Saudi Minister optimistic about kingdom’s future

Press, 17 March 1987, Page 8

Saudi Minister optimistic about kingdom’s future

NZPA-Reuter Abha Saudi Arabia’s Commerce Minister said yesterday he was more optimistic about the outlook for the kingdom’s economy after the stabilisation of world oil prices. Speaking on the first day of a Saudi businessmen’s conference in the south-western mountain resort of Abha, Suleiman Abdulaziz al-Salim said there were signs the economy was picking up after a tense 1986. But businessmen were sharply criticised by one of the kingdom’s leading political figures, Prince Khaled al-Faisal, who in a keynote speech accused the private sector of investing too heavily outside Saudi Arabia. Mr Salim said the Government had taken a bold step to stimulate the economy by deciding to draw down more than 50 billion riyals ($23.6 billion) of reserves in its 1987 Budget, announced at the turn of the year.

“When the kingdom released its current budget, it considered the role of Government expenditure in activating and stimulating the economy,” he told the conference. “It therefore took the bold step of withdrawing more than 50 billion riyals from its reserves and pumping it into the economy.”

Prince Khaled, who is governor of the Asir region which is hosting the conference, accused businessmen of ingratitude by fighting shy of investing within the king-

dom and preferring to channel funds abroad. “The continued investment by some of our citizens outside the kingdom is ungrateful,” he said.

The need to increase private investment in Saudi Arabia is expected to be a big theme of the conference.

Saudi Arabia last year delayed its Budget for more than nine months because of uncertainty over forecasting revenue at a time when crude oil prices briefly slid below SUSIO per barrel.

When the Budget was published in December, spending was cut by less than some bank economists and businessmen had expected and a large Budget deficit of 52.7 billion riyals ($24.9 billion) was officially sanctioned. Optimism began to mount with December’s pact by the Organisation of Petroleum Exporting Countries to curb oil output and boost prices to $lB a barrel. Mr Salim said one tangible sign of that optimism had been a strong rise in the price of Saudi shares.

Some have gained by more than 35 per cent since last November. Saudi Arabia’s economic planners have long recognised the need to stimulate the private sector and diversify the oildependent economy. But a number of companies began to experience financial difficulties as early as 1983 as world oil prices turned down. In spite of the encouraging signals cited by Mr Salim, some businessmen and bankers are still sceptical about prospects for the economy.