2001 Speech

SAMA Governor's speech on presenting 37th Annual Report
Governor of the Saudi Arabian Monetary Agency (SAMA) Hamad Sayyari presented the 37th Annual SAMA Report to Custodian of the Two Holy Mosques on November 26, 2001.

Custodian of the Two Holy Mosques:
It is a great honor for me to present to you the 37th annual report of the Saudi Arabian Monetary Agency. The report reviews Saudi economic developments during the fiscal year 1420/21 H (2000) and the latest economic developments during the fiscal year 1421/22 H (2001).
First of all, I would like to congratulate you on the Kingdom's remarkable achievement in the management of its oil policy as well as on the handling of negotiations with international companies on exploration activities in the Kingdom for natural gas and development of its production and exploitation. The current stage of the gas initiative has resulted in specifying three pivotal projects to be carried out jointly by eight international companies, with an initial investment estimated at U.S. $25 billion.
The projects will have deep and far-reaching effects on the development and progress of the Saudi economy. They are also expected to contribute to generating clean energy for electricity, water desalination and existing industries, and to establishing new projects in the areas of energy production, water desalination and petrochemicals arising from exploitation of natural gas. While reducing domestic consumption of crude oil, and increasing the volume of oil exports, the new investments will strengthen the structure of the Saudi economy and provide more job opportunities for qualified Saudi citizens.
I would like to pay tribute to the decision of the Council of Ministers issued on Rabi' Al-Awal 5 [May 28, 2001] that provides for the publication of economic and financial data, including those on the Gross National Product, cost of living indices, government revenue and expenditure, the status of the external account, public debt, and other data related to foreign investment flows. This measure will actively contribute to increasing the transparency of the Saudi economy, an issue of vital importance to domestic and foreign businessmen and investors, as well as international financial institutions, in addition to negotiations for accession to the World Trade Organization.
Custodian of the Two Holy Mosques:
Under your able leadership, the Kingdom has acquired a significant position among the comity of nations. Its political stability and sound economic practices have offered to it opportunities for growth and development, and the assimilation of modern technologies. The Kingdom is an active member of a number of international institutions and organizations, such as the International Monetary Fund, the World Bank Group, and the Bank for International Settlements. Its economy is classified among fast-growing emergent economies affecting the global economy. That is why the Kingdom was selected to be among the Group of Twenty, established in 1999. This group incorporates important emerging market countries in addition to major industrial nations such as the United States of America, Japan, and a number of countries of the European Union, as well as international financial organizations, and it aims at discussing and exchanging views on issues related to international economic and financial stability.
Therefore, raising the degree of disclosure and transparency of financial and economic data on the Kingdom and finalizing legislation and reforms adopted by the Higher Economic Council will boost the Kingdom's status regionally and internationally and enhance its capability to attract capital and investment for achieving further growth and advancement.
Custodian of the Two Holy Mosques:
Let me now review briefly the salient economic developments. Oil prices rose sharply during FY 2000 in continuation of the trend set in the second quarter of 1999. Prices came under pressure during the current fiscal year [FY 2001], falling sharply and dropping below the minimum level of the pricing mechanism, due to the present unfavorable circumstances witnessed by the global economy.
At the domestic level, the Gross Domestic Product (GDP) at constant prices recorded a high growth of 4.5 percent during the fiscal year 1420/21 (2000) due to growth rates of 8.5 percent and 2.6 percent registered by the oil and non-oil sectors respectively. Among important sectors, mining and quarrying, manufacturing, construction, and wholesale and retail trade recorded growth rates of 9.6 percent, 3.2 percent, 3.5 percent and 3.0 percent respectively. The finance and business services sector registered a growth rate of 2.5 percent. It is hoped that positive growth rates will continue to be recorded during the current fiscal year 1421/22 (2001).
The balance of payments recorded a surplus in FY 2000 that considerably exceeded the one recorded in the preceding year, owing to a substantial improvement in the trade balance. It is expected that the surplus in the balance of payments will continue during the current fiscal year. The riyal exchange rate, wholesale and retail price indices, and consumer prices remained remarkably stable because of a continued balance between domestic supply and demand.
As for the monetary and banking sector, broad money (M-3) expanded by 4.5 percent during 2000. Bank deposits increased by 7.1 percent. Loans and advances to the private sector went up by 6.2 percent. Banks' capital and reserves rose by 2.8 percent, reinforcing their financial position. The rate of capital adequacy reached 21 percent as compared with the minimum of 8.0 percent prescribed by the Basel Committee. In the current year, bank deposits, loans, advances and profits have maintained their upward trend, reflecting the continuing strength and efficiency of the banking system.
Custodian of the Two Holy Mosques:
In your elaborate speech delivered on Rabi' Al-Awal 12 this year [June 4, 2001], inaugurating the third session of the Consultative Council (Majlis Al-Shura), you indicated important issues related to domestic economic affairs. This emphasizes your commitment to facing challenges that encourage development, the most important of which is the considerable annual increase in the number of graduates seeking employment. You were exactly right when you stated that the citizens, more than anyone else, are responsible for building the country, and maintaining and keeping intact the development projects achieved so far. Developments in the labor market require that educational qualifications be associated with on-the-job training; and the government and the private sector should make concerted efforts to build the national economy, and increase investment and employment opportunities, with the privatization of certain sectors aiming at increasing private sector activity and providing greater opportunities for citizens to participate in productive assets.
Custodian of the Two Holy Mosques:
The Kingdom is celebrating this year the twentieth anniversary of your assumption of the reins of government. This era has truly witnessed the most magnificent achievements of the country's history. The most salient achievements in the field of economic and social development have been the large expansion in education and training programs and health services; the expansion and development of the infrastructure, including the construction of roads, bridges, airports, sea ports, and projects for electricity generation and water desalination; the development of the industrial cities at Jubail and Yanbu, and industrial estates in other places throughout the Kingdom, which have accommodated huge industrial enterprises in the field of petrochemicals and related intermediate and manufacturing industries. The government also finalized the acquisition of Aramco, transforming it into the largest oil company in the world, renamed Saudi Aramco Company; and under your direct supervision and guidance, the Two Holy Mosques have witnessed the largest expansion in the history of Islam. This expansion has contributed to the accommodation of millions of pilgrims for hajj and for umrah, and visitors from Muslim countries all over the world.
However, among your greatest achievements has been the issuance of regulations and legislations aimed at maintaining the country's political and economic system and promoting the growth of the society in such a way as to ensure the well-being of Saudi citizens and expand their participation in the country's progress and advancement. The most prominent achievements in this regard have been the Basic Laws of Governance, the Shura Council regulations, and the provincial system; also, updating other rules and regulations related to commerce, finance and investment, and the formation of highly authorized bodies, such as the Supreme Council for Petroleum and Mineral Affairs, the Higher Economic Council, the Saudi Arabian General Investment Authority, and the Higher Commission for Tourism. All of these aim at accelerating the enforcement of decisions and policies related to fostering the country's development and advancements in all fields.
May God guide your steps to greater success.