Soaring oil prices boosted Saudi Arabia's investment income by nearly 45 per cent in 2007 and the increase allied with high exports to keep the Kingdom's fiscal balance at one of its highest levels, Saudi figures showed yesterday.
From around $10.4 billion (Dh38bn) in 2006, the Kingdom's income from its foreign assets jumped to nearly $15bn in 2007, an increase of about 45 per cent, showed the figures by the Riyadh-based Jadwa Investment Company, one of the leading financial consultants in Saudi Arabia.
The income last year was nearly triple its 2005 level and more than five times the investment income in 2000, it said in a report.
It forecast the income would climb to a record $20bn in 2008 as a result of an expected surge in the Kingdom's foreign assets.
A breakdown showed the investment income recorded the highest growth rate in the components of the current account and this has combined with growth in other sectors to keep the account surplus at one of its highest levels.
"The only area of revenue that posted a major rise was investment income. This is revenue earned on the country's stock of foreign assets," it said. "Investment income jumped by 45 per cent to $15bn and is now over triple the level of 2005. Official foreign assets were up by 93 per cent over the same period… We think higher average interest rates for US Treasuries rather than a diversification into higher-yielding assets explain the bulk of the remainder of the increase in investment income."
Figures by the Saudi Arabian Monetary Agency (Central Bank) showed its foreign assets leaped to SAR1.19 trillion (Dh1.16trn) at the end of 2007 from around SAR884.3bn at the end of 2006 and nearly SAR619.4bn at the end of 2005. The assets were only around SAR197.9bn at the end of 2002.
Sama's figures showed the assets continued their steady and rapid climb into 2008 as a result of a surge in the Kingdom's oil export revenues. By the end of April, the assets hit an all time high of SAR1.37trn.
The sharp rise in the income and oil revenues maintained the large surplus in the country's current account, standing at around $95bn in 2007, one of its highest levels. Jadwa projected the surplus to rocket to a record high of $134.8bn in 2008.
It said the current account recorded a massive surplus last year despite a surge in imports and payments for services, including costly skilled labour.