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Positive Steps: Interview with Saudi Arabia’s Minister of Finance Ibrahim Abdulaziz Al Assaf
Ibrahim Abdulaziz Al Assaf, Saudi Arabia’s Minsiter of Finance, talks about Saudi Arabia’s ‘strong economy’ and potential hurdles in 2012.
April 22, 2012 4:37 by kippreport
Saudi Arabia is one of the strongest economies in the entire Middle East – and the world. What has gone in favor of Saudi Arabia and what challenges lie ahead?
Our economy has been performing very well, particularly in the past year, and we expect it to continue this year. All of the indicators are excellent, like the overall sectors. The particular sector that had slow growth is now growing at a healthy rate. For example, the industrial sector is growing at a rate of 15 percent, the construction and other services are growing at close to 10 percent, and the other strong factor is government finance, which is doing well, along with the private sector in general. This is a result of accumulated policy and actions by the government. We have not taken things for granted like other countries, we have not overspent or gone on a spending spree. We saved some of the resources we made over the past few years, and utilized them in the medium term to help the economy during difficult times by performing well.
Recently, there was news that the Saudi Arabian stock market will open for foreign investors. We hear that Saudi banks are the strongest in terms of capital and influence, so what do you think has gone in favor of them and what kind of policies were implemented that the banks are in such a strong state.
The answer is very simple – it is because of strong supervision and a regulatory environment by our central bank, SAMA. They have been very closely monitoring and cooperating with our local banks to maintain that strength. Again, it goes parallel with what the whole economy is doing. Our banks could have mirrored other banks in the world, going on a lending spree and expanding with many multiples of leverages, yet they didn’t. Their strength is supported by the stability and strength of the economy at large, and that’s why they are performing well.
What are the sectors in Saudi Arabia that are experiencing good growth and is there any sector in particular that you are excited about?
The industrial sector is the real excitement for us, which is growing at a rate of 15 percent, which is not a joke. The other one is service sector, like the financial services or the restaurant and hotels or other services in the economy. A particular sector that we are excited about is the mineral resource sector, as you know we are going through huge investments in the mineral resource centre, particularly Phosphates, bauxite, and aluminum and other basic minerals, and core extractions such as cement. We are having a number of initiatives in that area, which, in my view, will lead to a situation in the future where the mineral resources or the minerals will contribute to the GDP of the country.
What kind of risks, financial or geopolitical, could be a hurdle in the route towards progress in 2012?
The economy depends on revenue, exports, commodity and oil. I think the demand for oil is stable and I don’t see any major changes, and again, we have the defensive line in case something happens. As far as the Saudi economy is concerned, I see things moving in the same positive way that it has for the past few years. For the world economy this is another issue, which will take a long time to talk about, but hopefully things will turn out well for Europe again and the US will continue to grow, and Asia [India and China] will follow suit.
How was this year’s Davos conference?
I have been participating in the world economic forum for many years; I have seen themes change, but the setting is almost the same. It is like a jungle with lots of things happening at the same time, some related and some unrelated. Each year there is a theme or an issue that comes to the table, and this year is no different with the economic challenges, especially in Europe and other parts of the world making up a good portion of the discussions. The more important thing in Davos is the bilateral meetings or the side meetings. You find many people from different parts of the world and it is an opportunity to discuss with them how they see things, and to let them know about our region and our country, what the opportunities and the challenges that face each one of us are.
FIRST PUBLISHED IN TRENDS