Saudi Arabia, officially known as the Kingdom of Saudi Arabia (KSA), is an Arab state in Western Asia constituting the bulk of the Arabian Peninsula. With a land area of approximately 2,150,000 km2 (830,000 sq. mi), Saudi Arabia is geographically the fifth-largest state in Asia and second-largest state in the Arab world (after Algeria). Jordan and Iraq to the north, Kuwait border Saudi Arabia to the northeast, Qatar, Bahrain, and the United Arab Emirates to the east, Oman to the southeast, and Yemen to the south. It is the only nation with both a Red Sea coast and a Persian Gulf coast, and most of its terrain consists of the arid inhospitable desert or barren landforms. The area of modern-day Saudi Arabia formerly consisted of four distinct regions: Hejaz, Najd, and parts of Eastern Arabia (Al-Ahsa) and Southern Arabia ('Asir).
Saudi Arabia has a modern banking industry with 13 commercial banks. Saudi banks provide retail and corporate banking, investment services, brokerage facilities, and derivative transactions in addition to credit cards, ATMs and point-of-sale transactions. There are also banks in the Kingdom that provide Islamic banking services. Islamic banking is a system of banking that is consistent with the principles of Islamic law (Shari’ah). It prohibits usury, the collection, and payment of interest and trading in financial risk. Saudi Arabia also has a thriving stock market. The total value of shares traded annually is some SR 60 billion [the US $16 billion]. The Tadawul All-Share Index (TASI) of the Saudi stock market is one of the most highly capitalized stock exchanges in the Arab world. TASI was also one of the first exchanges globally to set up a full electronic clearing and settlement system with immediate transfer of ownership. The banking and finance sector is overseen by several government agencies. The Ministry of Finance supervises economic policies. The Saudi Arabian Monetary Association (SAMA) manages fiscal policy, issues the country’s currency, the Saudi Riyal and oversees the nation’s commercial banks. The government has also established five specialized credit institutions to provide loans to citizens for development projects in agriculture, industry and construction – the Saudi Industrial Development Fund (SIDF), the Saudi Arabian Agricultural Bank (SAAB), the Real Estate Development Fund, the Public Investment Fund and the Saudi Credit Bank.
|Agriculture||Wheat, barley, tomatoes, melons, dates, citrus; mutton, chickens, eggs & milk.|
|Manufacture||Crude oil production, petroleum refining, basic petrochemicals, ammonia, industrial gases, sodium hydroxide (caustic soda), cement, fertilizer, plastics, metals, commercial ship repair & commercial aircraft repair|
|Services (Including financial)||35.5% (2013 estimate)|
|Kingdom Holding Company||Investment|
|Saudi Basic Industries Corp. (SABIC)||Petrochemical|
|Saudi Telecom Co.||Telecommunication|
|Saudi Aramco Mobil Refinery Co. Ltd||Petroleum Refinery|
|Saudi Electricity Co.||Electricity|
|Holding, Saad Group of Companies||Contracting|
|Al Rajhi Bank||Banking|
|The National Commercial Bank||Banking|
|Samba Financial Group||Banking|
Saudi Stock Exchange or Tadawul is the only stock exchange in Saudi Arabia. The Capital Market Authority supervises it. The Tadawul All-Share Index (TASI) reached its highest point at 20,634.86 on 25 February 2006. It lists 169 publicly traded companies (as of January 1, 2015).
Saudi joint stock companies had their beginnings in the mid-1930s when the "Arab Automobile” company was established as the first joint stock company. By 1975 there were about 14 public companies. The rapid economic expansion, besides the Saudisation of part of the foreign banks capital in the 1970s, led to the establishment of a number of large corporations and joint stock banks. The market remained informal until the early 1980’s when the government embarked on forming a regulated market for trading together with the required systems. In 1984, a Ministerial Committee composed of the Ministry of Finance and National Economy, Ministry of Commerce and Saudi Arabian Monetary Agency (SAMA) was formed to regulate and develop the market. SAMA was the government body charged with regulating and monitoring market activities until the Royal Decree No. (M/30) established the Capital Market Authority (CMA) in July 2003 under the Capital Market Law (CML). The CMA is the sole regulator and supervisor of the capital market, it issues the required rules and regulations to protect investors and ensure fairness and efficiency in the market.
