Saudi monetary base, reserves expand

Saudi Arabia’s monetary base is recording double digit growth as banks in the world’s oil superpower are easing lending curbs enforced in the wake of the 2008 global fiscal distress and local debt default problems.

Official data showed the Gulf kingdom’s net foreign assets also surged by at least 19 per cent year on year in August because of strong oil prices.

“On the monetary front, Saudi Arabia continues to record double digit growth figures amidst a globally unstable environment,” National Commercial Bank (NCB) said in a study sent to 'Emirates 24/7'.

Citing government figures, it said the country’s monetary base (M0) expanded to SR257.2 billion last month, a 20.1% increase on an annual basis.  A major portion of M0 is attributed to currency outside banks which swelled by an impressive 32.7 per cent Y/Y reaching SR129.4 billion.

“Banks have opted to reduce their reserves to deploy their liquidity and expand their loans portfolio,” the study said. It showed banks claims on the private sector have gained for the fifth consecutive month by 9.4 per cent as it surpassed the SR800 billion mark. 

Meanwhile, bank claims on the public sector have somewhat cooled to 18 per cent during August after peaking in May at 27.3 per cent, it said.
“While total deposits continue to grow on an annual basis settling at SR1.046 trillion, they have been within a SR20 billion range over the last six months…..this resulted in raising the loans-to-deposits ratio to 76.7 per cent following the previous month’s figure of 75.6 per cent.”
Internationally, the net foreign assets (NFA) of the Saudi Arabian Monetary Agency (Sama), the country’s central bank, continue to rise as they have accumulated just over SR210 since the beginning of 2011.

During August, Sama's NFA gained a staggering 19.4 per cent Y/Y, as it proceeds with providing a safety cushion for the Saudi economy.
”The global economy is experiencing unpleasant volatility while the kingdom secures its future with ample reserves.”

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