Drain on Saudi Foreign Assets Slows as Government Cuts Spendingby
Net foreign assets fell 1 percent to $579 Billion in March
Rate of decline slowest since July as reform program starts
The decline in Saudi Arabia’s net foreign assets slowed for a third month, helped by a rebound in oil prices as well as spending cuts and domestic bond sales.
Net foreign assets held by the Saudi Arabian Monetary Agency fell 1 percent in March to $579 billion, the slowest pace of decline since July, indicating that the drain on currency reserves that began in 2014 is moderating.
Net foreign assets dropped by $115 billion last year as Brent crude below $50 a barrel pummeled state finances, forcing officials to rein in spending and re-evaluate government projects. In December, authorities announced a series of economic measures, including subsidy cuts as well as plans to introduce value-added taxation.
Brent crude prices recovered by 10 percent in March. The kingdom is also tapping more avenues to finance its budget in addition to domestic bond sales and drawing down on reserves. The government sealed a $10 billion syndicated loan this month, according to three people with knowledge of the matter, and is planning to sell international bonds.
On Monday, Deputy Crown Prince Mohammed bin Salman laid out a plan for fiscal, economic and social reforms over the coming 15 years. Under the blueprint, the government seeks to raise non-oil revenue by more than $100 billion by 2020 to balance the budget, a target some economists said will be challenging to implement.