Saudi assets gain SR266bn in 8 months

Saudi Arabia’s foreign assets gained a whopping SR266 billion (Dh264
billion) in the first eight months of 2012 due to strong oil prices, a monthly average of around SR33 billion, or more than SRone billion a day.

Oil prices averaged more than $110 a barrel during January-August 2012, nearly 50 per cent above the breakeven crude price needed by the world’s dominant oil exporter and largest Arab economy to balance its budget.

From around SR2,057.8 billion at the end of 2011, the foreign assets of the Saudi Arabian Monetary Agency (SAMA), central bank, soared to an all time high of nearly SR2,323 billion at the end of August, SAMA said in its monthly bulletin.

The assets swelled by nearly SR46 billion over their previous month’s level of SR2,287 billion, one of the biggest monthly increases over the past two years.

The increase in the assets in the first eight months was in most components of the funds, with deposits with banks abroad surging from
SR414 billion to SR490.2 billion. Investment in foreign securities, which account for nearly two thirds of the total assets, grew to
SR1,595 billion from SR1,427.8 billion.

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. According to National Commercial Bank, Saudi Arabia’s largest bank, the surplus could exceed SR300 billion.

In 2011, SAMA’s 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. Riyadh’s basked in its highest fiscal surplus of nearly SR580 billion in 2008 when oil prices averaged around $95 a barrel, nearly 50 per cent above its budgeted price.

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.

In a recent study, the International Monetary Fund said massive financial surpluses would allow Saudi Arabia to boost its foreign assets to more than $one trillion (SR3.75 trillion) in 2015

It projected the assets to climb to $701 billion at the end of 2012 and continued their growth to reach $843 billion at the end of 2013 and $953 billion at the end of 2014 before smashing the $one-trillion barrier in 2015.

By Staff, November 12, 2012