RIYADH – Muhammad Al-Jasser, Governor of the Saudi Arabian Monetary Agency, sounded optimistic that inflation in the Kingdom would go down in the coming months.
Inflation surged to 6.1 percent year-on-year in August and sparked a chorus of complaints from consumers, especially over higher food prices.
“I think also it is premature to make conclusions this early on the trajectory of inflation,” Al-Jasser said at a news conference here Sunday.
He said “seasonality” – a reference to the big spending on food that takes place during the holy month of Ramadan, which ended on Sept. 9 – was a component in the jump in prices.
He also said the sharp rise worldwide in key food commodity prices such as wheat had been an important cause in the surge of prices. Nevertheless, he said, SAMA and other government departments have been “very active” in coordinating over fiscal policy to keep a rein on inflation.
The SAMA chief said Saudi economy has contributed to the global economic recovery and stressed that it was not a burden on the world economy.
A day after SAMA’s 46th annual report was released, Al-Jasser said the national economy registered only a 0.6-percent slowdown in the GDP growth during the past year despite a 53 percent drop in government revenues and an 83 percent decline in the balance of payments.
Al-Jasser stressed that the banking sector has never needed government bailouts, as was the case for banks in some countries. Saudi banks have sufficient solvency, he added, which was confirmed by a five percent rise in lending to the private sector.
Al-Jasser said the Kingdom’s cash reserves, which exceed $460 billion, are not a surplus, but an indication of the economy’s strength. The Kingdom must benefit from its reserves through a wise, well-studied approach, he added.
Addressing a question by Okaz/Saudi Gazette, Al-Jasser denied any relationship between SAMA and rises or decreases in interest rates on personal loans. He stressed that the banking market determines interest rates.
In expressing support for small and medium enterprises, which make significant contributions to the national economy, Al-Jasser said he held a meeting Saturday with the chairmen of the boards of directors of banks to discuss the subject and positive results would be issued in the future.
Al-Jasser advised young businessmen to take a positive approach to small and medium-sized companies so their sectors can grow. – Okaz/SG