SAUDI ARABIA: Saudi Arabia's finance minister Ibrahim al-Assaf, economy minister Khalid al-Gosaibi and governor of the Saudi Arabia Monetary Agency (SAMA) Hamad al-Sayari address an economic conference in Riyadh

Saudi Arabia's finance minister Ibrahim al-Assaf, economy minister Khalid al-Gosaibi and governor of the Saudi Arabia Monetary Agency (SAMA) Hamad al-Sayari address an economic conference in Riyadh. Saudi Arabia, the world's largest oil exporter, will continue to support the private sector and seek ways to overcome obstacle facing both local and foreign investors, Saudi Finance Minister Ibrahim al-Assaf said on Tuesday (May 8) at a conference in the Saudi capital, Riyadh. "The government will continue to support the private sector in order to make a fundamental partner in the process of economic development and will seek to overcome the obstacles that face Saudi and foreign investors to benefit as much as possible from the relative advantages of the Saudi economy" he said. Al-Assaf also said that the kingdom plans to control government spending in a bid to limit inflation that rose to at least an 11-year high in 2006, spurred by rising food prices and rents. Average inflation last year rose to 2.3 percent, the first time it crossed 1 percent since 1995, according to Saudi Financial Group. Higher rents and food prices, including a near 60 percent jump in the cost of fresh vegetables, drove Saudi Arabia's annualised inflation to 3.6 percent in January, according to government statistics. "The inflation ratio has maintained its low levels although it had risen from 1% four years ago, to 2.2% last year and 3% in the first few months of the current year, according to the most recent statistics issued by the general statistics and information authority, but it remains under control, especially in view of the domestic economic activity and taking into consideration the levels of inflation internationally," Hamad Saud al-Sayyari, Saudi Arabia's central bank governor, said at the same conference. He has ruled out revaluing the dollar-pegged riyal which has declined against the currencies of seven of the kingdom's eight largest sources of import countries since the start of last year, helping fuel inflation, according to Samba. Saudi interest rates roughly track U.S. Federal Reserve rates, giving the country few monetary policy tools with which to curb inflation. A weaker dollar has raised import costs for nations across the oil-producing Gulf which peg their currencies to the dollar, leading to higher prices and fuelling speculation that they might revalue. The United Arab Emirates said in April it would penalise retailers and suppliers for "unjustified" price rises in a bid to control inflation, which reached 9.5 percent in 2006.

ITN Source | May 9, 2007

Tags:. .economy. .activity. .spending. .reserve. .policy