Saudi Arabia may seek IMF sway in exchange for riches

Saudi Arabia, which has more than $500bn in foreign assets, may demand a greater share of voting rights at the International Monetary Fund in exchange for providing the lender with more money.

Saudi Arabia’s reserve position at the Washington-based fund more than doubled to SR18.2bn ($4.9bn) last year from SR7.4bn in 2010, according to Saudi central bank data. In 2007, it had a SR2.7bn position with the IMF, the data showed. The cost to insure Saudi debt on Jan 31 was less than half the Middle East sovereign average, according to data provider CMA.

The IMF’s Managing Director Christine Lagarde, who visits the kingdom’s capital on Feb 4, has urged members states to contribute $500bn in new lending resources to avoid a 1930s-style global depression. Saudi Finance Minister Ibrahim al-Assaf last week said that the world’s top oil exporter may be willing to raise its contribution to the fund.

“The Saudi government will be looking for a greater say in the disbursement and that is where the more difficult negotiations will take place,” Crispin B. Hawes, director for the Middle East and North Africa at the Eurasia Group, said by telephone from London.

The IMF is pushing China, Brazil, Russia, India, Japan and oil-exporting nations to be the top contributors, according to a G-20 official, who spoke on condition of anonymity last month because the talks are private. The fund wants a deal struck at the Feb 25- 26 meeting of G-20 finance ministers and central bankers in Mexico City, the official said.

 “We will see how we can move forward,” al-Assaf said in an interview on Jan 27 with Bloomberg Television in Davos, Switzerland. “I really cannot answer exactly who is going to contribute and, for that matter, Saudi Arabia’s contribution.”

During a June visit by Lagarde to the Red Sea city of Jeddah, al-Assaf called for “a greater role” in the fund, the official Saudi Press Agency reported. Lagarde travelled to the country when she was campaigning for her appointment as the fund’s managing director. Al-Assaf said that the kingdom doesn’t want the IMF presidency limited to a certain region and it would support the “best candidate” and ‘‘most efficient one from its viewpoint,’’ the news service reported.

 “It’s understandable that a state in a position to contribute more would want to have more of a say,” said Liz Martins, senior economist at HSBC Bank Middle East. “The Gulf countries will want to be involved in that as stakeholders in the stability of the region.”

Saudi Arabia has been left mostly unscathed by popular uprisings in the region. As the leaders of Tunisia, Egypt and Libya were toppled, King Abdullah, 88 this year, ensured a swift political transition with the appointment on Oct 28 of Nayef bin Abdulaziz Al Saud as crown prince after the death of his predecessor Sultan.

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