SAMA ready to add to deposits.

The Saudi central bank will boost its deposits at banks, if the need for such support arises to offset the impact of the global credit crunch on access to foreign financing, finance minister Ibrahim Al Assaf said. "There is a parallel effort... in increasing the deposits with local banks to enable them to also lend to development projects in the kingdom," Assaf told Al Arabiya television. "The problem is with foreign borrowings, there is a challenge, the problem is not with the kingdom's economy, but with international financial institutions," Assaf said. Earlier this week, the state-controlled Public Investment Fund (PIF) announced measures to increase its financing support for projects in the kingdom amid the global liquidity crunch. The central bank, Saudi Arabian Monetary Agency (SAMA, has also instigated measures to unlock more liquidity. SAMA has reduced its benchmark repurchase rate five times since October to two per cent from 5.5 per cent to push down the interbank lending rate. It also pumped $3 billion into Saudi banks' deposits in October - the first direct injection of US dollars in a decade. Meanwhile, Saudi Arabian General Investment Authority governor Amr al-Dabbagh told Bloomberg at Davos that the kingdom plans to spend $400 billion on infrastructure projects in the next five years. "We are talking now about much less construction cost because of the drop in the prices of steel, cement and other building materials," he said. Saudi Arabia is now "accelerating infrastructure development projects... [which] will cost us today 30 to 40 per cent less for infrastructure projects than six months back," he added.

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