In his briefing to Custodian of the Two Holy Mosques King Fahd bin Abdulaziz, to whom he presented the 36th Annual Report of the Saudi Arabian Monetary Agency on November 21, 2000, SAMA Governor Hamad Al-Sayari made the following comments.
The Kingdom's Gross Domestic Product (GDP) at current prices grew by 8.8 percent during FY 1999. The oil and non-oil sectors recorded positive growth rates of 23.7 percent and 2.5 percent respectively. The private sector grew by 2.4 percent while the government sector advanced by 2.6 percent.
The average general cost of living index for all cities registered a drop of 1.3 percent in 1999 as against a decline of 0.2 percent in the preceding year. According to the latest available data, the average cost of living index dropped further by 0.5 percent during the first half of 2000.
Monetary growth accelerated during 1999, with broadly defined money supply increasing by 6.8 percent as compared with a rise of 3.7 percent in 1998. The riyal exchange rate, remaining stable against the U.S. dollar at 3.75, witnessed some fluctuations but within tolerable limits against other major currencies. Exchange rates remained stable during the first half of 2000.
The report said actual government revenue rose by 4.2 percent to SR 147.5 billion [U.S. $ 39.33 billion] during 1999, while government expenditure declined by 3.3 percent to 183.8 billion [U.S. $ 49.01 billion]. As a result, the deficit in the state budget dropped from SR 48.4 billion [U.S. $ 12.91 billion], or 10.1 percent of the GDP in 1998, to SR 36.3 billion [U.S. $ 9.68 billion], or 7.0 percent of the GDP, in 1999.
The Kingdom's balance of payments recorded substantial improvement during 1999. The latest data indicate a surplus of SR 1.5 billion [U.S. $ 0.4 billion] in the current account as compared with a deficit of SR 49.2 billion [U.S. $ 13.12 billion] in the preceding year. The value of oil exports (excluding bunker oil) increased by 38.0 percent to SR 167.8 billion [U.S. $ 44.75 billion] while that of non-oil exports dropped by 7.0 percent to SR 21.8 billion [U.S. $ 5.81 billion] during 1999. However, the deficit in the service and remittance account remained almost unchanged at the previous year's level of SR 91.7 billion [U.S. $ 24.45 billion].
Commercial banks' claims on the private sector rose by 1.0 percent, SR 1.5 billion [U.S. $ 0.4 billion], to SR 162.2 billion [U.S. $ 43.25 billion] in 1999 as compared with the increase of 20.2 percent, SR 27.0 billion [U.S. $ 7.2 billion] in the preceding year. The smaller rise during 1999 was due to increased liquidity generated in the economy by government financial operations and payments by the government of amounts due to farmers and contractors. The rate of bank claims on the domestic private sector to total bank deposits declined from 67.8 percent at the end of December 1998 to 65.9 percent at the end of December 1999. During the first half of 2000, bank claims on the private sector declined by SR 2.0 billion [U.S. $ 0.53 billion], or 1.2 percent, to SR 16.2 billion [U.S. $ 4.32 billion], representing 61.8 percent of total bank deposits.
Commercial banks' foreign assets and liabilities increased by SR 5.5 billion [U.S. $ 1.47 billion] and SR 8.0 billion [U.S. $ 2.13 billion] during 1999, to SR 91.5 billion [U.S. $ 24.4 billion] and SR 51.2 billion [U.S $ 13.65 billion] respectively. Thus, net foreign assets of the banks went down by SR 2.5 billion [U.S. $ 0.67 billion] to SR 40.3 billion [U.S. $ 10.75 billion] during the year. During the first half of 2000 commercial banks increased their foreign assets by SR 6.7 billion [U.S. $ 1.79 billion] to SR 98.2 billion [U.S. $ 1.63 billion], and their liabilities by SR 6.1 billion [U.S. $ 1.63 billion] to SR 57.3 billion [U.S. $ 15.28 billion], and thus the net foreign assets rose by SR 0.6 billion to reach SR 40.9 billion [U.S. $ 10.91 billion] by the end of June 2000.
