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DUBAI: ¶¶Òõ¶ÌÊÓƵ’s money supply growth picked up in December in a sign that the economy is regaining strength after a slump last year caused by low oil prices and government austerity measures, central bank data showed.
Annual growth in M3 money supply, the broadest money supply measure, rose to 0.7 percent in December, its highest level since January 2016, from 0.1 percent in November. Growth in other forms of money supply accelerated by similar margins.
A $17.5 billion international bond sale by the government in October eased pressure on its finances and encouraged authorities to start settling tens of billions of dollars in unpaid state debts to the private sector.
A pick-up in global oil prices in the last few months, to around $55 a barrel from an average of about $45 in 2016, has also allowed the government to loosen its purse strings slightly.
More active government spending on economic development projects was seen in a sharp drop in government deposits at the central bank allocated for such projects. Those deposits fell by SR44.5 billion ($11.9 billion) from the previous month to SR190.0 billion in December, their lowest level in years.
At the same time, the government’s deposits in its current account at the central bank rebounded by SR44.8 billion to their highest level in 2016, suggesting higher oil prices are helping Riyadh to replenish the account.
The government continued drawing down its foreign assets to pay some of its bills. Net foreign assets at the central bank shrank by $1.9 billion from the previous month to $528.6 billion in December, their lowest level since November 2011.
Among those assets, the central bank’s holdings of foreign securities fell by $6.4 billion to $364.1 billion, while deposits with banks abroad rose by $3.8 billion to $107 billion.
Commercial bank lending to the private sector increased by just 2.4 percent in December from a year earlier, its slowest growth since March 2010, the central bank data showed. Lending expanded 4.4 percent in November.
Lending growth has slowed because the government has resumed paying its bills, bankers said.
When the government was not paying companies, they were forced to draw down credit facilities with banks to obtain operating funds, inflating credit growth figures. But now that state money is flowing again, firms feel less pressure to use bank loans.