Saudis tap reserves to boost economy

Opec powerhouse Saudi Arabia is pumping money from its huge 400-billion-dollar stockpile of reserves into the economy to keep up growth, economists and bankers in Riyadh said.
A decline in net reserves over the last three months suggests that the world's biggest oil exporter is using the money to keep up liquidity in the Saudi banks and possibly as well to shore up government investment spending, they said.
The result should be slightly positive growth in gross domestic product even as most major global economies and some of Saudi Arabia's Gulf neighbours endure contractions.
SABB bank, the Saudi affiliate of British banking giant HSBC, has forecast 0.7 percent growth this year, after 4.2 percent in 2008, while investment bank Jadwa has predicted 0.2 percent.
"The economy is still vibrant," said John Sfakianakis, economist at SABB. "I don't think they have any systemic risks."
"The domestic economy here is pretty healthy" despite a fall in oil export earnings, added Jadwa's Paul Gamble.
The Saudi Arabian Monetary Agency released data Saturday showing a nearly two percent decline in reserves in February, to 1.585 trillion riyals (422.6 billion dollars), from January.
Reserves peaked at 443.2 billion dollars last November following a year of skyrocketing oil prices.
Government spending on major projects -- projected at some 400 billion dollars over the next five years -- is crucial in driving the economy.