Saudis ‘com­fort­able’ with for­eign re­serves

The Myanmar Times - - International Business -

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. –

Photo: AFP

Ahmed Alkho­lifey has no is­sue with the fall in for­eign re­serves.

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