Aug 08 2012
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Saudi Net Foreign Assets To Rise Strongly In 2012 - IMF
Wednesday, Aug 08, 2012
DUBAI (Zawya Dow Jones)--Net foreign assets of the Saudi central bank are set to rise sharply by the end of 2012, boosted by the kingdom's buoyant oil revenues, according to new figures released by the International Monetary Fund.
In its latest Article IV review of Saudi Arabia's economy, published late Tuesday, the IMF said that "higher oil revenues have strengthened fiscal and external balances and have boosted social spending and savings for future generations."
Saudi Arabia's oil production is running close to record levels around 10 million barrels a day, as the kingdom has sought to keep global prices at reasonable levels at a time when Iranian production has dropped sharply due to international sanctions.
Saudi Arabia's net foreign assets have increased steadily since 2009, when they dipped from a year earlier on the back of the global financial crisis.
But despite the strong fiscal buffers created by massive oil revenues, the IMF cautioned Saudi Arabia about the rapid increase in public spending this year, saying it continued to be "above the level consistent with an intergenerationally equitable drawdown of oil wealth."
To achieve that, the international body advised the Saudis to ensure greater efficiency in spending, and to broaden the country's tax base.
Stepped-up spending on education, health care and other social programs dominated Saudi Arabia's SAR690 billion budget for 2012.
The IMF expects the kingdom's real GDP growth to slow to 6% this year, from 7.1% in 2011. Inflation is expected to hold steady at 5.2%, up only slightly from 5% in 2011, thanks to reduced food inflation, the IMF said.
-By Leila Hatoum, Dow Jones Newswires; +971-4-446-1686; firstname.lastname@example.org; Twitter: @ZDJnews
Copyright (c) 2012 Dow Jones & Co.
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