RIYADH, Oct 12: Riding on high oil prices, the Saudi GDP grew by 5.3 per cent in 2004, the Saudi Arabian Monetary Agency (SAMA) said in a report presented to King Abdullah.

Spelling out the country’s major economic achievements in 2004, SAMA Governor Hamad Al-Sayari said the kingdom had achieved a record budget surplus of SR107 billion ($28.5bn) last year as a result of soaring world oil prices.

While receiving the report on the health of the Saudi economy, the king reiterated that Saudi Arabia would continue efforts to attract more foreign investment by revising its regulations. “It will also promote small- and medium-scale firms that serve a large number of citizens.”

“The government is making efforts to remove the factors hampering the flow of investment,” the king said while receiving the 41st annual report of the Saudi Arabian Monetary Agency (SAMA) for 2004. He said the government was regularly revising its investment policies and regulations.

King Abdullah also reaffirmed the kingdom’s resolve to go ahead with its reform programmes in order to achieve continuous progress and prosperity. He emphasized the government’s policy of increased spending on long-term productive projects that promote prosperity of its citizens, create job opportunities and strengthen the economy.

Presenting the SAMA report to the king, Sayari predicted that the Kingdom’s economy would achieve strong growth this year and in the coming years. “The Kingdom’s balance of payments registered a record surplus of SR194.7 ($51.92) billion in 2004,” Sayari said.

During 2004 the Kingdom achieved high economic results in various sectors, for the third consecutive year. “The national revenue grew by 16.8 percent and the actual gross domestic product increased by 5.3 percent in 2004,” he said, adding that there was substantial increase in monetary supply and bank loans. “This again shows the dynamic role of the private sector,” he pointed out.

“The cost of living index however, rose by only 0.3 percent during 2004,” he emphasised. A lion’s share of the surplus from rising oil prices would go for the repayment of public debts estimated at SR600 billion.

Saudi Arabia is expected to register even a huge budget surplus in 2005. The Samba Financial Group has predicted that the kingdom’s real GDP growth will be 6.5 per cent in 2005 and oil export revenues will be SR589 billion. The budget surplus will be SR191 billion.

Samba’s Chief Economist Brad Bourland told the press that “the oil market has been stronger than anticipated in the third quarter. I may revise estimates upward slightly for 2005.”

Riyad Bank also expects the GDP growth of 7.6 per cent, a budget surplus of SR176 billion and a current account balance of payments SR244 billion this year.

Estimates of the International Monetary Fund (IMF) show that Saudi Arabia will post a 4.1 per cent GDP growth in 2005 and 3.3 per cent in 2006. Current account balance of payments (as per cent of GDP) will be 27.7 per cent this year and 25.1 per cent next year.