The value of letters of credit (L/Cs) issued by banks in Saudi Arabia surged 24 per cent in the first six months of 2012 compared with the first half of 2011.

This is the second year running in which the value of import L/Cs issued by Saudi banks has increased substantially.

Import financing

The total value of L/Cs issued in the first half of 2012 reached 107 billion Saudi riyal (SR107 billion - US$29 billion).

This was due to record levels of Saudi import financing to meet strong demand for several items, including building materials and motor vehicles according to data from the Saudi Arabian Monetary Agency (SAMA).

Credit demand

In the first six months of 2011, the value of L/Cs grew 10 per cent over and above the value of L/Cs issued in the first half of 2010.

Saudi businesses are obtaining record amounts of credit to finance opportunities in the government's US$514 billion infrastructure expansion programme.

This programme supports the construction of housing and infrastructure as well as industrial development.

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