Net foreign reserves at Saudi Arabia’s central bank fell to 2.492 trillion riyals ($664.5 billion) in June, down 1.2 percent from May to their lowest level since March 2013, latest central bank data has showed.
The world’s largest oil exporter has been drawing down its reserves to cover a huge state budget deficit caused by low oil prices. The central bank serves as the kingdom’s sovereign wealth fund, storing its accumulated earnings from oil exports.
Net foreign assets dropped 9.4 percent from a year earlier in June. They peaked at a record $737 billion last August.
They were dropping at faster month-on-month rates earlier this year, but last month the government began covering part of its deficit by selling bonds for the first time since 2007, placing a 15 billion riyal issue. This has reduced pressure for the reserves to fall.
The assets are held mainly in the form of foreign securities such as U.S. Treasury bonds – securities totalled $483.3 billion at the end of June – and deposits with banks abroad totalling $119.7 billion. The vast majority of the assets are believed to be in U.S. dollars.
The June data appeared to show a shift in the central bank’s approach. For many months it had mainly been running down its bank accounts rather than selling securities.
But in June, it liquidated a massive $32.4 billion of securities while increasing its deposits abroad by $22.9 billion, the data showed.
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