Saudi economy adds 271 billion riyals of liquidity during “Corona” pandemic

Liquidity in the Saudi economy, “M3 money supply,” hit its all-time high at the end of last week, September 30, at 2.256 trillion riyals, up from 2.229 trillion at the end of the previous week.

According to an analysis conducted by the newspaper Al-Eqtisadiah, based on data from the Saudi Central Bank “Sama”, the money supply increased by 13.6% (271 billion riyals) compared to levels prior to the outbreak of the Corona pandemic. , which amounted to 1.985 trillion riyals at the end of 2019.

The money supply increased by 1.22% during the past week, compared to the previous week, and by 4.99% (107 billion riyals) since the end of last year, when it was 2,149 trillion riyals.

Since the week ending May 7, 2020, the money supply has remained above two trillion riyals, reaching a level record at the end of last week.

The increase in the money supply and the lowering of interest rates contribute to an “expansionary monetary policy”, which helps to strengthen aggregate demand, which supports GDP and employment, which is a useful policy to reduce the unemployment and the economic crisis that hit most of the countries of the world with the Corona pandemic.

And in early June 2020, the Saudi Central Bank announced it would pump 50 billion riyals to bolster liquidity in the banking sector, to allow it to continue funding the private sector.

He said this liquidity “will enhance the role of banks in modifying or restructuring their financing without additional fees and will support plans to maintain employment levels in the private sector, as well as exempt a range of fees for electronic banking.”

And “M3 money supply” is the sum of “cash.” in circulation outside banks “,” sight deposits “,” term and savings deposits “and” other quasi-cash deposits “.

And “other deposits almost in cash “are the deposits of the residents in foreign currencies, deposits against letters of credit, existing transfers and repurchase agreements that banks have implemented with the private sector.

Over the course of 28 years, the “M3 money supply” has seen annual growth, doubling more than nine times during that period, reaching around 228 billion riyals in 1993, while it closed 2020 at 2,149 trillion. riyal.

In the period from 1993 to 2008, the “money supply” did not exceed the trillion riyal, while it surpassed it at the end of 2009 to reach 1.029 trillion riyals.

Since 2009, the “money supply” has not exceeded two trillion riyals, except in the last year, registering 2,009 trillion riyals at the end of March, and then the “money supply” surpassed two trillion. of riyals more than once.

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