|
Speech by H.E. the Governor to the
Custodian of the Two
Holy Mosques on the
Occasion of presenting
the thirty-ninth annual
report of the Saudi
Arabian Monetary Agency.
Custodian of the Two Holy Mosques,
It gives me great pleasure to present to
Your Majesty the thirty-ninth annual report of the Saudi Arabian
Monetary Agency. The report reviews most prominent economic developments
in the Kingdom for fiscal year 1422/23H (2002) and latest developments
for fiscal year 1423/24H (2003).
During 2002 and the current year so far
the Saudi economy has made considerable progress, despite the adverse
circumstances prevailing over the Arab world. During 2002, the growth
rate of the nominal GDP stood at 2.8 percent. This was mainly
attributable to the expansion of 4.0% in the private sector economic
activity. The oil sector also grew by 2.5 percent due to favorable crude
oil prices. What is more significant is the fact that the growth of the
economy has been achieved within a non-inflationary environment. The
general cost of living index dropped by 0.6 percent during the year. The
surplus in the balance of payments went up to Rls 44.5 billion from Rls
35.1 billion in the preceding year, while the deficit in the budget was
down from Rls. 27 billion to Rls 20.5 billion. These data reflect the
strength of the Saudi economy and its ability to overcome the negative
effects of the crisis witnessed by the region. It is expected that in
2003 the national economy would make greater progress than that made in
the previous year because of the stability of oil prices at favorable
levels for both producers and consumers, and the government’s continuing
process of introducing regulatory and structural reforms in the national
economy.
Custodian of the Two Holy Mosques,
It is my pleasure to congratulate Your
Majesty on the important decisions taken recently that will support and
enhance the growth of the Saudi economy. Among these decisions was the
issuance of royal order for restructuring of a number of ministries. The
Council of Ministers has also approved the Capital Market draft Law,
Insurance Law, Anti-Money Laundering Law and other laws. There is no
doubt that these decisions are complementary to institutional measures
already undertaken by the government, such as the establishment of
specialized councils and approval of a number of commissions and
regulations as well as privatization of some public economic activities.
These measures have effectively contributed to preparing the domestic
economy for meeting the challenges of the coming era.
Custodian of the Two Holy Mosques,
The stability of crude oil prices at
favorable levels for both producers and consumers, and the tangible
success in the efforts aimed at controlling public expenditures and
restoring balance in the state budget are achievements that augur well
for the Kingdom. These would help reduce public debt, enhance economic
growth rates and create adequate job opportunities for the Kingdom’s
citizens. This would require attaching further priority to the efforts
aimed at developing an appropriate mechanism for amortizing the public
debt and maintaining fiscal balance through rationalizing and scheduling
public expenditures, and increasing the volume and channels of non-oil
public revenues.
Custodian of the Two Holy Mosques,
The Kingdom has, through its development
plans, made great strides in diversifying the productive base of the
economy as a strategic choice for supporting sustained economic growth.
The Kingdom has also continued to work on various tracks for
improving the environment and performance of the national economy and
its public and private institutions, and for enhancing investment in
modern technology and national human resources. However, the accelerated
changes witnessed at the domestic and international economic fronts
would require continued work to enhance the participation of the private
sector in the development efforts.
Custodian of the Two Holy Mosques,
Over the preceding years, Your government
has exerted fruitful efforts in implementing the privatization program
of a number of public institutions. The success of this program would
certainly help reduce fiscal burden on the state budget, improve
utilizing available recourses and upgrade the quality of services.
Moreover, it would enhance the opportunities of domestic and foreign
private investment in important sectors such as telecommunications,
electricity, water, communications, transport and other vital sectors.
In this context, I would like to laud the successful experience of
floating part of the shares of Saudi Telecommunication Company for
public subscription. This would encourage undertaking a similar step in
the near future. It is hoped that the new Capital Market Law would
contribute to the enhancement of efforts exerted for the success of the
privatization program in the Kingdom.
Custodian of the Two Holy Mosques,
The Saudi society is characterized by its
high population growth rate, especially the youth group. As a result,
the annual number of the youth entering the labor market has increased
at rates higher than those of new job opportunities, creating thereby a
challenge to economic and social development. This issue has preoccupied
officials at the various sectors, at the top of which are the Labor
Force Council, education and training institutions and the chambers of
commerce and industry. Therefore, the development of education and
training curricula, to meet the labor market needs, has been accorded
special attention by Your judicious government. This would help prepare
the youth to undertake jobs required by the sectors of the modern
economy.
Custodian of the Two Holy Mosques,
Let me now review briefly the salient
monetary and banking developments included in the thirty-ninth annual
report of the Saudi Arabian Monetary Agency. During 2002 and the current
year so far, the Kingdom’s monetary policy continued to maintain the
stability of the national currency and domestic prices and ensure the
soundness and strength of the domestic banking system. This stability is
an essential prerequisite for achieving sustainable economic growth.
During the first three quarters of 2003, money supply went up by 4.1
percent and bank deposits increased by 4.8 percent. Commercial bank
claims on the government and private sectors rose by 10.8 percent.
Moreover, banks enhanced their capital base, concentrated on
high-return and low-risk assets, developed their banking services and
intensified their use of modern technology. This contributed to an
increase of 5.0 percent in their profits and a high Capital
Adequacy ratio of 18.7 percent compared with 8 percent prescribed by
Basel Committee. The domestic share market continued to perform well for
the fifth consecutive year, reflecting great optimism about the domestic
investment climate. The share price index rose in the first three
quarters of 2003 by 61.1 percent. Based on the strength of the Saudi
economy and its banking and financial sector, the international rating
agency of Standard and Poors has granted the Kingdom (A+) rating for
national currency debt and (A) for long-term foreign currency debt.
These are high ratings as compared with international and regional
ratings.
Custodian of the Two Holy Mosques,
In this context, it is my pleasure to
laud the enactment of “The Capital Market Law” which is considered a
significant qualitative leap in the history of the Saudi capital market.
The Law will contribute to restructuring the Kingdom’s capital market on
new and sound foundations that broaden its base, enhance confidence in
it, attract investments, and provide integrated regulatory reference to
the market that includes the most important principles, foundations and
provisions covering all the aspects of the market. The Saudi Arabian
Monetary Agency, in cooperation with commercial banks, has endeavored
over the last decade to prepare an adequate basis for the enhancement of
this Law by employing and training best national human resources and
introducing the latest international electronic systems.
Custodian of the Two Holy Mosques,
In conclusion, I would like to commend
the successful cooperation of government and private entities that
provided SAMA with necessary information for preparing this thirty-ninth
annual report. Also, I would like to call upon all government and
private entities for further transparency and disclosure of data and
information that would play a crucial role in helping officials at
government and private sectors to take proper economic and investment
decisions. This is actually in harmony with the Council of Ministers’
approval of periodic and regular publication of financial and economic
data due to their importance in supporting economic and social
development and developing the data base of the Kingdom.
May Allah bless you and guide Your
steps to greater success
SK495-03
|
