Saudi Arabia boosted its investments in foreign securities by nearly SR73 billion in the first half of 2010 as the world’s dominant oil power continued to benefit from high oil prices to rebuild its foreign assets, official data showed on Tuesday.
In contrast, the Gulf Kingdom’s bank deposits with foreign banks plunged by nearly SR40 billion in the same period, showed the figures by the Saudi Arabian Monetary Agency (SAMA), the country’s central bank.
Overall assets gained about SR37 billion in the first half despite a surge in the country’s public spending as part of counter-crisis stimulus measures.
From around SR1,071 billion (Dh1,060 billion) at the end of 2009, SAMA’s investments in foreign securities soared to nearly SR1,144 billion (Dh1,1432) billion) at the end of June, SAMA said in its June bulletin.
But bank deposits slumped from a record high of around SR335.6 billion (Dh332 billion) to nearly SR295 billion (Dh292 billion) in the same period.
The surge in securities investment boosted SAMA’s overall assets from around SR1,570 billion (Dh1,555 billion) at the end of 2009 to nearly SR1,607 billion (Dh1,591 billion) at the end of June, the report showed.
Overall assets had swelled in most months of the first half but declined in June from the previous month’s SR1,611 billion (Dh11,595 billion). The fall was mainly in foreign securities, which dipped by nearly SR nine billion as bank deposits abroad gained about SRfive billion in June.
Analysts said they relative stability in Saudi Arabia’s assets, an indication that the country recorded a fiscal surplus during that period although it is again believed to be overshooting budgeted spending.
They noted that oil prices averaged around $70 during the first half of this year, nearly 40 per cent above Riyadh’s forecast of $50 a barrel.
Despite higher expenditure, most financial institutions in the Kingdom expect a projected SR70-billion deficit in the budget to turn into an actual surplus.
According to the Riyadh-based Jadwa Investments, the 2010 budget would record a surplus of around SR23 billion due to a sharp rise in revenue.
It expected the Kingdom, which controls over a fifth of the world’s proven oil deposits, to earn around SR626 billion (Dh620 billion) in 2010, nearly 39 per cent above the budgeted revenues of SR470 billion (Dh465 billion).
But it also predicted Riyadh would exceed spending to a record high of SR603 billion (Dh597 billion) against the planned SR540 billion (Dh535 billion).
In a recent study, a key Saudi bank expected SAMA’s assets to surge by nearly 14 per cent at the end of this year because of higher oil prices.
Banque Saudi Fransi (BSF) said the increase this year would follow a decline by around 12 per cent in those assets because of heavy withdrawal by the government to meet growing spending commitments at home.
SAMA’s June bulletin showed its assets plunged by around SR139 billion (Dh137.5 billion) during 2009 after leaping by nearly SR513 billion through 2008.
Analysts attributed the surge in 2008 to the sharp rise in oil prices while the 2009 decline was caused by lower prices and higher budgetary spending.
“SAMA has always followed a conservative investment policy as most of its assets are concentrated in safe US treasury bills away from volatile stock markets and restructured products,” Saeed Al-Shaikh, chief economist at the Saudi National Commercial Bank, said in a recent study.
“This has enabled SAMA to preserve the value of its net foreign assets and kept it in a much better position than the other Gulf investment organisations, which have accumulated nearly 40 per cent of their assets in financial markets.”
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