1996 News Story

Finance minister reports positive performance of economy

Custodian of the Two Holy Mosques King Fahd Bin Abdul Aziz has sent a cable of appreciation to Minister of Finance and National Economy Dr. Ibrahim Al-Assaf, praising the accomplishment realized by the Saudi Arabian Agricultural Bank (SAAB) in terms of both the lending facilities offered to farmers and investors and the various agricultural and animal husbandry projects in the Kingdom.   SAAB’s 31st annual report shows a total of 3,822 loans worth SR 670.6 million (US $ 178.8 million) for the year 1414-15 (1994).

Dr. Al-Assaf today issued a statement on the performance of the Saudi economy as a whole, pointing out that the prudent economic policies pursued by the Saudi government under the guidance of the Custodian of the Two Holy Mosques and Crown Prince Abdullah over recent years have focused on rationalizing government expenditure, enhancing revenue, and encouraging the private sector.   These policies have borne fruit in the clear indications of the positive performance of the economy, which is overcoming the huge costs of the Gulf Wars and the impact of oil market stagnation.Initial indications show that the gross national product (GNP) is projected to grow by 6.2 percent in 1996 as compared with a growth rate of 4.2 percent in 1995.   There are also very clear signals of greater private sector productivity, increased industrial investment, continued strong performance in banking, and a higher level of returns on investment.  This has been accomplished in an economic environment of price stability, free enterprise, an open economy, and an exchange system free of any restrictions.  The Minister emphasized that the government of Saudi Arabia will continue to pursue these policies of fiscal prudence aimed at an eventual balancing of the budget.

Concerning the current position of the balance of payments, Dr. Al-Assaf stated:  “This is another manifestation of the good performance of the Saudi economy.  After many years of sizable deficits in the current balance, these have started to phase out as a direct result of the appropriate policies.”  Preliminary figures show the deficit in the current account has declined in the first half of 1996 to about U.S. $ 0.5 billion, compared to U.S. $ 17.3 billion in 1993, U.S. $ 10.5 billion in 1994, and U.S. $ 8.1 billion in 1995, an improvement attributable to prudent fiscal and monetary policies, the higher value of petroleum products, and the continued growth of non-oil exports.  The latter increased in the first half of this year by 10 percent compared with the same period in 1995, in spite of an increase in imports.