Saudi still to decide on IMF funds offer at G20 summit


A senior government official who declined to be named said Saudi Arabia would join European and developing nations demanding more scrutiny of the financial system.

But he declined to say if the kingdom would hand a cheque over to the IMF at the G20 meeting.

Riyadh will "call for better regulations and greater oversight on banks in the West and will demand the IMF plays a bigger role in monitoring industrial nations economies," he said.

Saudi Arabia is the IMF’s largest Arab shareholder and the only Arab state in the Group of 20, which outgoing U.S. President George W. Bush has called to a summit in Washington on Saturday.

The world’s largest oil exporter has not publicly said if it will agree to emergency funding for the IMF to help developing economies get over a global credit crunch, and domestic pressures mean Saudi Arabia is likely to impose certain conditions on any funds it offers.

Qatar has already pledged help while Kuwait has been more cagey, but the two have suffered more than Riyadh due to their sovereign funds heavy exposure to U.S. and European stocks.

The Saudi hit has been less. The bourse lost some 40 percent of its value this year and question marks have been raised over some megaprojects because of falling oil prices, which are now under $ 60 a barrel from a record $ 147 a barrel in July.

But with most of its population suffering from the bourse crash and rising costs of living over the past year, the government will not want to appear as a cash cow for the West.


"The sentiment in the street, in the whole (Gulf Arab region), is that governments are not doing enough to save their own citizens," said Mustafa Alani, a Dubai-based political analyst.

That means the government is likely to seek guarantees for any funds it offers the IMF, said John Sfakianakis, chief economist at SABB, HSBC’s Saudi subsidiary.

"The surplus it sits on is now superior to Russia’s," he said. "It has to step forward to defend its interests and balance these against those of the global economy."

But British Prime Minister Gordon Brown said after meeting Saudi rulers earlier this month that he expected Riyadh to chip in.

A senior banker familiar with Saudi thinking also saw Riyadh offering the IMF help: "There is an unwritten obligation that has to be maintained — some support from Saudi Arabia and the Gulf Arab countries to help the global financial system."

Like other Gulf Arab oil exporters, Saudi Arabia has an interest in repairing the state of the world’s economy, said Abdulaziz al-Uwaisheg, head of studies and economic integration at the Gulf Cooperation Council (GCC) General Secretariat.

"Demand for oil depends on the health of the global economy," he wrote in al-Riyadh daily this week. "Investment of the GCC states — some two trillion dollars — are affected by the economic conditions of the global economy."
The IMF, which had $ 201 billion in loanable funds as of Aug. 28, has offered money to Iceland, Ukraine, Hungary and Belarus to help protect their economies against the crisis. Several other countries are in talks to secure funding.

But there are concerns IMF funds could run out and, flush with cash after several years of record oil revenues, Saudi Arabia could make a difference


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