Saudi foreign reserves drop over low oil prices
The latest market data show that Saudi Arabia’s foreign reserves dropped to $644 billion at the end of October as the price of oil remained low.
AFP has quoted Jadwa Investment as announcing in a statement that Saudi Arabia’s foreign reserves for September stood at $651 billion. The statement added that the drop over the past month was slower than previous months.
Jadwa Investment also said that Saudi Arabia since the start of the year has withdrawn $88 billion from its foreign reserves to finance its state budget. This, it said, has been due to the sharp fall in income from oil, which makes up over 90 percent of public revenues.
Oil prices have crashed from around $115 a barrel in June last year to under $45 a barrel now.
Nevertheless, the rate of government withdrawals slowed down from the first half of 2015 partly due to the issuing of bonds to fund a budget deficit projected by the International Monetary Fund to be around $130 billion.
The slowdown is also due to measures adopted by Riyadh to rationalize spending which has been growing at a rapid pace in the past few years, Jadwa added.
In 2014, Saudi Arabia posted a budget deficit of $17.5 billion — only its second shortfall since 2002, AFP said.
For Saudi Arabia, the prospects of big fiscal deficits has already prompted officials to float the idea of potentially unpopular reforms, including introducing value added tax and cutting energy subsidies.
Reduced oil revenue is also causing some of the influential business class to push Riyadh to quickly find an end to its expensive war in Yemen, reports said on Wednesday.