IMF highlights Saudi role in boosting world economy in 2011
August 8, 2012
The International Monetary Fund (IMF) has highlighted the role of Saudi Arabia in boosting the world economy in 2011 by increasing its oil production to meet global demand. This assessment came in a report following Article IV consultations between the IMF Executive Council and Saudi Arabia on July 2, 2012. The IMF holds Article IV consultations with each of its member states annually in order to assess their economic health.
The report noted that Saudi Arabia increased its oil production in 2011, while simultaneously pumping $15 billion in additional resources into the IMF, contributing to global stability. Due to its high oil revenues, the Kingdom has been able to accelerate local development, while supporting regional economies. Furthermore, its financial health has allowed it to withstand most of the negative fallout of the euro zone crisis and other foreign turmoil.
According to the IMF, the Kingdom’s economic expansion rate increased in 2011, as Saudi GDP amounted to 7.1 percent. The non-oil economy expanded by 8 percent – the largest amount since 1981 – and inflation remained at 5%. Meanwhile, new initiatives to tackle critical issues, including unemployment, housing, and the financing of small and medium businesses, were launched, as government spending increased by 20 percent.
The report noted that despite the increase in spending and the strong growth of imports, financial and foreign surpluses continued to surge in 2011 due to oil price hikes. It concluded that the growth of monetary reserves and the expansion of the economy are signs that the Saudi banking sector is healthy, enjoying high levels of capital and liquidity with improved profits.