25/06/2011
Kingdom’s foreign assets surge
Accordign to data by the Saudi Arabian Monetary Agency (SAMA)
Saudi Arabia’s foreign assets increased by more than SR100 billion in the first four months of 2011, data from the Saudi Arabian Monetary Agency (SAMA) said.
The surge in foreign assets in 2010 was a result of higher than expected oil prices, which turned the country’s budgeted deficit into a surplus of nearly SR109 billion compared with a deficit of SR87 billion in 2009 and a record high surplus of SR581 billion in 2008, when oil prices peaked at an average of $95 a barrel.
From around SR1,705 billion ($455 billion) at the end of 2010, the total foreign assets controlled by SAMA leaped by SR101.7 billion to SR1,806.7 billion ($482 billion) at the end of April, the figures showed.
A breakdown showed SAMA’s investment in foreign securities jumped by around SR85 billion to SR1,267 billion ($337 billion ) from SR1,181.9 billion ($315 billion).
Deposits with banks abroad edged up slightly to around SR344.5 billion ($91.7 billion) from SR343 billion (91.4 billion) in the same period. The monthly bulletin showed there was an increase of around SR16 billion in foreign currencies and gold to reach SR151.8 billion (40.5 billion). However, there was a decline by about SR3 billion in currency notes to SR22 billion ($5.8 billion).
In the first four months of 2011, crude prices averaged as high as $100 a barrel and could be far higher through the year because of recovering demand and political unrest in the Middle East and North Africa, where oil supplies by OPEC member Libya have been totally disrupted.
According to National Commercial Bank (NCB), the 2011 deficit could turn into an actual surplus of around SR77 billion.
"We believe that revenues are underestimated, and the government will still manage to record a surplus in 2011. With our forecast of $80 for the average Arabian light spot prices and an 8.5 million bpd for average oil production in 2011, we project revenues and expenditures at SR753 billion and SR677 billion, respectively. This would lead in turn to a budget surplus of SR77 billion, or 4.2 percent of estimated GDP in 2011," NCB said. It expected actual expenditure to be overshot by around 17 percent through the year as the government is pursuing post-crisis fiscal expansionary measures, which are aimed at supporting the economy.
Other assets gained nearly SR3 billion to rise to SR21.2 billion ($5.6 billion.
Jadwa Investment said in a separate study that an increase of around SR135 billion in SAMA’s assets through 2010 was below expectations but added this was due to high public expenditure as part of the country’s expansion measures.
"The increase for the whole of 2010 was below that which would be expected with an average oil price of $80 per barrel due to high public spending."
In late 2010, Saudi Arabia announced another record high budget of SR580 billion for 2011, with a deficit of SR40 billion.
But analysts believe the shortfall will again revert into a surplus at the end of the year oil price just under $60 assumed by government will be far below the expected actual price.
