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Sun 12 Oct 2008 12:34 AM

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Saudi govt sees indirect impact from global crisis

Saudi continues to be 'active in the field of int'l cooperation', says finance minister.

Saudi Arabia, the world's top oil exporter, may be indirectly affected by the global financial crisis but any impact will be temporary, Finance Minister Ibrahim Al-Assaf said on Saturday.

Saudi Arabia can help international efforts to solve the crisis by "continuing to be active in the field of international financial cooperation", state news agency SPA quoted him as saying.

He did not elaborate. Al-Assaf and the kingdom's central bank governor Hamad Saud Al-Sayyari are both attending the Oct. 11-13 meetings of the International Monetary Fund and the World Bank.

Al-Assaf said he hoped nations directly affected by the crisis would do what is necessary to end the scarcity of lending among financial institutions and to the real economy.

"What the United States and Europe are going through will affect the rest of the world's states," he said.

But the crisis will not hamper the kingdom's economic development plans which will continue to be funded by reserves and oil receipts, Al-Assaf said.

Public expenditure takes a large chunk of the liquidity available in the Saudi market, Al-Assaf said.

"We don't expect... that there will be a decline in expenditure on projects," he said.

Mohammed Al-Jasser, the Saudi central bank vice governor, said on Wednesday there was no need to provide emergency funds to banks in the world's largest oil exporter as the financial sector faced no shortage in liquidity.

Six Saudi banks launched a concerted effort to restore confidence on Tuesday, saying they had no direct exposure to toxic mortgages as shares plunged on fears about the impact of the global financial crisis.

But Saudi Arabia's main stock index fell again on Saturday to close at its lowest level since July 2004.

Al-Assaf said the stock market's decline was the result of unjustified fear, noting that local banks for instance were not affected by the global crisis. (Reuters)

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