Saudi Arabia Is Protected Against Economic Crisis

By Ayesha Daya and Glen Carey

Nov. 16 (Bloomberg) -- Saudi Arabia invested in ``low-risk and very liquid'' assets and the kingdom is well protected to weather the global economic turmoil as the world's largest oil supplier tries to maintain stable oil supplies.

Saudi Arabia stashed away $1.3 trillion in reserves, as the biggest OPEC producer benefited from record oil prices earlier this year, Saudi Arabian Monetary Agency's vice governor Mohamed bin Suleiman Al-Jasser said at a conference in Dubai today.

``The economy at large has been very well protected,'' Al- Jasser said. ``We've built up reserves and pursued counter- cyclical policies to protect our economy.''

Saudi Arabia, the biggest Arab economy, has used oil prices averaging about $107.32 a barrel this year to attract investments and build its foreign currency reserves. The kingdom seeks to shift its economy away from oil and create jobs for its citizens by building industrial cities, like the $120 billion King Abdullah Economic City on the Red Sea coast.

Saudi Arabia will help alleviate global financial stress by maintaining stable oil markets and boost its own economy by funding infrastructure projects, King Abdullah said in Washington yesterday.

``We will continue to fulfill our role in ensuring the stability of the oil market,'' Abdullah said in a statement after a five-hour summit with the Group of 20 leaders. ``Saudi Arabia has made many sacrifices, including maintaining costly additional productive capacity amounting to about 2 million barrels per day.''

Oil prices have declined 60 percent since reaching a record high of $147.27 a barrel on July 11 as demand weakens because of the global credit crisis. Crude oil touched $54.67 a barrel, a 21-month low, on Nov. 13.

Middle East's oil producers are trying to fend of a further decline in oil prices on concern that this may force them to reduce government spending. The 13-member Organization of Petroleum Exporting Countries will meet in Cairo on Nov. 29 and in Oran, Algeria, on Dec. 17 to discuss plans to halt the fall in oil prices.

To contact the reporter on this story: Ayesha Daya in Dubai at adaya1@bloomberg.net