Riyadh: Saudi Arabia’s net foreign assets dropped for a 10th month in a row in November as the kingdom used reserves to finance its budget deficit amid the plunge in oil prices.
The central bank’s net foreign assets fell by $12.55 billion (Dh46 billion), the biggest drop since March, according to data released on Monday. The assets have tumbled $109 billion since August 2014. Finance Minister Ebrahim Al Assaf told local media on Monday that he expects the government to issue international bonds in 2016 in addition to local debt to finance the shortfall.
The oil price slump has pushed Saudi officials to make unprecedented decisions, including cutting fuel, electricity and water subsidies. The government plans to reduce spending in next year’s budget to 840 billion riyals ($224 billion) from 975 billion riyals spent in 2015. The budget deficit is expected to narrow to 326 billion riyals in 2016 from 367 billion riyals this year, according to the Finance Ministry.
This year’s shortfall is equivalent to about 16 per cent of gross domestic product, according to the National Bank of Abu Dhabi. The median estimate of 10 economists forecast a deficit of 20 per cent of GDP, according to data compiled by Bloomberg.
The government wants to diversify methods of financing its deficit to avoid “affecting the ability of banks to lend to the private sector,” Al Assaf said, according to Al Eqtisadiah newspaper.
