Saudi foreign assets at all-time high

Strong oil prices coupled with higher crude production boosted Saudi Arabia’s foreign assets to their highest ever level of around SR2,387 billion at the end of July despite a fall in deposits with banks for the first time this year.

The foreign assets of the Saudi Arabia Monetary Agency (SAMA), the Gulf Kingdom’s central bank, swelled by nearly SR25 billion in July and all the increase was in its investment in foreign securities, its figures showed.

The increase in July meant that SAMA’s foreign assets surged by nearly SR230 billion in the first seven months of this year to extend a steady and rapid rise in the assets over the past few years, with the exception of 2009, when they dived by about SR139 billion after the Kingdom suffered from a large fiscal deficit.

Experts said the sharp rise in the assets this year meant that Saudi Arabia is heading for another massive fiscal surplus for the third year running as a result of high oil prices and the country’s production.

A breakdown showed SAMA’s investment in foreign securities grew to around SR1,562 billion at the end of July from SR1,523 billion at the end of June and nearly SR1,427 billion at the end of 2011.

SAMA’s deposits with banks abroad dropped to about SR499 billion from SR522 billion at the end of June. They stood at nearly SR435 billion at the end of 2011.

After sharp falls in late 1990s, SAMA’s assets began their rapid rise in the following years, with the exception of 2009, because of high oil prices and a surge in the country’s crude output.

In 2011, the assets leaped by about SR352 billion as a result of high oil prices and a sharp rise in the Kingdom’s crude output to an average 9.3 million barrels per day from around 8.2 million bpd, an increase of 1.1million bpd.

It was the biggest annual increase in the assets since 2008, when they rocketed by a whopping SR513 billion mainly because of a 50 per cent rise in crude prices that allowed the country to record its highest fiscal surplus of SR580 billion.

The rise last year was also more than doubled the assets growth of around SR135 billion through 2010, when they ended the year at SR1,705 billion compared with SR1,570 billion at the end of 2009.

A surge in oil prices to a record high average of more than $105 a barrel allied with higher crude supplies to widen Saudi Arabia’s fiscal surplus to nearly SR307 billion in 2011 from SR87 billion in 2010.

The current account of the largest Arab economy and the world’s oil powerhouse also shot up to $156 billion from $69 billion.

Buoyed by strong oil prices, Saudi Arabia announced a record high budget of SR690 billion for 2012 and analysts expect actual spending to end the year much higher as was the case in previous years.

 

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