Saudi Arabia’s foreign assets down 14 per cent as it covers huge budget deficit

Net foreign assets at Saudi Arabia’s central bank fell 1.9 per cent in November from the previous month to 2.356 trillion riyals ($628 billion) as the government liquidated assets to cover a huge budget deficit caused by low oil prices.

Assets dropped 14.2 per cent from a year earlier to their lowest level since October 2012, central bank data showed on Monday. They reached a record high of $737 billion in August last year before starting to shrink.

The central bank acts as Saudi Arabia’s sovereign wealth fund and has born the brunt of financing the deficit, which totalled 367bn riyals this year, according to a Finance Ministry statement on Monday.

The assets, some of which are managed by global fund firms, are mainly securities such as US Treasury bonds and deposits with banks abroad. Equities are believed to account for only a small fraction of securities holdings, perhaps 20 per cent. The bulk of assets are believed to be denominated in US dollars.

The November data showed Saudi Arabia slowing its sales of foreign securities; the central bank’s holdings of these dropped 0.5 per cent from the previous month to $425 billion. It drew down its deposits with banks abroad by 5.4 per cent to $143bn.

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