Saudi Arabia to use reserves for govt handouts
Saudi goverment attempts to ease housing problem; Potential measures to boost access to loans.
February 27, 2011 3:09 by Reuters
Top OPEC oil exporter Saudi Arabia will draw on its reserves to help fund government handouts unveiled by King Abdullah last week to address social pressures, its finance minister said on Sunday.
Abdullah returned home on Wednesday from three months of medical treatment abroad and unveiled benefits for Saudis worth around 135 billion riyals ($36 billion) an apparent bid to insulate the kingdom from an Arab protest wave.
“We will fund this from the budget (but) we’ll need to draw on reserves to cover it,” Finance Minister Ibrahim Alassaf told al-Arabiya TV channel, adding that the measures would boost confidence in the biggest Arab economy.
Saudi Arabia has boosted foreign reserves over the past years thanks to continued high oil prices. These hit 1.65 trillion riyals ($440 billion) by the end of December, according to the central bank.
Under its budget unveiled in December, Saudi Arabia plans to spend 580 billion riyals in 2011.
Part of the king’s handouts will go to new funds to help Saudis to get housing loans, a pressing issue for the Gulf Arab state’s rising local population of 18 million.
“We are looking into two new initiatives… to facilitate obtaining credit,” Assaf said.
“The citizen can go to the banks and tap a special fund. This makes it possible to the banks to give more credit and decrease the costs for the citizens,” Assaf said.
Saudi Arabia has so far escaped popular protests against poverty, corruption and oppression that have raged across the Arab world, toppling entrenched leaders in Egypt and Tunisia and spreading to Bahrain and Libya.
Saudi Arabia has pledged to spend $400 billion until 2013 to upgrade its infrastructure and has launched a plan to build five economic and industrial cities to create new jobs. But several international firms have pulled out of projects due to a credit squeeze after the global financial crisis.
(Reporting by Martina Fuchs; Editing by Ulf Laessing and Jane Merriman)