Global financial crisis
A major factor affecting the experience of international and Saudi banks during the tumultuous period of 2008 and 2009 was the sound performance of the Saudi banking sector, which continued to show strong profitability and growth during that period. The rate of return on average equity for 2008 was 20%, and for the nine months to September 2009, it stood at 16%. These solid returns in a period of turbulence and volatility are very positive and satisfactory. Saudi banks are well capitalized by international standards and showed an average Basel capital adequacy ratio of 16% in 2008 (15.9% in September 2009). It is noteworthy that almost all the capital of Saudi banks is Tier 1 capital. In addition, the quality of Saudi banks’ assets remained strong, with non-performing loans (NPLs) amounting to 1.4% of total loans and advances at end-2008, while provisions coverage was at 153%. NPLs remained below 3% in September 2009. Banks continued to be highly liquid, with liquid assets representing an average of 34% of total customer deposits in 2008. The healthy situation prevailing at end-September 2009 has continued unabated, with a liquidity ratio at over 30%. There is not much evidence of a decline in lending to Saudi Arabia from international banks reporting to the BIS. The BIS statistics contained in the March 2009 BIS Quarterly Review showed strong growth (92%) in the extension of credit to Saudi banks in 2007 when total credit reached USD 69 billion from USD 36 billion at end-2006. Thereafter, the growth rate (7%) tapered off and the credit extended to Saudi banks increased to USD 74 billion by the end- September 2008. Loans to the non-banking sector increased from USD 17 billion in December 2006 to USD 31 billion at end-2007 (growth of 82%), subsequently tapering off to USD 36 billion by September 2008 (growth rate of 16%) (BIS data are not yet available after this period).
On the liabilities side, international banks’ deposits from Saudi Arabia grew rapidly from USD 105 billion (December 2006) to USD 185 billion by September 2008 (growth of 76%). The BIS statistics are confirmed by the Saudi Arabian Monetary Agency’s (SAMA) banking system statistics, which indicate a decline in funding provided by international banks to Saudi banks (domestic operations only). There was a reduction from SAR 64 billion (December 2007) to SAR 40 billion (September 2009). Household lending in the Kingdom was stable during the period September 2007–09 at between SAR 180 billion and SAR 190 billion due to domestic factors following the adjustment in the local stock market in 2006. Other factors include regulatory changes and stricter lending criteria applied by banks.
Consequently, there was no noticeable growth in household lending during the period 2007–09. Corporate sector lending by banks rose sharply during the period 2006–08 from SAR 274 billion to SAR 529 billion, a growth of almost 93% over a three-year period. This was due to a variety of reasons, including rapid economic growth in the oil sector and the non-oil private sector. The overall economy was buoyant, reflecting conditions of positive growth, and bank lending to the corporate sector was booming. There was strong growth in lending to almost all sectors, which showed high growth percentages: commerce (68%); manufacturing and processing (120%); transport and communications (400%); services (95%); and building and construction (45%). The only sector where there was a significant downturn in lending was the financial companies sector, which declined by 70%. However, lending conditions changed in the nine months from January to September 2009, during which the overall growth in corporate loans was less than 2%. This turnaround reflected the shifting sentiment in the banking sector due to the deteriorating conditions affecting the global markets.
