Saudis ‘comfortable’ with foreign reserves
SAUDI Arabia has a “very comfortable” level of foreign reserves, the central bank chairperson said despite a drawdown in assets to help cover a fall in oil revenue.
At the end of September, the reserves totalled US$555 billion, a drop from about $616 billion at the end of 2015 and $732 billion a year earlier.
“I think we are very comfortable. We have no issue with that,” Saudi Arabian Monetary Agency Governor Ahmed Alkholifey told a press conference after the release of SAMA’s annual economic report.
Since 2014, global oil prices have collapsed by more than half, accelerating Saudi efforts to move away from petroleum which still accounts for the bulk of government income.
The world’s biggest oil exporter, in its budget last December, projected a deficit of $87 billion this year.
Mr Alkholifey could not publicly comment on whether this year’s deficit is expected to approach that figure, although SAMA has confidential internal forecasts.
Its annual report said oil revenues fell 51 percent last year to $119 billion, or 72.5pc of revenues.
Non-oil proceeds rose to $45.2 billion, or 27.5pc, up from 12.5pc. Expenditure was $260 billion, leaving a record deficit last year of $97 billion. Faced with this shortfall, Riyadh took a series of austerity measures, including subsidy cuts, reductions in salaries and delays in major projects.
Along with drawing on its reserves in an effort to cover its fiscal gap, the kingdom has issued domestic bonds and in October raised $17.5 billion from its first international bond issue.
The Saudi economy grew by 3.5pc in the first half of this year.
The International Monetary Fund projects Saudi real Gross Domestic Product growth of far less, at 1.2pc this year, compared with 3.5pc in 2015. –
Ahmed Alkholifey has no issue with the fall in foreign reserves.