Saudi Arabia's investments in foreign securities increased by close to SR55 billion in the first quarter of this year, the country's central bank reported on Tuesday. However, deposits with foreign banks by the Saudi Arabian Monetary Agency (SAMA), plunged by nearly SR17 billion in the same period, the bank said in its March bulletin. From around SR1.07 trillion at the end of 2009, SAMA's investments in foreign securities ballooned by around five percent to SR1.126 trillion at the end of March, the report noted. The surge in investment boosted the Kingdom's total foreign assets by SR40 billion to SR1.61 trillion at the end of March from SR1.57 trillion at the end of 2009. Total assets recovered from a decline of nearly SR139 billion in 2009 due to lower oil prices and the government's initiative to provide fiscal stimulus the cushion the effects of global slowdown. According to the Riyadh-based Jadwa Investments, the 2010 budget would record a surplus of around SR23 billion as oil prices recover. World oil prices witnessed improvement since the start of 2010, though on Wednesday, prices slumped after the euro hit a new one-year dollar low point amid worries about debt-laden Greece which shook global financial markets, traders said. Brent North Sea crude for June delivery tumbled $2.56 to $86.38 a barrel in midday London trade. New York's main contract, light sweet crude for June, dropped $2.84 to $83.35. Jadwa forecast that the Kingdom would earn around SR626 billion in 2010, nearly 39 percent above the budgeted revenues of SR470 billion. Jadwa Research said in a note that bank lending is set to pick up in Saudi Arabia in the next few months. “Growth in lending in year-on-year terms is set to pick up over the next few months,” the report said. “Very low interest rates have encouraged banks to lend more and depositors to shift from savings to current accounts.” In another report, Banque Saudi Fransi (BSF) forecast that SAMA's assets would increase by nearly 14 percent at the end of this year because of an expected rise in oil prices to an average $70 from around $60 in 2009. BSF said the increase this year would follow a decline by around 12 percent in those assets because of heavy withdrawal by the government to meet growing spending commitments at home. “The size of those assets receded in 2009 because of the dual impact of lower oil export earnings and higher public spending,” the bank said. “As for this year, our expectations are that growth in those assets will outpace growth in the Kingdom's nominal GDP. We believe the government will continue to support the expansionary public spending program but since oil revenues are projected to increase, we expect those assets to rise by 14 per cent to reach nearly SR1.67 trillion at the end of 2010.”
