Local bonds didn’t compete with private sector for liquidity: SAMA’s governor

Public Debt Management Office’s issuance of local bonds did not compete with the private sector for borrowing or liquidity, and didn’t affect it, said Ahmed Alkholifey, governor of the Saudi Arabian Monetary Authority (SAMA).

SAMA is monitoring liquidity, as it is important that liquidity volumes are matching economic activities, he said during the Financial Stability 2018 seminar.

All loan demands have been fulfilled. If demand is strong, banks have the ability and willingness to lend, he said.

The rise in interest rates will not affect economic activities, as the main drive until now is the financial policy, not the monetary policy. Current interest rates are still reasonable or low compared to the previous period as it reached 5 percent in 2006.

In case indications show there is a liquidity problem, SAMA will intervene as it did on 2016, Alkholifey added.