Consequently, both the supply and the demand sides were affected in 2009. On the supply side, banks also became stricter in their lending criteria: they re-evaluated their existing credit lines and revised their pricing upwards in line with global and regional trends and also shortened their maturities for loans. The picture of domestic lending would not be complete without reference to a few public credit institutions that also stepped up their efforts to support credit availability. The Saudi Government announced plans to inject SAR 40 billion into specialized credit institutions in 2008 to ease credit conditions as private sector banks reassessed their credit extension in light of global market conditions. Of this amount, SAR 25 billion was granted to the Real Estate Development Fund over a five-year period, starting in 2008, to help the nascent housing market, and SAR 10 billion was provided to the Saudi Credit and Savings Bank (non-deposit taking institution) to be used as loans for low-income citizens. The share of foreign bank branches in the Saudi banking system is still not significant: their total assets at end-September 2009 stood at 2.5% of the total assets of the banking system. While foreign bank branches were vigorously competing for business with Saudi banks in 2009, they were also affected by funding constraints and guidance on stricter lending criteria from their head offices (HOs). In addition, on the demand side, they reviewed their relationships and credit lines, increased their prices and reduced the maturity of loans, etc.
Ibn Saud founded the Kingdom of Saudi Arabia in 1932. He united the four regions into a single state through a series of conquests beginning in 1902 with the capture of Riyadh, the ancestral home of his family, the House of Saud. The country has since been an absolute monarchy, effectively a hereditary dictatorship governed along Islamic lines. The ultra-conservative Wahhabism religious movement within Sunni Islam has been called "the predominant feature of Saudi culture", with its global spreading largely financed by the oil and gas trade. Saudi Arabia is sometimes called "the Land of the Two Holy Mosques" in reference to Al-Masjid al-Haram (in Mecca), and Al-Masjid an-Nabawi (in Medina), the two holiest places in Islam. The Kingdom has a total population of 28.7 million, of which 20 million are Saudi nationals and 8 million are foreigners.
Petroleum was discovered in 1938 and followed up by several other finds in the Shia-majority Eastern Province. Saudi Arabia has since become the world's largest oil producer and exporter, controlling the world's second largest oil reserves, and the sixth largest gas reserves. The kingdom is categorized as a World Bank high-income economy with a high Human Development Index, and is the only Arab country to be part of the G-20 major economies. However, the economy of Saudi Arabia is the least diversified in the Gulf Cooperation Council, lacking any significant service or production sector (apart from the extraction of resources). A monarchical autocracy, Saudi Arabia has the fourth highest military expenditure in the world, and in 2010–14, SIPRI found that Saudi Arabia was the world's second largest arms importer. Saudi Arabia is considered a regional and middle power. In addition to the GCC, it is an active member of the Organization of Islamic Cooperation and OPEC. The country has attracted criticism for its lack of democratic freedom, with a "Not Free" ranking by Freedom House, the status of women in Saudi society, as well as its usage of capital punishment.
Al-Waleed bin Talal
Abdullah of Saudi Arabia
The Saudi riyal (SAR) is the currency of Saudi Arabia. It is abbreviated as SR (Saudi riyal). It is subdivided into 100 halalas (Arabic: Halalah). The Saudi qirsh is 5 halalas. The riyal has been the currency of Saudi Arabia since the country came into being and was the currency of Hejaz before Saudi Arabia was created, one of the primary currencies in the Mediterranean region during the Ottoman era. The Hejaz riyal was based on but not equivalent to the Ottoman 20 kuru? coin and was consequently divided into 20 qirsh. However, although the Hejaz riyal was the same weight as the Ottoman 20 kuru?, it was minted in .917 fineness, compared to .830 fineness for the Ottoman coin. Thus, because the first Saudi riyal had the same specifications as the Hejaz riyal and circulated alongside Ottoman coins, it came to be worth 22 Ottoman kuru? and was consequently subdivided into 22 ghirsh when coins denominated in qirsh were issued from 1925. The system remained even though the riyal was subsequently debased to a coin equivalent, in silver content, to the Indian rupee in 1935. In 1960, the system was changed to 20 qirsh to a riyal, which was followed in 1963 by the introduction of the halala, one hundredth of a riyal. Some Saudi coins still bear denominations in qirsh, but it is no longer commonly used.
