Saudi foreign assets surge in September

Saudi Arabia’s foreign assets surged by more than SR18 billion in September to record their largest increase through 2010 as oil prices were at one of their highest levels in several months, according to official data.

From around SR1,623.9 billion at the end of August, the assets controlled by the Saudi Arabian Monetary Agency (SAMA), the Gulf Kingdom’s central bank, swelled to nearly SR1,642.2 billion at the end of September, SAMA said in its September bulletin, released this week.

It was the largest increase in SAMA’s assets for far this year and it indicated the world’s dominant oil power is earning more from its crude exports because of higher oil prices, which ranged between $70 and $85 during that month.

Strong oil prices in 2010 have kept SAMA’s assets at high levels although they slipped in April and June. But at the end of September, they were nearly SR72 billion above their level of SR1,570 billion at the end of 2009.

Analysts said the rise in the assets in September indicated Saudi Arabia is earning more than it is spending and this means the fiscal balance could turn into a surplus at the end of the year. This is despite the fact that Riyadh is expected to exceed planned expenditure by nearly 15 per cent through 2010, they said.

Saudi Arabia, which controls more than 20 per cent of the world’s extractable oil deposits, projected a budget deficit of around SR70 billion in 2010 but experts believe it could be a surplus on the grounds the government has assumed an oil price of at least $20 below the forecast price of $75 this year.

According to the Riyadh-based Jadwa Investments, the surplus could be around SR22 billion compared with an actual shortfall of SR87 billion in 2009.

Saudi Arabia basked in its highest ever fiscal surplus of around SR581 billion in 2008 when oil prices peaked at an average $95 a barrel and Riyadh’s crude output was nearly one million bpd above its 2009 production.

A breakdown showed a large part of the increase in SAMA’s foreign assets in September was in investment in foreign securities, which grew to nearly SR1,158 billion from SR1,150 billion at the end of August.

Deposits with banks abroad slumped to about SR293.6 billion from SR298.8 billion while foreign currencies and gold rose to nearly SR139.7 billion from SR134.7 billion in the same period, the figures showed.

SAMA’s assets have steadily increased over the past few years because of strong oil prices, which allowed the Kingdom to record massive fiscal and current account surpluses after several years of deficits.

From around SR619 billion at the end of 2005, the assets leaped to nearly SR884 billion at the end of 2006 and to around SR1,196 billion at the end of 2007. They hit an all time high of SR17,09 billion at the end of 2008 before receding to nearly SR1,570 billion at the end of 2009. They rebounded to about SR1,605 billion at the end of February because of stronger oil prices.

Saudi Arabia’s oil revenues climbed to a record $281 billion in 2008 after crude prices surged to their highest average of around $95 a barrel. The revenues dipped to about $157 billion last year but are expected to recover to $186 billion in 2010 ande$192 billion in 2011, according to Saudi bank estimates.

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