Saudi foreign assets at all-time high

Strong oil prices along boosted Saudi Arabia’s foreign assets by nearly SR116 billion in the first five months of 2013 to push them above the SR2.6 trillion mark for the first time.

The assets controlled by the Saudi Arabian Monetary Agency (SAMA), central bank, peaked at an all time high of around SR2.601 trillion (Dh2.57 trillion) at the end of May compared with about SR2.485 trillion (Dh2.46 trillion) at the end of 2012.

Sama’s monthly reports showed the assets, comprising investment in foreign securities, deposits with banks abroad and other funds, swelled by nearly 4SR43 billion month-on-month as they stood at around SR2.558 trillion at the end of April.

A breakdown showed most of the increase in May was in investment in foreign securities, which grew to SR1.862 trillion at the end of May from SR1.807 trillion at the end of April. Deposits with banks abroad declined to nearly SR490.7 billion from SR518 billion in the same period while there was a rise in most other asset components.

Year-on-year, SAMA’s assets were higher by a staggering SR362 billion as they stood at SR2.239 trillion at the end of May 2012.

The assets were also higher by around SR900 billion compared to their level at the end of 2008 and nearly triple their level at the end of 2000.

Experts said the rise this year was a result of high oil prices, which averaged nearly 50 per cent above the $70 level projected in the 2013 budget. Although Saudi Arabia is expected to overshoot budgeted spending again this year, the surge in revenue will more than offset the spending growth and this will likely result in much higher surplus.

Recent projections by Saudi Arabia’s largest bank showed the actual fiscal surplus could swell by a staggering 30 times at the end of 2013.
Saudi Arabia, the world’s top oil supplier and largest Arab economy, forecast 2013 revenue at SR829 billion and expenditure at a record high of SR820 billion, with a surplus of SRnine billion. The government is believed to have assumed an oil price of $70 for the budget but prices could average above $100 this year.

“Based on our forecast of oil prices, we project a fiscal surplus of SR277 billion or 9.5 per cent of GDP,” National Commercial Bank (NCB) said in a recent study.

“This will result in oil revenues of SR1,043.5 billion, representing a decrease of 8.5 per cent compared to actual oil revenues in 2012, which also takes into account a 3.7 per cent decline in export volume.”

Saudi Arabia had forecast a small deficit last year but at the end of the year, it turned into a massive surplus of SR387 billion, the Kingdom’s second highest fiscal surplus after the record 2008 balance of SR581 billion.



 

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