Saudi launches social measures, says economy steady
Economic, financial situation stable - Finance Minister.
March 1, 2011 2:35 by Reuters
Saudi Arabia will start implementing new social measures on Tuesday, its finance minister said, adding that the world’s top oil exporter has felt no economic ill effects from turmoil in other Arab states.
The OPEC crude producer has so far escaped the popular revolts that have toppled entrenched leaders in Egypt and Tunisia and now challenge autocratic regimes in Libya, Bahrain and Oman.
“We have not seen any adverse impact on the Saudi economy,” Ibrahim Alassaf told reporters.
Saudi stability is of global concern because the key U.S. ally holds more than a fifth of world oil reserves.
King Abdullah unveiled benefits for Saudis worth around estimated $37 billion after returning home last week after three months of medical treatment abroad. [ID:nLDE71M11C]
“There will be immediate execution (of the king’s measures),” Alassaf said on Tuesday. “The ministry of finance transferred the relevant amounts today.”
He earlier told a financial conference that the economic and financial situation in the desert kingdom was stable after the regional unrest cast a shadow over investors’ outlook on markets across the Gulf.
Despite surging oil prices that boost the country’s revenues, Saudi stocks slipped to nine-month lows this week, while Saudi currency forwards are near their weakest levels in two years. Debt insurance costs have also risen across the Gulf, the world’s top oil exporting area.
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 growing native population of 18 million. Over 10 percent of locals are unemployed.
Alassaf declined to say when the cabinet would approve a much-delayed mortgage bill to address the housing issue, saying only that the kingdom’s quasi-parliament, the Shoura Council, needed to act first.
Saudi Arabia has been mulling the bill for many years but analysts say if will not be effective unless it addresses the sensitive issue that much of Saudi land is owned by royals.
Alassaf also said spending would rise this year following the king’s measures but that it was too early to say by how much, adding budget revenue would increase.
Saudi Arabia plans to draw on its reserves to help fund the new social benefits, he said on Sunday.
Net foreign assets in the largest Arab economy reached a record high of 1.67 trillion riyals in January ($445 billion), nearly 9 percent up from the previous year on robust oil prices.
G20 member Saudi Arabia has outlined spending of 580 billion riyals for 2011 in its third consecutive record budget, with a conservative revenue estimate of 540 billion.
The wave of Arab anti-government protests have driven oil prices higher, with Brent crude trading around $112 a barrel and U.S. crude $97 a barrel <CLc1> on Tuesday.
Saudi analysts said the king might also soon reshuffle his cabinet to bring in new ministers and revive stalled reforms.
(Writing by Martin Dokoupil and Martina Fuchs; editing by Patrick Graham/Ruth Pitchford)