Poverty and junk food, a time bomb for the health of young British people

Poverty and junk food, a time bomb for the health of young British people
Poverty and junk food, a time bomb for the health of young British people

RIYADH: Saudi Arabia’s international reserves reached 1.75 trillion Saudi riyals (1 riyal = 0.25 euros) in May, the highest level in eighteen months, and recorded an increase annual growth rate of 6%, according to new data.

Figures released by the Saudi Central Bank (Sama) reveal that these assets include monetary gold, Special Drawing Rights (SDRs), the Kingdom’s reserve position at the International Monetary Fund (IMF) and foreign exchange reserves.

According to May figures, international foreign currency assets, including foreign exchange and deposits abroad as well as investments in foreign securities, accounted for 95% of the total, or 1.66 trillion riyals. They also saw an increase of 6% during this period.

SDRs accounted for 4% of the total, amounting to 77.68 billion riyals, and they increased by 0.3% during the same period.

Created by the IMF to supplement the existing official reserves of member countries, SDRs derive their value from a basket of major currencies: the US dollar, the euro, the Chinese yuan, the Japanese yen and the pound sterling. They can be exchanged between governments for freely usable currencies when needed.

SDRs provide additional liquidity, stabilize exchange rates, serve as a unit of account, facilitate international trade, and promote financial stability.

Saudi Arabia’s reserve position at the IMF stood at 12.72 billion riyals, but it decreased by 14% during this period. This category essentially represents the amount a country can withdraw from the IMF unconditionally.

In March, financial ratings agency Fitch Ratings announced that it had affirmed Saudi Arabia’s long-term foreign currency issuer default rating at ‘A+’ with a stable outlook.

The agency emphasizes that the Kingdom’s position reflects the solidity of its budgetary and external balance sheets. It also notes an improvement in governance thanks to social and economic reforms and efforts to strengthen the effectiveness of government institutions.

Saudi Arabia’s ratings are bolstered by the strength of its fiscal and external balance sheets, with a public debt-to-GDP ratio and sovereign net foreign assets well above the ‘A’ and ‘AA’ medians, substantial fiscal reserves in the form deposits, as well as other public sector assets.

According to the agency, the Kingdom benefits from considerable budgetary reserves and has one of the highest ratios of debt coverage by reserves among rated sovereign issuers, representing sixteen and a half months of current external payments.

Fitch forecasts that reserves will decline to an average of $420 billion (1 dollar = 0.93 euros) by 2024-2025 due to the decline in the current account surplus, offset by investments from entities such as the Public Investment Fund (PIF).

Additionally, sovereign net foreign assets are expected to remain above 50% of GDP during this period, exceeding the ‘A’ median of 6%.

In a report released in June, the IMF praised Saudi Arabia’s “unprecedented economic transformation,” attributing its success to prudent government policies and effective diversification efforts.

He also highlighted that strong domestic demand, ongoing financial reforms and environmental policies constitute major assets in the evolution of the Kingdom’s economic landscape.

Following its official visit to the country, the IMF predicted that Saudi Arabia’s GDP growth will accelerate to nearly 4.5% by 2025 and stabilize at 3.5% by year in the medium term.

Non-oil growth is expected to reach 3.5% in 2024 before increasing further from 2025. Despite an expected decline in oil production in 2024 due to production cuts, a recovery is expected in 2025.

The IMF says Saudi Arabia’s diversification efforts are yielding positive results and emphasizes the need to maintain non-oil growth momentum, ensure financial stability and improve business competitiveness.

This text is the translation of an article published on Arabnews.com

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