IMF says that Saudi Arabia has strong fundamentals, but urges greater transparency int he financial sector.
Saudi Arabia’s economy faces the global financial crisis with “stronger fundamentals compared with previous downturns”, because it has boosted its financial sector and built up its reserves, according to the IMF.
After an annual review of the Saudi economy, known as Article IV consultation meetings, in July, the IMF released a report on the country on 19 August. The outlook for Saudi Arabia remained positive despite the economic slowdown.
It also warned that “the most important short-term challenges are to preserve financial sector stability and mitigate the domestic impact of the global recession”.
“The banking system has weathered the global crisis. It remains profitable and well capitalised, with low non-performing loans,” according to the report.
It also urged financial regulators to “further enhance transparency and disclosure by the corporate sector”. Transparency has been a serious issue for Saudi corporates following the defaults of family conglomerates the Saad Group and Ahmad Hamad al-Gosaibi & Brothers.
The IMF predicts gross domestic product (GDP) will shrink by 0.9 per cent in 2009, after growing 4.4 per cent in 2008.