WASHINGTON (Reuters) – Saudi Arabia has no plans to offer extra funds to the International Monetary Fund, Finance Minister Ibrahim al-Assaf said on Saturday, quashing speculation it would offer cash to help the IMF battle the global financial crisis.
“There were lots of rumors that we were coming here to pay the bill, there is no such thing,” Assaf told Reuters in an interview on the sidelines of a meeting of leaders from the Group of 20 advanced and emerging economies.
Saudi Arabia, the IMF’s largest Arab shareholder and the only Arab state in the G20, has been urged to chip in to ensure the IMF has enough resources to protect emerging economies from the worst financial crisis since the 1930s.
Earlier this month during a visit to the rich oil-producing kingdom, British Prime Minister Gordon Brown said Saudi Arabia should contribute more to the IMF. Assaf said Brown also suggested China, another country with rich foreign exchange reserves, should contribute more.
“This is his opinion. This is not our opinion. We are not going to pay more or less than others. We have been playing our role responsibly and we will continue to play our role, but we are not going to finance the institutions just because we have large reserves,” Assaf said.
“These reserves are for the development of the kingdom of Saudi Arabia,” the minister said. “There is no specific emergency fund for the IMF or any other institution.”
He said the kingdom has been a generous contributor to international institutions, and said Saudi Arabia should have an “appropriate” quota at the IMF and its sister institution, the World Bank, and would want to maintain it.
“More importantly, our policy with regard to the oil market is very important and responsible when we invest in increasing our capacity in order to have stability in the oil market, which of course is reflected in the stability of the financial markets as well as the global economy at large,” Assaf said.
He said Saudi King Abdullah told the other G20 leaders about the country’s plans to implement a $400 billion program to invest in the oil and government sectors over the next five years.
The summit brought together heads of state from emerging powers, such as China and Saudi Arabia, with leaders of old-line advanced economies for the first time in a glimpse of a new era of global power sharing.
The group backed a rapid action plan to tackle the economic crisis and erect defenses against future threats, and said they would seek ways to give emerging countries more say in global economic councils.
Gulf countries have been among those who have suffered from the financial crisis, particularly Qatar, Kuwait and the United Arab Emirates, where government-run investment funds have heavy exposure to U.S. and European stocks.
The Saudi hit has been less, although the Saudi stock market has lost some 40 percent of its value this year and question marks have been raised over some major development projects because of falling oil prices — now under $60 a barrel from a record $147 in July.
And with most of its population suffering from the stocks crash and rising costs of living, the Saudi government will not want to appear as a cash cow for the West.
The IMF, which had $201 billion in loanable funds as of August 28, has offered money to Iceland, the Ukraine, Hungary and Belarus to help protect their economies against the crisis.
But there are concerns IMF funds could run out and, flush with cash after several years of record oil revenues, Saudi Arabia could make a difference.
Asked if Riyadh will take advantage of bargains in the markets now and invest abroad, Assaf said: “Saudi Arabia’s policy has for a long time focused on domestic investment despite some of the pressures and criticism on why we aren’t investing outside.”
“Our policy has been to follow a conservative and liquid investment outside and focus on the domestic market.”
Assaf said the G20 summit produced “a good outcome” despite “the different views of the participants and the different circumstances facing the members.”
“It gives the right signal to the market about their seriousness in dealing with these crises,” he said.