GulfBase Live Support
29/04/2012 06:29 AST
Strong oil prices and high crude output could boost Saudi Arabia’s official foreign assets by more than $100 billion in 2012, while the Kingdom’s economy could swell by around 5.1 percent, Riyadh-based Jadwa Investments report said.
The assets controlled by the Saudi Arabian Monetary Agency (SAMA) have already soared by nearly $20 billion in the first two months of 2012 following a large budget surplus in the previous year as a result of high oil prices.
The surge in crude prices above $100 a barrel is expected to push the country’s budget revenue to an all time high of around SR1.15 trillion, Jadwa said.
It expected actual spending to surge to around SR757 billion this year “in part because there look to be more Saudi recipients of unemployment benefits than we had anticipated.”
The bulk of the extra oil revenues will be used to build up savings in the form of foreign assets, which were up by $20 billion in the first two months of the year.
“We expect an increase of more than $100 billion in 2012. Higher savings give comfort that elevated levels of spending can be maintained for a number of years, as the reserves can be drawn down in the event of revenue shortfalls.”
SAMA’s foreign assets, including deposits with banks abroad and investment in foreign securities, already jumped by around SR352 billion in 2011 to record their second largest increase since 2008, when they rocketed by nearly SR513 billion because of higher oil prices and output.
Jadwa said high government spending would remain the main stimulus to the Kingdom’s economy, the largest in the Middle East, adding that high oil revenues have supported business and investor confidence so far this year.
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