Shuffling The Oil Wealth

Shuffling The Oil Wealth

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  • The foreign reserves of the Kingdom of Saudi Arabia experienced a significant decrease of over $16 billion in July, marking their lowest point since 2009. The Saudi Central Bank (SAMA) reported that net foreign assets dropped to around 1.53 trillion riyals ($407 billion) during the same period. This decline was attributed to a decrease in the value of foreign exchange and deposits abroad, which totaled about 554.2 billion riyals in July, down from 616.3 billion riyals the previous month. Despite this decrease, investments in overseas securities saw a slight increase, reaching 952.29 billion riyals compared to approximately 950.87 billion riyals earlier.
  • The total reserve assets of the Saudi Central Bank, as per SAMA's data, decreased to about 1.6 trillion riyals in July from approximately 1.662 trillion riyals in the prior month. These reserve assets encompass various components such as gold, reserves with the International Monetary Fund, foreign exchange, deposits abroad, and investments in securities abroad. Notably, special drawing rights are excluded from the calculation of net foreign assets, contributing to the observed decline in the overall reserve assets during this period.

Why it matters

The International Monetary Fund expects that the largest oil-exporting country in the world will face a budget deficit during the current year, amounting to 1.1% of GDP. And the Washington-based IMF estimates the price of oil that Saudi Arabia needs to balance its budget this year at more than $80 a barrel. 


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