Saudi assets growth set to slow

Saudi Arabia’s foreign assets are expected to grow at a slower pace in the coming months after a rapid increase through 2012 mainly because of lower oil prices and overspending by the world’s dominant oil exporter.

A local study put the Gulf Kingdom’s net foreign assets, controlled by the Saudi Arabian Monetary Agency (SAMA) at SR2,677 billion (Dh2,650 billion) at the end of May 2013 compared with nearly SR2,633 billion (Dh2,607 billion) at the end of April.

The study by the Riyadh-based Jadwa Investments said SAMA added SR31.8 billion to its assets in May, leading to an expansion of 1.3 percent month-on -month as its gross foreign assets rose by SR31 billion compared with SR19.7 billion in the previous month.

At the same time, SAMA’s foreign liabilities marginally increased from SR4.7 billion at the end April to SR5.7 billion in May, it added.

The report showed the improvement in gross foreign assets reflects in part a rebound in oil production during April and May, which were scaled slightly up to 9.3 million barrel per day (mbpd) compared with 9.1mbpd year-to-March.

Foreign asset position also contributed to an expansion in SAMA’s total assets, which grew 1.7 percent month-on-month in May to SR2,602 billion.

Within the foreign assets, SAMA increased its investment in foreign securities and in foreign currencies convertible to gold by SR55 billion and SR5 billion in May, respectively, while reducing deposits with banks abroad by SR27.3 billion.

“We maintain our view that the positive momentum in SAMA’s foreign assets is likely to slow over the coming few months relative to their strong growth last year as oil prices shift to below $105 per barrel and the Kingdom adjusts its production to an average of 9.6mbpd this year,” Jadwa said in the study, sent to Emirates 24/7.

It showed Saudi Arabia, the largest Arab economy, will again overshoot budgeted expenditure as was the case in previous years due to a sharp rise in revenue.

The report projected actual spending at nearly SR870 billion compared with budgeted expenditure at SR820 billion. It said actual revenue could also surge to nearly SR1,047 billion in 2013 against budgeted revenue of SR829 billion.

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