27/10/2013
Investment in U.S. bonds up to 75% .. Economic Adviser
Foreign investment diversification protects the Saudi economy from the American crisis
Oil and Economic Adviser called to prepare for all eventualities that may face the Saudi economy due to the US debt crisis, including the diversification of investment abroad, both geographically and in terms of the nature of the assets invested. Judge Mohamed Al Sabban said: the impact of the US economy in the world, pushing the US Congress to shut down the Government and the American failure to raise debt ceiling finally under concern States have huge deposits in US Treasury securities, such as China, Japan and Saudi Arabia. He said during his participation in the Forum area in Jeddah yesterday that the Saudi investments in US Treasury bonds ranged between 75 and 80 per cent of the total cash reserves.
He said US lawmakers if they don't agree back in January and February on raising the debt ceiling next the Government budget, that America will face '' an economic setback '' and would not be able to meet domestic and international commitments, leading to lower ratings, raising the cost of borrowing, and return the world economy to the crisis of 2008. The size of the GDP of America estimated 3.16 trillion dollars, which is equivalent to about a quarter of the huge number of world output, so the United States is the largest world economy by China. He also added that the US public debt, which is about 16.7 trillion dollars and represents approximately 105% of GDP, is '' very high by any standard ', so American legislators and executives are trying to resolve this problem by cutting expenses and increase budget revenues.
Sabban said: I think that there will be a solution to the crisis, but will not be radically, and will issue in the coming years. The impact of the debt crisis in the Gulf economy confirmed that Gulf States would be '' the most affected 'in the absence of a solution', but ruled out this command, because experience shows that the United States is moving away from the abyss of America each time is approaching. He continued: '' the Gulf economy still depends on oil revenues for about 90 per cent, both in financing government budgets, or in the development of various economic sectors. The break-even point in a number of budgets of the GCC countries rose significantly, most of our States need oil price between 75 and 85 per cent for the non-achievement of budget deficits '. And because the world market has shown a lot of risks Finally, Saudi Arabia anticipate this, and 'real' diversification of the economy, and to shift towards a knowledge economy comparable to the best in the world, was quoted as saying.
He said Saudi Arabia has huge cash reserves of up to three trillion, achieved thanks to high oil prices, oil production which exceeded finally level of 10 million barrels. Said: '' these reserves help to implement transition to a diversified economy, based almost entirely on the export of crude oil as it is currently the case. The State of Qatar and the UAE as 'the most geographically diversified in investments' between the Gulf Cooperation Council, through their cases sovereign 'running efficiently and less risky and superior returns.
And on the effects of the continuing decline of the dollar in the coming years because of the continuing debt crisis, said: '' this will affect negatively the currencies associated States, including SAR, and will start the prices of goods and services imported from outside the dollar spikes, influencing domestic inflation rates, in addition to the impact on the real value of the cash proceeds. ' He noted the difficulty of disengaging the riyal to the dollar, which will lead to adverse reactions on the Saudi economy and its stability, and said: '' no one should be recommended, at least in the current circumstances. ' He added: '' We must gradually start from now, take steps to reduce any potential risk to Saudi Arabia if the crisis worsened, including diversification of investments abroad, geographically, and in terms of the nature of the assets the investor .
