RIYADH — Saudi Arabia's efforts to deepen its financial sector are gaining pace, with key developments such as an expansion of the non-bank segment and greater resource mobilization serving as signs that the market is maturing, the Governor of the Saudi Arabian Monetary Agency (SAMA) Fahad Al Mubarak said. Speaking in an interview he gave to the global publishing, research and consultancy firm Oxford Business Group (OBG), Al Mubarak said the authorities were also intensifying their focus on financial inclusion. “Meanwhile, the Capital Market Authority (CMA) has announced the potential opening up of the Saudi capital market to qualified foreign institutional investors sometime in 2015,” he said. “Efforts are also under way to facilitate debt issuance and settlement procedures to promote the corporate bonds and sukuk market.” Al Mubarak pointed to data for the Saudi financial sector which he said highlighted its growth story. Total market capitalization registered a compound annual growth rate (CAGR) of 10% during 2009-13 to $467.5 billion, while the number of listed companies rose from 135 to 163 in the same period. Saudi banks' assets showed a CAGR of 8.4% over 2009-13, largely on account of enhanced deposit and credit flows. SAMA's governor remains confident that the Saudi economy will weather the current storm of declining oil prices in the medium term, supported by years of strong economic growth, which averaged 5.5% annually, and a wave of spending on capital projects. Historical high oil prices had strengthened public finances, he said, while enabling the government to reduce its debt-to-GDP ratio to 1.6 % in 2014 from around 97% in 2002. “The key contribution came from the non-oil sector, which on average expanded by 6.8% per year, compared to oil sector growth of 1.6 %,” Al Mubarak told OBG. “The government budget for 2015 has already envisaged a record projected spending of $229.3 billion, with 51.2% of this allocated to health, education and infrastructure development.” During the interview, Al Mubarak also highlighted SAMA's plans to boost the part played by small and medium-sized enterprises (SMEs) in the Saudi economy. Steps taken included facilitating access to credit and establishing dedicated small business units in banks, he said. Al Mubarak was interviewed by OBG's representatives in Saudi Arabia as the Group prepares to publish its forthcoming report on the Kingdom's economic activity and investment opportunities. The full interview will appear in The Report: Saudi Arabia 2015. The publication will be a vital guide to the many facets of the country, including its macroeconomics, infrastructure, banking and other sectoral developments. — SG
