US discloses Saudi holdings of Treasuries for first time

Washington: The Treasury Department has released a breakdown of Saudi Arabia’s holdings of US debt, after keeping the figures secret for more than four decades.

The stockpile of the world’s biggest oil exporter stood at $116.8 billion (Dh429 billion) as of March, according to data the Treasury disclosed on Monday in response to a Freedom-of-Information Act request. The tally ranks Saudi Arabia among the top dozen foreign nations in terms of holdings of US debt, and compares with China’s $1.3 trillion trove, and $1.1 trillion for Japan.

Yet the disclosure may bring more questions than answers, because Saudi Arabia’s foreign reserves amount to $587 billion, and central banks typically put about two-thirds of their coffers in dollars, according to International Monetary Fund data. Some nations accumulate Treasuries in offshore financial centres, meaning the holdings show up under the data of other countries. For example, Belgium, which held $143 billion of US government debt as of February, is home to Chinese custodial accounts, analysts say.

In a sign that Treasury’s figures on the kingdom’s ownership fall short of the full tally, the New York Times reported last month that Saudi officials threatened to sell $750 billion of Treasuries and other assets in the US if Congress enacts a bill allowing the monarchy to be held responsible in American courts for any role in the September 11, 2001, terror attacks.

1970s decision

The US started releasing data on foreign ownership of Treasuries in 1974. Since then, the Treasury’s policy had been to not disclose Saudi holdings, and it grouped them instead with those of 14 other mostly Opec nations, including Kuwait, Nigeria and the UAE, Bloomberg reported in January. The group held $281 billion as of February, down from a record of $298.4 billion in July.

For more than a hundred other countries, from China to the Vatican, the Treasury had provided a detailed monthly breakdown of how much US debt each owns. The figures for March are scheduled for release at 4pm New York time on Monday.

The question of Saudi holdings of Treasuries is gaining importance as the monarchy faces fiscal pressure from the decline in oil prices and costly wars in the Middle East.

In the past year, Saudi Arabia burnt through 16 per cent of its foreign-exchange reserves to plug its biggest budget shortfall in a quarter-century, according to data from the kingdom’s central bank. The signs of strain are prompting concern over Saudi Arabia’s potential influence on the world’s largest and most important bond market.

Saudi Arabia’s holdings of Treasuries peaked at $123.6 billion in January, the data released on Monday show.