By Hazim Al-Mutairi

Okaz/Saudi Gazette

RIYADH — Saudi Arabia’s economy can achieve an International Monetary Fund forecast for 1.9 percent gross domestic product growth this year if all indicators remain unchanged, central bank Governor Ahmed Al-Khulaifi told a news conference here on Sunday.

After annual consultations with the Saudi government last month, the IMF predicted Saudi Arabia’s gross domestic product would grow 1.9 percent in 2018 partly because of higher oil output, after shrinking 0.9 percent last year.

The Saudi Arabian Monetary Authority (SAMA) governor said the GDP during the first quarter witnessed 1.4% growth.

He said expat remittances dropped by 7% during 2015, 2016 and 2017.

Asked if any new licenses have been granted to banks operating in the Kingdom, he said new branches are under construction some of which have been granted licenses to start work before year-end.

“We have three banks from the countries in the region. A digital bank is under study,” Khulaifi said.

He said SAMA will publish next month the conditions for opening branches of foreign insurance companies. The contribution of the insurance sector in the GDP is below required level. So SAMA is working to raise the contribution of this sector to meet the aspirations.

He confirmed that there are no plans to transfer some SAMA assets to the Public Investment Fund.

Khulaifi said SAMA does not interfere in restricting interest rate on loans, but encourages lending to small and medium enterprises as well as productive loans, which accounted for 77 percent of total loans.

Addressing the press conference SAMA’s deputy governor for investment Ayman Al-Sayari said the central bank is not worried by rising market interest rates because they are based on a gradual rise of global rates from a low base.

“The fact that the increase is gradual gives a lot of comfort to SAMA to address any issues that could come up in the local liquidity system — something that we have not witnessed so far because liquidity is ample,” he said.

Sayari also said monthly local currency debt issues by the government were not straining liquidity.

“When it comes to the local market, I believe the level of debt this far is not really an alarming level nor in quantum, nor in percentage, for example of GDP.

“Usually there’s a lag time for the Ministry of Finance to raise debt and release it in the form of a rise in government spending, so liquidity gets recycled in the system and we don’t have any concern.” — With agencies