Saudi Arabia’s bank debt dell by SR 8.4 billion, a result of the sharp increase in oil revenues the kingdom has enjoyed since the beginning of the year.
According to a report released by the Saudi Arabian Monetary Agency (SAMA), government debt to the banks equaled SR 236.7 billion at the end of the first half of the year, compared to SR245.1 billion during the same period in 1999.
According to the report, the obligations in the first half of this year were divided between government bonds and treasury notes reaching SR204.7 billion and SR32 billion respectively.
Speaking to Asharq Al-Awsat, Dr. Wadea Ahmed Kabi, a Saudi economist, noted that there have been times that the government's bank debt exceeded total national revenue. He welcomed the government’s decision to use the higher-than-forecast revenues to repay such debts. Ultimately, he stated, such a decision will lead to increased government investment, because existing postponed projects, which require greater liquidity, can now be completed.
Another consequence of the increase oil revenue, Kabli said, would be greater competition among the banks in developing their client base in the private sector.
The readiness of the banks to raise their exposure in the private sector is already apparent. According to SAMA, borrowing by privately owned companies in the service sector during the first half of the year rose to SR 19.3 billion, up from SR 18.6 billion during the same period last year. In the commercial sector, the volume of credit extended rose to SR 76.3 billion from SR 75 billion, while in the industrial sector loans increased to SR 44 billion, compared to SR 41 billion during the first six months of 1999. – (Albawaba—MEBG)
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