JEDDAH: Custodian of the Two Holy Mosques King Abdullah said the Kingdom’s economy was in excellent condition and that it had only suffered from the panic that gripped the world following the economic meltdown elsewhere.

In an interview with the Kuwaiti newspaper Al-Seyassah yesterday, King Abdullah said Saudi Arabia wanted the price of oil to stabilize. “In our view, $75 per barrel would be a fair price. Our budgets are not based on the earlier high price but on a lower one. What comes in excess goes to surplus reserves and sovereign wealth.”

The oil price that reached an all-time record of $147 per barrel in July fell to one-third of that figure following the economic crisis.

King Abdullah admitted that the oil price fall may have slowed down some trade activities “because of those who stop spending because of fear.” He, however, said the crisis acted as a catalyst to bring Gulf Cooperation Council (GCC) countries closer.

King Abdullah believes that oil, for which no viable substitute has so far been found, would remain the backbone of the global industry for some time to come.

The king allayed the fears of the Saudi people in particular and of Gulf citizens in general that they would be affected by the current global economic crisis. “Our economy is in a good shape. The global crisis may, however, have slowed it down to some extent as a result of the unjustified panic,” the king said.

“The crisis created tension and fear in people while capital behaved cowardly. The deluge of media portrayals of the crisis in Western countries left people in a state of worry. While some began to seek safe havens for their investments, others exploited the situation to make profits. People do not believe in anything but what they have in their hands. However, this crisis will not continue for long.”

The king explained that as a state with immense wealth, “Saudi Arabia has not been affected (by the crisis) as the surplus oil revenue is not exposed to upsets in the financial markets and is safe. Our private sector has the capability to protect its wealth and investments.”

King Abdullah said he did not know the extent of the impact of the crisis on other Gulf states but hoped their surplus revenues and investments in sovereign wealth funds had not suffered great losses.

“I assure you that we, by the Grace of Allah, are far from any negative impact, I mean our sovereign wealth. What harmed us is in fact the worry of people as they feared that what affected the US and Western nations would also affect and harm us,” he said.

The king reiterated that Saudi Arabia would continue with its five-year development plans without any alteration in its total outlay of $200 billion.

“Our economy is stable and strong, so people should remain sure that no loss will affect them. The only problem is that they become victims of their own unjustified panic. I repeat, and repeat, that our country is in good condition,” the king said.

Saudi shares surged 9.51 percent yesterday, led by blue chips, as investors took heart from a global stock rally and reassuring remarks by King Abdullah on the state of the economy. The Tadawul All-Share Index (TASI) gained 9.51 percent and ended at 4,845.11 points.

The king repeated that people had been carried away by panic created by the media. They were led to believe that “what happened in America could happen in Riyadh, Jeddah or any other city in the Kingdom. As a result of the media onslaught, people did not know what to believe. But we reassure people on the basis of facts that Saudi sovereign wealth is safe from the global economic crisis. Our statement is based on facts. When we say we will proceed with our development plans as announced in the past, we are telling the truth and we have nothing to hide. All budget and development activity figures have been put before the people,” the king said.

King Abdullah said this was not the first time the world economy had faced a crisis, but the current crisis received greater attention because of the advanced information systems that helped spread information very fast.

The king denied a media report that the United States had demanded $120 billion from Saudi Arabia.

“The United States, Western countries and other advanced countries in the East that are currently facing serious economic crisis are giant economies which do not need our help. The report is totally incorrect. Their trade exchanges run into trillions, not billions (like ours). Their GDPs are so phenomenal that they could not be compared to ours. Their economies are so huge that they do not need any help from the (Gulf) region. They do not need our assistance,” the king said.

Financial experts believe the crisis will last only 18 months, the king said.

On the UN interfaith conference which he initiated, the king said that he had been thinking of holding discussions between the leaders of different religions for a long time. The civilizations in the world need to understand each other in a rational manner without focusing on negative aspects, he said.

All religions desire peace, stability, safety and security. There are many points they agree on and only a few on which they disagree, he said.

“I have been preoccupied with the idea for quite some time. I noted the common ground shared by various religions despite their differences,” the king said. “I told them we should leave our differences to the Lord Almighty and be civilized by listening to all the diverse viewpoints. Our Messenger (peace be upon him), propagated Islam with logic and gentle words. His call to peace convinced and persuaded the masses to believe in his message,” the king said.