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HomeWorldSaudi foreign reserves top $500bn for first time

Saudi foreign reserves top $500bn for first time

Saudi Arabia’s foreign reserves surpassed $500 billion for the first time in July, giving the biggest Arab economy scope to carry out its spending plans to foment growth and weather any potential drop in oil prices.

Total reserves assets increased to SR1.90 trillion ($506 billion) from SR1.86 trillion in the previous month, according to data posted on the Saudi Arabian Monetary Agency’s website.

Foreign currency and deposits abroad rose 1.3 percent to SR493 million, while investments in foreign securities climbed 1.9 percent to SR1.3 billion.

“Half a trillion dollars is a lot in anyone’s book,” said Simon Williams, chief economist for the Middle East at HSBC Holdings.

“Oil prices are high, they are running surpluses and those surpluses get recycled overseas.”

The kingdom, which depends on oil for 86 percent of its revenue, announced increases in government spending in March as protests calling for more job opportunities and democracy engulfed the Middle East.

The package included $67 billion on housing and funds for the military and religious groups that backed the government’s ban on domestic protests, and followed a $36 billion handout announced on February 23.

Crude oil prices have so far averaged about $97 a barrel this year compared with about $80 last year.

“The asset stock is worth well over 100 percent of GDP, giving the kingdom a very substantial cushion to deal with any downturn in oil prices,” Williams said.

Saudi Arabia is putting profits from this year’s oil rally into US bonds even as worsening public finances in the world’s largest economy prompt China, the biggest holder of Treasuries, to slow purchases.

China’s ownership of such debt was about $1.17 trillion as of June 30, down from $1.18 trillion in October 2010 and little changed from $1.16 trillion the end of 2010, US government data show.

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