RIYADH, Jan 21 (Arab News): Saudi Arabia’s money supply saw an annual increase of 7.44 percent in November 2023 as it reached SR2.67 trillion ($712 billion), according to the Kingdom’s central bank.
Bank loans surged to SR2.59 trillion, marking a 10.14 percent increase, with the education sector experiencing the most significant growth during this period.
Total bank deposits that include demand, term, and other quasi money deposits reached SR2.46 trillion in November, representing a 7.5 percent yearly rise.
For the 22nd consecutive month, time and saving deposits continue to exhibit the most significant year-on-year growth, recording a 32 percent increase in November at SR838.25 billion. In contrast, demand deposits experienced a modest growth of only 0.37 percent at SR1.33 trillion.
According to a Fitch Ratings release in January, liquidity boost in Saudi Arabia is attributed to a significant rise in deposits from government-related entities, which primarily consist of term deposits, amounting to SR147 billion in the 12 months to October 2023.
The rise in deposits from GREs is likely a result of these entities choosing to place their surplus liquidity with commercial banks instead of the Saudi Central Bank, Fitch Ratings added.
This shift, facilitated through deposit auctions organized by the bank, also known as SAMA, led to a decrease of SR184 billion in GRE deposits at the institution over the first 10 months of 2023, however remained substantial at SR453 billion by the end of October.
The agency foresees that the current trend may persist, further bolstering liquidity in the banking system. However, this comes at an increased cost, as there is a greater reliance on term deposits, subject to higher interest rates in alignment with the trajectory of the Kingdom’s central bank mirroring the US Fed rates.
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