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10 December 2023

Saudi Arabia sees no need to borrow to cover projected deficit

Ibrahim Al Assaf, Finance Minister (SUPPLIED)

By Agencies

Top oil exporter Saudi Arabia sees no need to borrow to cover a projected budget deficit this year or any deficit next year, Finance Minister Ibrahim Al Assaf said yesterday.

He told Reuters the Kingdom's vast reserves would be its "first line of defence" to meet any deficits, adding that there had been a drastic reduction in the public debt to 12 per cent of gross domestic product from over 100 per cent a few years ago.

Low world oil prices were helping to ease the severity of global recession, Assaf said. But they could endanger energy investment, which he said was already rare outside Saudi Arabia.

He said Saudi Arabia's King Abdullah views the fair oil price to be $75 a barrel.

Assaf also said he expected a mortgage law, which has been in the works for more than a decade, to be enacted this year.

Muhammad Al Jasser, the new head of Saudi Arabia's central bank, yesterday told CNBC Arabiya TV the global financial crisis is still in full swing but it will not impact Saudi banks' solvency or ability to generate profits.

"The financial fallout from the global economic crisis is still in full swing and has not reached an end yet," he said.

Saudi banks will be more affected by local factors than by external ones because the majority of their investments and dealings are conducted domestically, he added.

Saudi expenditure "remains stable and its 2009 budget will allow the Kingdom to continue national projects", he said. King Abdullah on Saturday promoted Jasser to the post of governor, replacing Hamad Saud Al Sayyari, who has been at the helm since 1983.