The man everyone sees to get loans from the Saudis
Lausanne, Switzerland — There are few people more courted by top financiers than Abdel Aziz al-Quraishi. As the governor of the Saudi Arabian Monetary Agency, the desert kingdom's central bank, Mr. Quraishi invests billions and billions of petrodollars each year. The agency's official reserves are $22 billion. But Saudi Arabia, it is usually said, has many more billions invested not on the agency's books.
Anybody looking for money on a large scale wants to talk to Mr. Quraishi. That's one reason the world's top commercial bankers (55 from the United States, 60 from other nations) invited the dark- haired, square-faced central banker to their annual International Monetary Conference, held here last week. Mr. Quraishi is a good customer, investing some billions through such banks. He was a welcome table partner when the bankers dined -- in grand style -- at the heavily chandeliered Le Beau-Rivage hotel on the shores of Lake Geneva.
Karl Otto Pohl, chairman of the Deutsche Bundesbank, also huddled with the Saudi central banker. West Germany, with the world's largest monetary reserves, about $40 billion, has been borrowing billions from Saudi Arabia to finance its huge budget deficits. The US, too, has covered a good chunk of its federal borrowing by selling the Saudis special Treasury notes.
Some US banks, including Citibank, Chase Manhattan, and Morgan Guaranty, have been quietly investing Saudi agency money in American stocks for years through discretionary accounts -- money they can invest as they see fit.
Recently, the International Monetary Fund came to the Saudis' money trough. On May 7 the IMF announced it had signed an agreement with Sheikh Quraishi allowing it to borrow some 8 billion special drawing rights over two years. (An "SDR" is an international monetary unit of account, sometimes called "paper gold ," currently worth about $1.14.) The agreement eases to some degree the world's problem of "recycling" surplus OPEC earnings -- making the money available to nations with international-payments deficits.
Mr. Quraishi speaks only reluctantly on substantive issues with the press. He's friendly, with a twinkle in his dark eyes. He has a master's in business administration from the University of Southern California and speaks perfect English. Asked for an interview, he requested written questions. Next day, he said he had not answered my questions. But he had typed out his own questions and answers on the IMF deal -- "the largest loan in the history of the world." Here are the points he made, paraphrased:
Saudi Arabia went "as far as it could" in meeting the IMF need for funds when perceived against Saudi current and prospective reserve levels as well as the government's spending plans.
The recycling of surplus funds "is a means to finance deficits over a period necessary for the adjustment of economies to changed circumstances," Mr. Quraishi wrote. It is an international economic responsibility that requires "changed economic policies" both in the West and the less developed countries.
Saudi Arabia has shared in recycling not only through this loan, but also by:
1. Importing almost $40 billion a year in merchandise, as well as paying for services.
2. Government direct spending abroad of about one third of its budget of $89 billion for 1981-82.
3. Direct government aid -- grants and concessionary loans -- of about $4 billion a year over the last five years. That's about 4 percent of Saudi Arabia's gross domestic product.
4. Foreign workers in Saudi Arabia send nearly $4 billion a year home.
5. Private Saudi individuals invest large sums abroad.
Four billion more SDRs may be lent the IMF for the third year, depending on a review of Saudi Arabia's balance-of-payments position after 18 months. Could the oil-rich kingdom really face international payments difficulties?
Mr. Quraishi replied that current-account positions can and do change in dramatic fashion, as shown by the situation in West Germany and the United Kingdom. Moreover, the needs of the IMF should be reassessed, as its present estimates of its needs are only a rough guide. If the Saudis have payment troubles, the needs for recycling would be less.
The Saudi banker held that the IMF's role in the recycling process should be expanded, since it is the most appropriate international organization for official participation in financing deficits. There does appear to be "a capacity shortfall" between the financing requirements of the poor countries and the loan money available from commercial banks, he wrote.
IMF conditionality -- the insistence that in return for a loan, a nation take certain monetary, fiscal, or other measures to put its economy into better shape -- is being applied in a more pragmatic and less doctrinaire manner, Mr. Quraishi writes. This more helpful attitude encourages members, when in payments trouble, to approach the fund at an earlier date.
He hoped the Saudi loan would encourage participation by the industrial countries "as their circumstances permit" and increase their awareness of the need for changed economic and energy policies. If nations put their international payments in order smoothly, this should help the industrial countries grow faster and also benefit Saudi Arabia.
The Saudi loan should also permit commercial banks to enlarge their loans to developing countries as IMF loans and conditionality requirements prompt such nations to reform their economies.
And that is the noninterview "i nterview."