Strong oil to boost Saudi economy

Strong oil prices will likely bolster Saudi Arabia's foreign assets by nearly 14 per cent in 2010 after they dipped by about 12 per cent in 2009 because of higher budgetary spending, a key bank in the kingdom said.

Although the world's dominant oil exporter is again expected to overshoot forecast expenditure in 2010, the projected rise in crude prices and possibly hither output by the kingdom will more than offset the increase in spending and allow Riyadh to replenish its overseas assets, Banque Saudi Fransi (BSF) said. Citing figures by the Saudi Arabian Monetary Agency (Sama), the country's central bank which controls those assets, BSF estimated the assets at SR1.46 trillion (US$309 billion) at the end of November, bigger than the Saudi GDP.
"The size of those assets receded in 2009 because of the dual impact of lower oil export earnings and higher public spending. We do not expect any change in Sama's conservative strategy of managing those assets," said BSF.
"As for this year, our expectations are that growth in those assets will outpace growth in the kingdom's nominal GDP. We believe the government will continue to support the expansionary public spending programme but since oil revenues are projected to increase, we expect those assets to rise by 14 per cent to reach nearly SR1.67trn (US$445 billion) at the end of 2010."

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