Financial minister says kingdom can deal with headwinds from economic crisis
finance minister said on Monday he was confident that the OPEC member had the
means to deal with any renewed challenges if Europe's debt crisis worsens and
it will continue its investment programmes.
has been able to better withstand the headwinds of the crisis from its outset
and, if worse comes to worst, I am confident that we have the means to deal
with any renewed challenges," Finance Minister Ibrahim Alassaf told an
energy conference in the Saudi capital.
the looming challenges facing the global economy, I am confident that Saudi
Arabia's immediate and medium term growth prospects remain strong," he
Robust oil prices
and increased government spending are expected to propel the economy of the
world's top crude exporter to a 6.2 percent growth this year, from 4.2 percent
in 2010, before a slowdown to 4.5 percent in 2012, a Reuters poll showed in
Alassaf also said
the euro zone sovereign debt crisis remained "the central challenge to
global growth with multiple spillover effects", adding that Europe should
help itself, echoing last month's comments by Central Bank Governor Muhammad
"Time is of the
essence for Europe, as tightening liquidity conditions are beginning to
resurface globally, which fuel additional volatility," Alassaf said.
"I believe the Europeans have to deal themselves with the crisis and
reassure the markets."
The crisis swept
closer to the core of Europe on Monday as risk premiums on Spanish, Italian,
French and Belgian government bonds rose with investors fleeing to safe-haven
German Bunds, while European shares fell more than 3 percent after Moody's
warned that France's credit rating faced new dangers.
Saudi Arabia, the largest
Arab economy and the only Middle Eastern member of the Group of 20 developed
and emerging nations, has announced to spend an estimated $130bn, or nearly 30
percent of its economic output, on various social measures including new
housing as turmoil swept the region.
raised the kingdom's vulnerability to a potential oil price drop with some
analysts estimating the crude price level needed to balance its budget at over
$80 per barrel, though prices of over $100 this year have boosted its firepower
to withstand the market weakness.
"We are moving
with our investments and in a few days you will know all details of the budget.
Revenues are more than expected, the same is with expenditures," Alassaf
said, referring to the 2011 budget.
Alassaf declined to
give details about the next year plan. He said last month that the country will
not need to tap into its fiscal reserves, estimated by analysts at about $280bn,
to finance additional budget spending.
The ministry set its
2011 budget with record expenditures of SR580bn ($154.7bn) and a deficit of SR40bn,
or 2.4 percent of gross domestic product.
Saudi Arabia, which saw only minor protests this year unlike nearby Bahrain, to
fetch a fiscal surplus of 11 percent of GDP this year and 9.2 percent in 2012,
the poll showed.