Saudi foreign assets up SR17 bn in Nov

Saudi Arabia’s foreign assets surged by more than SR17 billion in November to record one of their largest increases through 2010 as strong oil prices sharply boosted its income, official data showed on Thursday.

From around SR1,663.1 billion at the end of October, the foreign assets controlled by the Saudi Arabian Monetary Agency (SAMA), the Gulf Kingdom’s central bank, swelled to nearly SR1,680.7 billion at the end of November, their highest level since the start of 2009, SAMA said in its monthly bulletin.

It was one of the largest increases in SAMA’s assets this year and it indicated that the world’s oil superpower is earning more than it is spending, which explains the massive surplus recorded in its 2010 budget.

Saudi Arabia has assumed an oil price of around $50 a barrel in its 2010 budget but crude prices remained at least $20 above that level over the past few months before averaging above $80 in November, their highest level in more than a year.

The increase in SAMA’s assets in November was mainly in its deposits with banks abroad and investment in foreign securities.

Bank deposits grew from around SR333.8 billion at the end of October to SR339.8 billion at the end of November while investments in securities rose from nearly SR1,151.7 billion to SR1,158.9 billion.

The figures showed that by the end of November, SAMA’s foreign assets have gained nearly SR110 billion since the end of 2009, when they stood at SR1,570 billion. At the end of November, the assets were more than double their level of nearly SR620 billion at the end of 2005.

Analysts said the surge in the assets in October and November indicated Saudi Arabia’s earnings have largely surpassed its actual expenditure despite a steep rise in the Gulf Kingdom’s actual expenditure
Saudi Arabia, which controls more than 20 per cent of the world’s extractable crude deposits, projected a budget deficit of around SR70 billion in 2010 but it turned into a surplus of about SR108.5 billion, according to official data.

The surplus was against a deficit of nearly SR86 billion in 2009, when spending hit another record and the Kingdom’s income sharply declined because of lower oil prices following the 2008 global fiscal crisis.

Saudi Arabia, the largest Arab economy, basked in its highest ever fiscal surplus of 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.

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.

In a recent study, the Riyadh-based Jadwa Investments expected high oil prices to boost SAMA’s foreign assets to more than SRtwo trillion at the end of 2011.

Follow Emirates 24|7 on Google News.