May 20, 2006	Saturday	Rabi-us-Sani 21, 1427

RIYADH, May 19: Riding on high oil prices in the global markets, the Saudi net foreign assets have increased by 42.9 per cent to reach SR752.8 billion (US $200.75bn).

A market report released by the Jeddah based National Commercial Bank estimated that the net foreign assets held by the Saudi Arabian Monetary Agency (SAMA), autonomous government institutions (AGIs) and local commercial banks had reach SR752.8 billion in 2005, and the trend seems to be heading for another record in 2006. At the end of January 2006, the net foreign assets grew by another 2.7 per cent to reach SR773.2 billion, the report added.

According to the review, foreign assets held in mutual funds increased by 34.7 per cent to SR21.31 billion at the end of 2005, and are estimated to have risen further by 3.2 per cent to SR22 billion in January 2006. By December 2005, the foreign assets based mutual funds comprised of 68.8 per cent in foreign shares, 7.5 per cent in foreign money market instruments, 0.4 per cent in foreign bonds and the residual 23.3 per cent in various other kinds of foreign assets. Thus, the overall aggregate of net foreign assets has reached SR851.8 billion by the end of 2005.

Following sharp increases in oil prices since 2001, Saudi Arabia began registering substantial surpluses in the balance of payments over the last few years. This has enabled the kingdom to hold higher levels of foreign reserves, accelerating to reach SR851.8 billion in 2005. The kingdom’s aggregate level of net foreign assets stood at nearly 75.6 per cent of total nominal GDP in 2005 and around 52-month equivalent of merchandise imports.

With aggregate stock of broadest money supply (M3) of SR549.76 billion, the overall foreign exchange cover on each SR100 in (M3) amounted to SR156 at the end of 2005.

As of January 2006, SAMA held the largest share at 75.8 per cent of the combined total net foreign assets, followed by AGIs with 21.2pc and the remaining 3 per cent were held by local commercial banks.

The combined official and banks’ net foreign assets have been growing at 16.83 per cent between 1999 and 2005, a rate much faster than the 11.4 per cent growth recorded for the nominal GDP in the same period. The total official and banks’ net foreign reserves of 2005 accounted for nearly 65.2 per cent of nominal GDP and provided cover for merchandise imports equivalent to 44 months compared to the internationally accepted benchmark of 4 months.

“The high level of foreign exchange reserves has enforced the stability of the riyal exchange rate and the low price inflation in the country,” NCB Chief Economist Dr Said Al Shaikh. “At the end of 2005, every SR100 in money supply (M3) was backed by SR138 in the official and banks’ net foreign assets,” Al-Shaikh was quoted as saying.