Commercial banks' capital and reserves increased by SR 2.1 billion [U.S. $ 0.56 billion] to SR 42.3 billion [U.S. $ 11.28 billion] during 1999. The ratio of capital and reserves to total bank deposits and total assets of the banks stood at 17.2 percent and 10.2 percent respectively at the end of 1999.
Commercial banks' investment funds increased in number by 14.9 percent from 114 in 1998 to 131 in 1999. Their total assets increased from SR 24.4 billion [U.S. $ 6.51 billion] in 1998 to SR 34.6 billion in 1999, registering a rise of 41.8 percent. The number of subscribers to these funds also rose from 70,200 in 1998 to 79,000 in 1999. During the first half of 2000, the number of these funds increased by 3.1 percent to 135. Their total assets rose by 12.4 percent to SR 38.9 billion [U.S. $ 10.37 billion] and the number of subscribers went up by 15.4 percent to 91,200.
The number of commercial banks operating in the Kingdom stood at 10 at the end of 1999 following the merger of the Saudi American Bank and the Saudi United Bank in early July 1999 under the name Saudi American Bank. The number of bank branches operating in the Kingdom reached 1,196 by the end of 1999. The number of branches increased further by 4 to 1,200 during the first half of 2000.
The number of automated teller machines (ATMs) rose from 1,808 in 1998 to 1,997 in 1999 and 2,048 in June 2000. The number of debit cards also increased from 3,647,881 in 1998 to 4,696,342 in 1999, but declined to 4,657,098 by the end of June 2000. The amount of financial transactions using the teller machines increased from SR 71.7 billion [U.S. $ 19.12 billion] in 1998 to SR 103.9 billion [U.S. $ 27.71 billion] in 1999 and reached SR 53.6 billion [U.S. $ 14.29 billion] during the first half of 2000. The number of machine transaction points increased from 5,891 in 1998 to 16,418 in 1999 and reached 17,371 by the end of June 2000. The number of payments made using these machines increased from 5 billion in 1998 to 6.3 billion in 1999 and reached 3.4 billion during the first half of 2000. The net payment through the “fast system” increased from SR 5.2 trillion [U.S. $ 1.39 trillion] in 1998 to SR 5.6 trillion [U.S. $ 1.49 trillion] in 1999 and reached SR 2.7 trillion [U.S. $ 0.72 trillion] during the first half of 2000.
The Saudi stock market recorded considerable improvement during 1999 in response to the upsurge in global oil prices and the good performance of most domestic joint-stock companies. Market capitalization rose by 43.1 percent from SR 160 billion [U.S. $ 42.67 billion] in 1998 to SR 229 billion [U.S. $ 61.07 billion] in 1999. The number of shares traded also increased considerably by 80.2 percent from 293 million in 1998 to 528 million in 1999. The total value of shares traded rose by 9.8 percent to SR 56.6 billion [U.S. $ 15.09 billion] in 1999 as compared with SR 51.5 billion [U.S. $ 13.73 billion] in 1998. The general share price index (1985 = 1000) at the end of December 1999 stood at 2028.53 as compared with 1413.10 at the end of 1998, recording a rise of 43.6 percent. When comparing the first half of 2000 with the same period of last year, the performance of the stock market improved significantly due to the increasing rise of oil prices in addition to the positive transformation that the Saudi economy is witnessing. The general share price index increased by 41.1 percent to 2080.70 points during the first half of 2000. The total value of circulating stocks increased to SR 28.1 billion [U.S. $ 7.49 billion] during the first half of 2000 compared to SR 18.9 billion [U.S. $ 5.04 billion] during the same period last year, an increase of 48 percent. The total number of circulating stocks increased by 96.6 percent from 131 million during the first half of last year to 258 million during the first half of 2000. The market value of the stocks released by the end of the first half of 2000 increased by 41.0 percent to about SR 234 billion [U.S. $ 62.4 billion] in comparison to SR 166 billion [U.S. $ 44.27 billion] during the end of the same period last year.
In support of the policy aimed at the development of investment in the Kingdom in general, and to provide the necessary incentives to attract foreign investment in feasible projects in particular, as well as to support privatization programs, the government approved a new foreign investment law in April 2000, and approved the establishment of the Saudi Arabian General Investment Authority (SAGIA) to replace the Saudi Consulting House.