JEDDAH, Saudi Arabia (AFP) – Visiting US Treasury Secretary Timothy Geithner on Tuesday praised the massive investments by Arab countries of the Gulf aimed at helping to drive the global economy back to growth.
“I think the world has yet to fully appreciate the scale of ambition and investment we are seeing in the (Saudi) kingdom and the Gulf region to lay the foundation for future growth,” he said in a speech in Jeddah, Saudi Arabia.
Geithner, on a visit to the oil-rich region to meet officials from key holders of hundreds of billions of dollars of US debt, stressed the need for spending to restore growth.
“Here in Saudi Arabia, the non-oil economy continues to grow, boosted by one of the largest stimulus packages of any G20 nation and by aggressive monetary and financial sector actions,” he said.
Geithner spoke to businessmen at the Jeddah Chamber of Commerce and Industry before meetings with his Saudi counterparts and King Abdullah.
On Wednesday, he is scheduled to meet with United Arab Emirates officials and the heads of two of the UAE’s main public investment funds in Abu Dhabi.
Economists in the region said Saudi and UAE officials would be seeking assurances on the recovery of the US economy from Geithner.
“Secretary Geithner’s visit will be like a progress report on the state of the US economy,” said veteran Riyadh economist John Sfakianakis.
“Since Saudi Arabia is a very important holder of US paper, some explanation about the state of the US economy” is necessary from the top US finance official, he said.
The visit underscores the importance of Saudi Arabia as the leading global oil exporter as well as holder of about 400 billion dollars in foreign reserves, most of it believed in dollar-denominated assets.
Because the country is so dependent on oil and gas exports — also denominated in dollars — economists do not believe Riyadh is considering any radical changes to its dollar holdings.
But the Saudi government has been selling off foreign assets in recent months to fund a massive government investment programme aimed at keeping the economy growing.
Saudi foreign assets have dropped from a peak of 443.2 billion dollars last November to 395.2 billion dollars at the end of May.
And across the six countries of the Gulf Cooperation Council, foreign holdings have fallen around 300 billion dollars, which likely has contributed to the dollar’s weakness.