Saudi foreign assets slip in August

Saudi Arabia’s foreign assets slipped by over $1billion in August for the first time in seven months but they remained at one of their highest levels and more than double their 2006 level, according to government data.

From around SR1,932.4 billion ($515.4bn) at the end of July, the assets which are based mostly in the West edged down to nearly SR1,9126.4bn at the end of  August, showed the figures by the Saudi Arabian Monetary Agency (WAMA), the Gulf kingdom’s central bank.

A breakdown showed the decline was due to a large fall in bank deposits as investment in foreign securities recorded a modest increase in August. From SR375.1bn at the end of July, Sama's deposits with banks abroad slumped to nearly SR357.2bn at the end of August.

But investment in foreign securities swelled from nearly SR1,346bn to about SR1,356.6bn. It was the first decline in Sama's foreign assets since February, when they dropped by around SR7bn.But the assets remained at one of their highest levels in the history of the world’s dominant oil power and more than double their level of around SR884bn at the end of 2006, according to Sama.

Since the end of 2010, Sama's foreign assets have gained a whopping SR221bn as a result of higher oil prices and the country’s crude production, which has remained above nine million bpd this year.Oil prices averaged nearly $105 in the first eight months of 2011, nearly $45 above Saudi Arabia’s budget forecasts.

Saudi Arabia’s foreign assets have steadily grown in most of the past 10 years as a result of strong crude prices, gaining nearly SR135bn through 2010.They recorded one of their largest increases of around SR513bn during 2008, when oil prices climbed to their highest annual average of nearly $95 a barrel. But a sharp fall in crude prices depressed them by SR139bn in 2009 to widen the actual budget shortfall to nearly SR87bn following a record high surplus of nearly SR580bn in the previous year.In 2010, the budget reverted into a surplus of SR109bn after oil prices increased by at least $15 a barrel.

For 2011, Saudi Arabia announced another record high budget of SR580 billion for 2011, with a deficit of SR40bn. But analysts believe the fiscal shortfall will again revert into a surplus at the end of the year on the grounds the oil price assumed by Riyadh of nearly $60 a barrel will be far below the expected actual price. 

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