In 1925, transitional copper coins for 1?4 and 1?2 qirsh (in some parts of the country, it is pronounced girsh) were minted in Makkah by Ibn Saud. They were followed, in 1926, by 1?4, 1?2 and 1-qirsh cupro-nickel pieces carrying the title "King of Hejaz and Sultan of Nejd". In 1927, the royal title was changed to "King of Hejaz and Nejd and Dependencies" and coins were issued in denominations of 1?4, 1?2 and 1 qirsh in cupro-nickel and 1?4, 1?2 and 1 riyal in silver. In 1935, the first coins were issued in the name of Saudi Arabia. These were silver 1?4, 1?2 and 1 riyal coins, which were nearly 50% lighter than the previous issue. Cupro-nickel 1?4, 1?2, and 1 qirsh were also issued from 1937. In 1946 (AH 1365), many of the cupro-nickel coins were countermarked with the Arabic numerals 65 (??) in what Krause and Mishler describe as "a move to break money changers' monopoly on small coins". Cupro-nickel 2 and 4 qirsh were introduced in 1957. In 1963, the halala was introduced, and bronze 1 halala coins were issued. That was the only year they were struck. Cupro-nickel 5, 10, 25 and 50 halala followed in 1972, inscribed with their denomination in ghirsh or riyal (1, 2 qirsh, 1?4, 1?2 riyal). In 1976, cupro-nickel 1 riyal coins were introduced, which are also inscribed with the denomination 100 halala. Bimetallic 1 riyal coins, also marked 100 halala, were issued in 1999.
In 1953, the Saudi Arabian Monetary Agency (SAMA) began issuing Haj Pilgrim Receipts for 10 riyals, with 1 and 5 riyals following in 1954 and 1956, respectively. These resembled banknotes and were initially intended for use by pilgrims who exchanged foreign currency for them. However, they became widely accepted in Saudi Arabia and largely replaced silver riyal coins in major financial transactions. Consequently, the Monetary Agency began issuing regular banknotes for 1, 5, 10, 50 and 100 riyals on 15 June 1961. The Pilgrim Receipts were withdrawn on 1 February 1965. 500 Riyal notes were introduced in 1983. 20 and 200 riyal banknotes were issued in 2000 to commemorate the centenary of the founding of what became the Kingdom of Saudi Arabia. The 5th series of banknotes bearing the face of King Abdullah was issued in 2007. On May 20, 2007, "the Saudi Arabian Monetary Agency, pursuant to article (4) of the Saudi Currency Law, issued under the Royal Decree No. (6) and dated 1/7/1379H." announced the fifth domination of the Saudi riyal that features King Abdullah Bin Abdulaziz's picture on all notes except the 500 riyal, which features King Abdulaziz Al Saud. The 100 and 50 riyal notes were released on May 21, 2007. The 10 and 5 riyal notes followed in June 2007, then the 500 riyal followed in September 2007, and finally, the 1-riyal note completed the series in December 2007. It is expected by the SAMA that the fourth (current) series will take approximately two years to phase out, although a complete removal of the current series require more than two years since the fourth series has been in circulation for well over 25 years. The fourth series, which feature King Fahad’s picture, will remain legal tender under the Saudi Arabian monetary law. The new series has the latest and most advanced security system to prevent counterfeiting and other similar activities.
|National Song||"as-Salām al-Malakiyy"|
|Currency||Saudi riyal (SR) (SAR)|
|GDP / GDP Rank||$1750.9 Billion USD|
|GDP Growth Rate||3.4 percent|
|GDP Per Captial||$55,158.2 (PPP)|
|Public Debt||12.4 percent of GDP|
|Unemployment Rate||5.5 percent|
|Labor Force (Occupation)||-|