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SAMA: Reduced Interest to Boost Economic Activity

SAMA: Reduced Interest to Boost Economic Activity

Wednesday, 18 September, 2019 - 08:15
Saudi Arabia's Monetary Authority Governor Ahmed al-Kholifey speaks during a news conference at Saudi Arabian Monetary Agency Headquarters, in Riyadh, Saudi Arabian, September 17, 2019. REUTERS/Ahmed Yosri
Riyadh – Mohammad Al Hamidi
The Saudi Arabian Monetary Authority (SAMA) predicted that lowering interest rates will trigger the growth of economic activity.

As Saudi Arabia's top financial monitor, SAMA reaffirmed it is committed to watching interest rates and providing forecasts. SAMA’s GDP indicators showed that growth will not be too far from the forecast made by the International Monetary Fund (IMF), which was estimated at 1.9%.

The body reaffirmed that the aftermath of recent attacks against the Kingdom’s oil installations on the state budget can be contained.

“Saudi Arabia’s economic growth this year will not be too far from the forecast made by the International Monetary Fund (IMF),” SAMA Governor Ahmed al-Kholifey said.

Asked if there would be impact on bank’s liquidity, Kholeify said that the central bank did not expect any shortage in liquidity but was prepared to support the market if needed.

Kholifey said he did not expect Aramco’s planned initial public offering to affect liquidity in the banking sector, as all indicators remain healthy, adding that loan to deposit ratio remains at 72%, under the 90% limit. He added that the central bank may revise its current lending regulations to facilitate availability of liquidity to investors before the IPO.

“Aramco size requires looking at the issue from a different perspective,” he said.

On the other hand, SAMA welcomed growth in the Kingdom’s banking sector.

Kholifey pointed out that there are two requests to open two local banks inside Saudi Arabia and another to establish a digital bank.

Speaking on mergers among local banks, Kholifey said it was acceptable if the union will “generate strong banking entities, add to the banking sector and meet the requirements.”

On that note, Kholifey pointed out that SAMA will launch an awareness campaign entitled “more financial awareness.”

The campaign targets the largest possible segments of the community by organizing awareness exhibitions within malls. It also comes in line with SAMA's abiding efforts to organize awareness and educational campaigns among the public.

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