The Saudi Arabian Monetary Authority (SAMA) has issued its 56th Annual Report. The report reviews key economic and financial developments of 2019 in the Kingdom of Saudi Arabia. It covers monetary and banking developments and highlights the developments of balance of payments and the latest developments of the external sector, public finance, and oil and non-oil sectors, including activities of insurance, finance and capital market. In addition, it provides time series data for public finance and oil statistics, monetary and banking statistics, and real sector statistics.
The report indicates that the Saudi economy achieved positive growth in most sectors during 2019. The GDP at constant prices grew by 0.3 percent, driven by a 3.3 percent growth of the non-oil sector. This positive development came despite a 3.6 percent decline of the oil sector. The private sector also grew by 3.8 percent during 2019, compared to a growth of 1.9 percent in 2018. However, the average general consumer price index decreased by 2.1 percent in 2019, compared to a rise of 2.5 percent in the preceding year. As regards the external sector, estimates of Saudi Arabia's balance of payments indicate a surplus of SAR 186.9 billion in the current account in 2019, constituting 6.3 percent of GDP. In respect of public finance, the actual government revenues increased by 2.3 percent in 2019. The state budget deficit decreased from SAR 173.9 billion (5.9 percent of GDP) in 2018 to SAR 132.6 billion (4.5 percent of GDP) in 2019.
Moreover, the report notes that SAMA has continued its approach in managing the monetary policy to achieve exchange rate stability and maintain the soundness and stability of the financial system to support economic growth. In addition, broad money (M3) rose by 7.1 percent to SAR 1,985 billion in 2019. The banking sector also showed good performance in 2019. Total assets of commercial banks increased by 9.7 percent to SAR 2,631 billion; bank deposits rose by 7.3 percent to SAR 1,796 billion.
Furthermore, the report reviews SAMA's efforts in managing the foreign exchange reserves in accordance with the international standards and guidelines on foreign exchange reserve management. Investment is carried out through strong diversified investment portfolios that are managed dynamically in order to optimize the distribution of assets and benefit from investment opportunities. Therefore, SAMA is keen on applying international best practices and standards, in addition to using the latest systems in risk management and investment performance measurement. This approach helped strengthening SAMA's balance sheet. SAMA continues to perform its role in supervising and ensuring the soundness of the banking system. It works on ensuring effective supervision of the financial sector in order to enhance confidence and achieve the highest levels of efficiency. Consequently, the capital adequacy ratio (CAR) based on Basel Standard stood at 19.4 percent at the end of 2019. In addition, the liquidity coverage ratio (LCR) reached 198 percent, and net stable funding ratio (NSFR) was 130 percent in 2019. These indicators reflect the resilience and sufficient liquidity of the Saudi banking system.
The report also refers to SAMA's efforts in developing, managing and supervising new payments infrastructures as per international best practices in this area. In 2019, the number of POS terminals went up by 24.7 percent; sales transactions executed through POS terminals rose by 56.5 percent. The value of these transactions also increased by 22.8 percent to SAR 285.3 billion in 2019.
In addition, the report highlights SAMA's endeavors to achieve the tasks entrusted to it in line with the requirements of the Saudi economy to face global challenges and achieve Saudi Arabia's Vision 2030. These tasks include enhancing the financial inclusion, developing the financing environment for SMEs, promoting the role of Islamic banking, and supporting the real estate financing, while ensuring effective supervision to maintain the stability of the financial sector. Moreover, the report discusses SAMA's efforts, in partnership with the Ministry of Finance and the Capital Market Authority, in implementing the initiatives of the Financial Sector Development Program (FSDP). The program aims to build an advanced and effective financial sector to support the growth of the national economy and stimulate savings, financing, and investment through deepening the development of the financial sector institutions.
In this regard, monetary and banking indicators continue to achieve good performance during 2020 despite the Covid-19 pandemic. Money supply recorded a y/y increase of 9.0 percent to SAR 2,052 billion in June, banking deposits grew by 9.0 percent to SAR 1,843 billion, and bank credit extended to the private sector went up by 13.2 percent to SAR 1,610 billion. As part of its role in activating the monetary policy and enhancing the financial stability, SAMA has contributed to reducing the impacts of the Covid-19 pandemic on the Saudi economy by introducing a number of initiatives. The most important initiatives were launching the SAR 50 billion Private Sector Finance Support Program in March this year and injecting SAR 50 billion into the banking sector in June 2020. Such programs were introduced as part of SAMA's efforts to support economic growth and enhance banking sector liquidity and ability to continue its role in providing credit facilities for the private sector.
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