Saudi Arabia's monetary base is recording double digit growth as banks ease lending curbs, with the official data showing the Kingdom's net foreign assets also rising by at least 19 percent year on year in August because of strong oil prices. The Kingdom's monetary base (M0) expanded to SR257.2 billion last month, a 20.1 percent increase on an annual basis. A major portion of M0 is attributed to currency outside banks which surged 32.7 percent Y/Y to SR129.4 billion. The net foreign assets (NFA) of Saudi Arabian Monetary Agency continue to rise as they have accumulated just over SR210 since the beginning of 2011. SAMA's NFA gained 19.4 percent Y/Y. “The global economy is experiencing unpleasant volatility while the kingdom secures its future with ample reserves.” “On the monetary front, Saudi Arabia continues to record double digit growth figures amidst a globally unstable environment,” National Commercial Bank (NCB) said. “Banks have opted to reduce their reserves to deploy their liquidity and expand their loans portfolio,” NCB said in the study. It showed banks claims on the private sector have gained for the fifth consecutive month by 9.4 percent as it surpassed the SR800 billion mark. For 2011, Saudi Arabia announced another record high budget of SR580 billion for 2011, with a deficit of SR40 billion. But analysts believe the fiscal shortfall will again revert into a surplus at the end of the year on the grounds the oil price assumed by Riyadh of nearly $60 a barrel will be far below the expected actual price.
