Source: Bloomberg
Saudi Arabia, the world’s largest exporter of oil, replaced its central bank head and economy minister as it presses forward with a record spending plan aimed at reducing unemployment and reliance on crude exports.
Fahad al-Mubarak was appointed central bank governor, replacing Muhammad al-Jasser, who was named economy and planning minister, state run al-Ikhbariya television said Tuesday. Tawfiq al-Rabea was appointed trade and industry minister. The reshuffle follows the naming of Prince Nayef bin Abdulaziz as heir to the throne in October.
Saudi Arabia’s drive to create jobs comes amid a wave of popular uprisings in the Middle East, triggered in part by unemployment. King Abdullah announced a US$130-billion spending plan in the first quarter and in August 2010 unveiled a US$384-billion plan to develop transportation, housing and education.
“I was really surprised by the appointment,” Mohammed al-Qahtani, an economist working at the Institute of Diplomatic Studies in Riyadh, said in an interview. “Had al-Jasser stayed at the central bank he would have had more autonomy. The economy ministry doesn’t have any real authority.”
The country needs the non-oil economy to expand at an average 7.5 per cent in the next five years to lower joblessness by half to 5 per cent, the International Monetary Fund said. Non-oil output growth will slow to 5 per cent in 2012 from 5.4 per cent this year, while the expansion in oil GDP will grind to a halt next year, IMF data project.
Al-Mubarak worked as the managing director of Morgan Stanley Saudi Arabia before his appointment as the central bank governor. He also was the chairman of the Saudi Stock Exchange. He declined to comment on central bank policies when contacted by Bloomberg today.
Saudi Arabia has not experienced the popular uprisings in the Middle East that led the toppling of leaders in Tunisia, Egypt and Libya this year. Saudi Arabia sent troops into neighbouring Bahrain in March to crush a mainly Shiite-led uprising after accusing Iran of interfering in the affairs of the island state. Iran denies the allegation and accuses Sunni rulers in Bahrain and Saudi Arabia of discriminating against Shiites.
This was the first time since 2009 that King Abdullah made changes to his Cabinet outside of the defence ministry and the royal family. That year, Abdullah appointed al-Jasser as the central bank governor and named new ministers of information and education.
Al-Jasser, who had been a deputy governor of the Saudi Arabian Monetary Agency since 1995, replaced Hamad Saud al- Sayari in 2009. Al-Sayari had served as the central bank’s governor since 1983.
Saudi Arabia maintained a monetary policy that aimed for stability in the financial industry in the first quarter of this year and last year, the kingdom’s central bank said in an annual report published December 12 on its website.
Saudi banks tightened lending criteria after two family-owned businesses defaulted on at least US$15.7 billion of loans in 2009 and the global credit crisis hurt the economy. Growth slowed to 0.1 per cent in 2009 from 4.2 per cent the previous year, IMF data show. More than half of new jobs went to foreigners between 2004 and 2009, the International Monetary Fund said in a September report.
