Saudi Liquidity Hits Record SAR2.825 Trillion

Saudi Arabia’s domestic liquidity has reached an all-time high of SAR2.825 trillion at the end of May 2024, according to the Saudi Central Bank (SAMA). The record level reflects the broad money supply (M3) and represents an annual growth of approximately 8.6 percent, an increase of more than SAR222.9 billion compared to the same period in 2023. This milestone underscores the strength and resilience of the Kingdom’s banking and financial sector.

Context and Background

The growth in liquidity, as reported in SAMA’s monthly statistical bulletin for May 2024, highlights the continued expansion of Saudi Arabia’s financial ecosystem. Since the beginning of the year, liquidity has grown by 4 percent, an increase of over SAR104.7 billion, rising from SAR2.72 trillion in January. On a monthly basis, liquidity grew by approximately 1.2 percent, up from SAR2.793 trillion at the end of April. These figures demonstrate consistent upward momentum, supported by robust economic policies and a dynamic banking sector.

Key Details

The broad money supply (M3) is composed of four main components. Demand deposits remain the largest contributor at 49.2 percent, totaling SAR1.391 trillion. Time and savings deposits account for 31.5 percent, reaching SAR889.6 billion. Other quasi-money deposits represent 11.1 percent, amounting to SAR314.8 billion, while currency in circulation outside banks contributes 8.2 percent, at SAR230.5 billion. Quasi-money deposits include residents’ foreign currency deposits, deposits against letters of credit, outstanding transfers, and repurchase agreements with the private sector.

Implications and Impact

This record liquidity level provides strong support for economic and commercial activity across the Kingdom. It enables businesses to access necessary financing, fuels investment, and contributes to the broader economic development process. The availability of ample liquidity also enhances the stability of the financial system, making it more resilient to global economic fluctuations. For international observers, this growth signals a favorable environment for foreign investment and reinforces Saudi Arabia’s position as a leading economic hub in the region.

Vision 2030 Alignment

The surge in liquidity directly supports the objectives of Saudi Vision 2030, which aims to diversify the economy, boost private sector participation, and enhance financial sector efficiency. As the Kingdom continues to implement ambitious reforms and mega-projects, such as NEOM and the Red Sea Project, a robust liquidity base is essential to fund these initiatives. The sustained growth in money supply reflects the confidence in Saudi Arabia’s economic trajectory and its commitment to achieving long-term prosperity.

20 Questions

Q1. What is the all-time high liquidity level reached by Saudi Arabia?

A1. Saudi Arabia’s liquidity reached an all-time high of SAR2,825,715 million at the end of May 2024, as reported by the Saudi Central Bank (SAMA).

Q2. What annual growth rate did liquidity achieve compared to the previous year?

A2. Liquidity grew by approximately 8.6 percent annually, an increase of more than SAR222.9 billion compared to May 2023.

Q3. How much has liquidity increased since the beginning of 2024?

A3. Since January 2024, liquidity has grown by 4 percent, an increase of over SAR104.7 billion, rising from SAR2.72 trillion.

Q4. What was the monthly growth in liquidity for May 2024?

A4. Liquidity increased by approximately 1.2 percent monthly, up from SAR2.793 trillion at the end of April 2024.

Q5. What is the broad money supply measure known as?

A5. The broad money supply measure is known as M3, which includes M2 plus other quasi-money deposits.

Q6. What are the four components of M3?

A6. The four components are demand deposits, time and savings deposits, other quasi-money deposits, and currency in circulation outside banks.

Q7. Which component is the largest contributor to M3?

A7. Demand deposits are the largest contributor, accounting for 49.2 percent of the total, with SAR1,390,893 million.

Q8. How much do time and savings deposits contribute to M3?

A8. Time and savings deposits contribute 31.5 percent, totaling SAR889,558 million.

Q9. What percentage of M3 is held in other quasi-money deposits?

A9. Other quasi-money deposits represent 11.1 percent of M3, amounting to SAR314,807 million.

Q10. What is the value of currency in circulation outside banks?

A10. Currency in circulation outside banks amounts to SAR230,456 million, contributing 8.2 percent to M3.

Q11. What does M1 include?

A11. M1 includes currency in circulation outside banks plus demand deposits only.

Q12. What is the definition of M2?

A12. M2 includes M1 plus time and savings deposits.

Q13. What are quasi-money deposits composed of?

A13. Quasi-money deposits consist of residents’ deposits in foreign currencies, deposits against letters of credit, outstanding transfers, and repurchase agreements.

Q14. Which institution reported these liquidity figures?

A14. The Saudi Central Bank (SAMA) reported these figures in its monthly statistical bulletin for May 2024.

Q15. How does high liquidity support the Saudi economy?

A15. High liquidity supports economic and commercial activity, facilitates financing, and contributes to the economic development process.

Q16. Why is liquidity important for Vision 2030?

A16. It enables funding for mega-projects and economic diversification, aligning with Vision 2030 goals.

Q17. What does the growth in liquidity indicate about the banking sector?

A17. It reflects the strength, solidity, and resilience of Saudi Arabia’s banking and financial sector.

Q18. How does liquidity growth benefit international investors?

A18. It signals a stable and favorable investment environment, enhancing confidence in Saudi Arabia’s economic prospects.

Q19. What was the liquidity level at the end of April 2024?

A19. At the end of April 2024, liquidity stood at SAR2,793,313 million.

Q20. What was the liquidity level at the end of January 2024?

A20. At the end of January 2024, liquidity was SAR2,720,957 million.

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