard, SAMA will continue its approach to support economic reform process in collaboration with all other government entities.
May Allah Bless and Guide you.
Thank you.
