Private sector credit growth expanded by a 3.6 per cent in April, compared to April 2009, to SR750.63bn ($200.15bn), the highest rate of growth since August 2009 when it stood at SR742.6bn.

According to the monthly bulletin released by the Saudi Arabian Monetary Agency’s (Sama), the kingdom’s central bank, it accelerated to 0.65 per cent, from 0.49 per cent in March.  

Meanwhile, bank deposits fell in April for a fourth month to SR911.87bn, according to the Sama data.

“The main driver of lower overall deposits was falling foreign currency for both businesses and government entities, which dropped 22.6 per cent in the first four months of the year, including a 5 per cent decline in April due mainly to currency fluctuations and businesses reducing their foreign currency holdings,” says John Sfakianakis, chief economist at Banque Saudi Fransi.  

In April Sama’s foreign assets fell month-on-month for the first time since September 2009, as it drew down foreign bank deposits by 7.5 per cent or SR23.9bn to finance spending.

“The government continues to take the role as primary financier for strategic Saudi projects as private sector firms linger on the sidelines,” says Sfakianakis. He adds, “That the recovery is guarded is evident in money supply data.”

Annual growth of M3 money supply, the broadest measure of all the cash in the economy, grew 2.6 per cent to SR1 trillion in April, the slowest rate of growth since 1999, and still a sharp fall from mid-2008 when it peaked above 21 per cent.

Sfakianakis says this is “a byproduct of the sluggish lending atmosphere” and expects “a marginal improvement” in money supply numbers in the coming months as loan growth resumes.