Saudi assets to gain $107bn

Strong crude prices will allow with high production to lift Saudi Arabia’s hydrocarbon export earnings to an all time high in 20121 and this will boost the Gulf Kingdom’s net foreign assets by a whopping $107 billion.

Figures by National Commercial Bank (NCB), the country’s largest bank, showed a surge in public revenue will widen the Kingdom’s fiscal and current account surplus despite an expected increase in expenditure.

From around $535.9 billion (Dh1.96 trillion) at the end of 2011, Saudi Arabia’s net foreign assets are projected to swell to nearly $642 billion (Dh2.35 trillion) at the end of 2012, NCB said in a study sent to Emirates 24/7.

The assets are expected to further grow to around $718 billion at the end of 2012, their highest ever level, the report showed.

The assets, managed by the Saudi Arabian Monetary Agency (SAMA), central bank, have rapidly risen over the past few years because of a surge in oil prices and the country’s crude production.

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 report showed high oil prices, which have remained above $100 a barrel this year, would boost Saudi Arabia’s actual public revenue to a record high of SR1,150 billion while actual spending will also likely rise to SR771.8 billion, creating a budget surplus of nearly SR320 billion, the Kingdom’s second largest fiscal balance since the 2008 record surplus of SR580 billion.

The current account is also projected to soar to an all time high of around $174 billion this year from $158 billion in 2011, NCB said.

As a result of high crude prices and output, Saudi Arabia’s oil export earnings are forecast to hit a record high of $335 billion in 2012 compared with $317 billion in 2011 and around $215 billion in 2010.

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.

NCB projected the price of Saudi Arabia’s crude to average around $105 in 2012, slightly lower than the record price of $108 in 2011. But it expected the Kingdom’s crude output to surge to 9.9 mbpd this year from 9.3 mbpd in 2011. In 2013, production could climb to one of its highest levels of 10.1 mbpd.

By Staff, September 24, 201