Letters of credit (L/Cs) are underpinning a revival of Saudi Arabia's private sector import financing, which has now surpassed pre-pandemic levels, according to data released by the Saudi Arabian Monetary Authority (SAMA).

The central bank data indicates that imports by commercial firms reached 39.6 billion Saudi Riyal (SR39.6 billion - US$10.6 billion) in the second quarter of 2022 compared with same quarter in the previous year.

Reversing trend

Private sector imports financed through settled L/Cs and bills received increased by SR5 billion in the second quarter of 2022 compared with the same quarter last year, the data shows.

Import financing had dropped to a low point during the pandemic to SR30 billion in the second quarter of 2020 according to SAMA.

Its data shows the value of imported goods beginning to recover in line with the global economy to SR34.6 billion in the second quarter of 2021, rising to its highest level since the third quarter of 2016 in the second quarter of 2022.

Imported goods

Increased imports of building materials, machinery, and textiles and clothing amongst other goods helped drive up the value of the private sector's imports financed through settled L/Cs and bills.

Imports of food grains, fruits and vegetables also increased year-on-year in the second quarter of this year.

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