NEW CENTRAL BANK GOVERNOR WILL MAINTAIN STATUS QUO

UNCLAS RIYADH 000319 SENSITIVE SIPDIS DEPT FOR EEB AND NEA/ARP E.O. 12958: N/A TAGS: EFIN EINV ECON PGOV PINR SA SUBJECT: NEW CENTRAL BANK GOVERNOR WILL MAINTAIN STATUS QUO Key points -------------- ¶1. (SBU) -- As part of his February 14 cabinet re-shuffle (more details septel),King Abdallah appointed Saudi Arabian Monetary Agency (SAMA) Vice Governor Dr. Muhammed Al-Jasser to be SAMA's new governor, replacing Hamad Al-Sayari, who had held the position since 1985. -- Senior banking sources have indicated Jasser's elevation will not bring any significant policy changes. Comment -------------- ¶2. (SBU) Unlike the other cabinet changes announced February 14, Jasser's promotion will not result in any significant change of direction. We expect SAMA will continue its positive relations with USG institutions under his leadership, particularly at the highest level. Sayari's departure was almost certainly at his own insistence and not a response to his management of the bank. End comment. Vice Governor Al-Jasser takes over at SAMA -------------- ¶3. (SBU) As part of a larger cabinet re-shuffle that saw the replacement of four ministers and numerous other senior Saudi government officials, Dr. Muhammed Al-Jasser, Vice Governor of the Saudi Arabian Monetary Agency (SAMA) since 1995, was promoted to Governor of SAMA. He replaced Hamad Al-Sayari, who had held the position since 1985. Senior embassy banking contacts have indicated Sayari was highly regarded by the King and his family, and that his departure from SAMA was at his own request. ¶4. (U) Like Sayari, Jasser was educated in the United States, finishing his BA in Economics at San Diego State University in 1979 and his PhD in Economics at the University of California in 1986. He started his government career in the Ministry of Finance as head of the Budget Department's Financial and Economic Analysis Unit. From 1990 until 1995 Jasser was the Saudi Executive Director at the International Monetary Fund and was also part of Saudi Arabia's negotiating team for WTO accession. He currently serves on numerous corporate boards in the Kingdom, most notably as chairman of the board for both the Arab Investment Company and the Saudi Telecom Company. ¶5. (U) Since the onset of the current financial crisis, Jasser's public profile has increased substantially, frequently speaking out about the fiscal situation in the Kingdom. Most recently he has downplayed the role of domestic commercial banks in financing the Kingdom's many infrastructure projects and emphasized the importance of government support for this construction. At the same time, he is also a strong proponent of the free market, and has told banks and companies they should explore issuing bonds if they require additional financing. ¶6. (SBU) Jasser, like his predecessor, is a staunch defender of the Saudi riyal's peg to the U.S. dollar (it has been pegged at a fixed exchange rate of 3.75 riyals to the dollar since 1986) and has a positive reputation with local bankers. He received good reviews for his successful management of inflationary pressures in the first three quarters of 2008 and of the more recent liquidity crunch. MUENCH