Saudi foreign assets up 16% in 10 months

Strong oil prices along with higher crude production boosted Saudi Arabia’s foreign assets by more than 16 per cent in their first 10 months of 2012, indicating the Gulf Kingdom is heading for another large fiscal surplus.

The foreign assets of the Saudi Arabia Monetary Agency (SAMA), central bank, soared by nearly SR335 billion (Dh332 billion) to an all time high of SR2,392 billion at the end of October 2012, an increase of about 16.2 per cent.

The assets, the largest owned by an Arab central bank, swelled by around SR44 billion in October alone, one of the biggest monthly increases this year, according to SAMA’s monthly report released this week.

Nearly 66 per cent of the growth in the first 10 months was in SAMA’s investment in foreign securities, which leaped by SR222 billion to a record high of SR1,649.5 billion at the end of October. Deposits with banks abroad grew by SR104 billion to SR518 billion at the end of October from SR414 billion at the end of 2011.

Analysts said the surge in assets indicated the Kingdom, the largest Arab economy and the world’s top oil exporter, is heading for a large fiscal surplus for the second year running as a result of higher oil prices and output.

After sharp falls in late 1990s, SAMA’s assets began their rapid rise in the following years, with the exception of 2009, when crude prices dipped.

In 2011, the assets leaped by about SR352 billion as a result of high oil prices and a sharp rise in the Kingdom’s crude output to an average 9.3 million barrels per day from around 8.2 million bpd, an increase of 1.1million bpd.

It was the biggest annual increase in the assets since 2008, when they rocketed by a whopping SR513 billion mainly because of a 50 per cent rise in crude prices that allowed the country to record its highest fiscal surplus of SR580 billion.

The rise last year was also more than doubled the assets growth of around SR135 billion through 2010, when they ended the year at SR1,705 billion compared with SR1,570 billion at the end of 2009.

A surge in oil prices to a record high average of more than $105 a barrel allied with higher crude supplies to widen Saudi Arabia’s fiscal surplus to nearly SR307 billion in 2011 from SR87 billion in 2010.

The current account of the largest Arab economy and the world’s oil powerhouse also shot up to $156 billion from $69 billion.

Tempted by strong oil prices, Saudi Arabia announced a record high budget of SR690 billion for 2012 and analysts expect actual spending to end the year much higher as was the case in previous years.

Forecasts by the Riyadh-based Jadwa Investments company showed actual spending could shoot up to SR841 billion in 2012 while revenue could climb to its highest level of SR1,189 billion, leaving a surplus of SR348 billion.

Image via Shutterstock

Follow Emirates 24|7 on Google News.