1996 Public Statement

SAMA's 32nd annual report

The following is the complete text of the 32nd annual report of the Saudi Arabian Monetary Agency (SAMA) released on November 18, 1996.

Gross Domestic Product (GDP):
The performance of the Saudi economy recorded an improvement during the fiscal year of 1995 with a nominal GDP registering a growth rate of 4.3 percent as compared with 1.4 percent in 1994, an improvement largely attributable to a recovery in oil prices following substantial declines in the preceding two years.

Monetary Expansion:
The rate of monetary expansion during 1995 remained the same as in 1994, with broad money increasing in both these years by 2.9 percent. Among the components of broad money, currency outside banks declined by SR 1.9 billion (U.S. $ 0.5 billion), or 4.2 percent, while total bank deposits increased by SR 8.7 billion (U.S. $ 2.3 billion), or about 4.6 percent, being nearly double the 2.4 increase in 1994, when the figure was SR 4.3 billion (U.S. $ 1.2 billion).

Bank claims on the private sector:
Claims by commercial banks during 1995 on the domestic private sector in loans and advances, overdrafts, bills discounted and investments in private securities, increased by SR 7.9 billion (U.S. $ 2.1 billion), or 7.0 percent, to SR 121.6 billion (U.S. $ 32.4 billion) constituting 61.9 percent of total bank deposits as compared with 60.6 percent at the end of 1994.

Bank foreign assets:
The foreign assets of commercial banks, which had fallen by SR 13.9 billion (U.S. $ 3.7 billion) in 1994, declined further in 1995 by SR 0.4 billion (U.S. $ 0.1 billion) to SR 96.8 billion (U.S. $ 25.8 billion), with a ratio to the total bank assets standing at 30.1 percent at the end of 1995 as compared with 31.1 percent at the end of 1994.

Bank capital and reserves:
Commercial banks continued to expand their equity base, with capital and reserves increasing in 1995 by SR 1.4 billion (U.S. $ 0.4 billion) to SR 34.7 billion (U.S. $ 9.3 billion), continuing a rise of SR 3.1 billion in 1994 (U.S. $ 0.8 billion), constituting 17.7 percent of total bank deposits and 10.8 percent of total bank assets.

Branches and technology:
The number of bank branches stood at 1,192 at the end of December 1995. Of these, 503 were in the northern and central provinces, 468 in the western and southern provinces, and 221 in the Eastern Province. Banks continued to make progress in the use of advanced technology with the objective of improving their services to customers, such as electronic cash receipts and payments, and dealings in the stock market and investment funds.

Balance of payments:
The performance of the balance of payments recorded a large improvement for the fiscal year 1995, reflecting a rise in trade surplus and a decrease in net payments on services and transfers accounts.   The trade surplus, estimated for 1995 at SR 85.3 billion (U.S. $ 22.8 billion), was higher by 7.6 percent compared to SR 79.3 billion (U.S. $ 21.2 billion) for 1994. This was due to the fact that the increase in exports was greater than that in imports. While exports, excluding bunker fuel, rose by SR 15.6 billion (U.S. $ 4.2 billion) to SR 175.2 billion (U.S. $ 46.7 billion) or about 10 percent, imports rose by SR 10.0 billion to SR 89.9 billion (U.S. $ 24 billion), or 12.5 percent. The increase in exports was attributable to both oil and non-oil exports, with the latter registering a marked increase in its growth rate. On the services and transfers account, net payments in 1995 declined by 6.5 percent to SR 103.1 billion (U.S. $ 27.5 billion).

Cost of living index:
Prices came under pressure in 1995, with the general cost of living index increasing by 5.1 percent as compared with the rise of 0.6 percent in 1994. This increase was, however, of a one-time nature, reflecting the impact of adjustment in various government charges and fees such as prices of electricity and water as well as domestic air fares, introduced in the 1995 budget to augment non-oil revenues and reduce wasteful consumption. It is worth noting that compared to the general index for January 1995, which reflected the immediate impact of the budgetary measures, the average index for the eleven months of this year showed a rise of only 0.3 percent.

The State budget:
The budget for the fiscal year 1996 envisaged revenue at SR 131.5 billion (U.S. $ 35.1 billion), or 2.6 percent lower than the budget estimate for 1995, which was SR 150 (U.S. $ 40 billion). After defense and security, and public administration, the largest allocations were made for human resource development at SR 27.5 billion (U.S. $ 7.3 billion) and health services and social development, at SR 10.1 billion (U.S. $ 2.7 billion).