How should the government to deal with the financial crisis?
Saudi Arabia began reaction and crossing a short statement of His Highness the Crown Prince said that while this global crisis, and the Custodian of the Two Holy take all necessary action. Then came the words of Finance Minister and Deputy Governor told him to add a degree of detail in an attempt to reassure people about liquidity at banks and financial and economic situation in the Kingdom. Minister’s deputy governor and a good start but not sufficient under the state of anxiety, fear and painful loss to all. As Crown Prince pointed out in his statement that we are part of this global village and continued on. Perhaps the clearest example of the degree of reliability in the global system is in the field of finance and investment.
Influence in the kingdom takes many forms, including economic and financial follows:
- Direct financial losses in the stock market, especially since many have not prepared well of the bubble in February (February) 2006. The market go up so quickly and painfully acute, especially anyone who has banking facilities. This no doubt will reduce the commercial traffic, as well as the loss of many conservative International, which diminishes the availability of money for investments.
- The global economic recession inevitably affect oil prices, which are the source of budget financing, Vnzul oil price from 148 dollars a barrel to less than $ 80 an impressive and surprising trend, not only influence here, but up to petrochemical industries and our ability to export, especially after this Wave of large investments. Taking inflation into account, oil prices should be about $ 95 a barrel compared with 1981.
- The loss of conservative Saudi public and private. Cash balance of the financial institution up to 300 billion dollars, this still conservatively managed, but investing in stocks and securities losses recorded saying. They say the same thing about banks and banking institutions and insurance and retirement.
Given the large magnitude of the impact and complexity of the problem is desirable that there be a package of short-term actions to restore confidence: first, the explicit, clear and documented formal organization to ensure all deposits and liquidity funds in banks and investment firms licensed (Riyal preliminary step to an independent monetary policy). Second: the emergence of the institution and officials of the Ministry of Finance briefing for discussion and to answer every question. Third: a state of exceptional transparency for the management of external balance and performance of banks, for example, the loss of Riyad Bank, but did not specify the nature of these losses. Expected that the majority of losses, but banks do not reach the fatigue banks and financial disclosure is desirable, but preferably before the results of the fiscal year. Fourth: It would be helpful if the Commission announced in coordination with the financial moratorium for a period of six months to issue any new shares government, but allows the private sector to put any shares the view that the market vulnerability to them. Fifth: to reduce short-term interest rates (even if it fuels inflation temporarily), and to ensure access for all borrowers, especially individuals from the reduction. Sixth: to avoid entering government, a purchaser of shares, particularly as the Saudi stock mostly did not arrive to a collapse in terms of intrinsic value. Already bought “retirement” quantities of stocks and losses recorded saying.
In the long run there is a need to restructure the economy, including the financial sector and the service which will upgrade the service of economic trends. Example of the restructuring required by the desire to issue mortgage system, but that collides with the reality of structural inappropriate. The need for housing is concentrated in low-income, and this is difficult to provide four thousand riyals monthly installment of the least housing units as possible.
To rely on the lessons of the past wrapped in the hope that the storm passes, it will not protect us every time. We live in a global village with Sntvaal, given the small and limited efficiency of our economy will be mostly recipients, raising the degree of risk Assembly. Therefore, we find national solutions and thinking always proactive. Perhaps the most important step to serve us all is greater transparency and financial disclosure for the protection of all.
Influence in the kingdom takes many forms, including economic and financial follows:
- Direct financial losses in the stock market, especially since many have not prepared well of the bubble in February (February) 2006. The market go up so quickly and painfully acute, especially anyone who has banking facilities. This no doubt will reduce the commercial traffic, as well as the loss of many conservative International, which diminishes the availability of money for investments.
- The global economic recession inevitably affect oil prices, which are the source of budget financing, Vnzul oil price from 148 dollars a barrel to less than $ 80 an impressive and surprising trend, not only influence here, but up to petrochemical industries and our ability to export, especially after this Wave of large investments. Taking inflation into account, oil prices should be about $ 95 a barrel compared with 1981.
- The loss of conservative Saudi public and private. Cash balance of the financial institution up to 300 billion dollars, this still conservatively managed, but investing in stocks and securities losses recorded saying. They say the same thing about banks and banking institutions and insurance and retirement.
Given the large magnitude of the impact and complexity of the problem is desirable that there be a package of short-term actions to restore confidence: first, the explicit, clear and documented formal organization to ensure all deposits and liquidity funds in banks and investment firms licensed (Riyal preliminary step to an independent monetary policy). Second: the emergence of the institution and officials of the Ministry of Finance briefing for discussion and to answer every question. Third: a state of exceptional transparency for the management of external balance and performance of banks, for example, the loss of Riyad Bank, but did not specify the nature of these losses. Expected that the majority of losses, but banks do not reach the fatigue banks and financial disclosure is desirable, but preferably before the results of the fiscal year. Fourth: It would be helpful if the Commission announced in coordination with the financial moratorium for a period of six months to issue any new shares government, but allows the private sector to put any shares the view that the market vulnerability to them. Fifth: to reduce short-term interest rates (even if it fuels inflation temporarily), and to ensure access for all borrowers, especially individuals from the reduction. Sixth: to avoid entering government, a purchaser of shares, particularly as the Saudi stock mostly did not arrive to a collapse in terms of intrinsic value. Already bought “retirement” quantities of stocks and losses recorded saying.
In the long run there is a need to restructure the economy, including the financial sector and the service which will upgrade the service of economic trends. Example of the restructuring required by the desire to issue mortgage system, but that collides with the reality of structural inappropriate. The need for housing is concentrated in low-income, and this is difficult to provide four thousand riyals monthly installment of the least housing units as possible.
To rely on the lessons of the past wrapped in the hope that the storm passes, it will not protect us every time. We live in a global village with Sntvaal, given the small and limited efficiency of our economy will be mostly recipients, raising the degree of risk Assembly. Therefore, we find national solutions and thinking always proactive. Perhaps the most important step to serve us all is greater transparency and financial disclosure for the protection of all.