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May numbers have also seen an increase in consumer spending levels, though this could be to pre-empt higher VAT of 15% from July. Image Credit: Gulf News Archive

Riyadh: Saudi Arabia's net foreign assets rose in May, reversing three months of declines.

The stockpile climbed by about 3 billion riyals ($800 million), to $445 billion, according to a monthly report from the Saudi Arabian Monetary Authority.

Officials have said a record cumulative decline of more than $47 billion in March and April was mainly due to a $40 billion transfer from the central bank to the sovereign wealth fund, intended to support investments abroad to take advantage of market turmoil during the coronavirus pandemic.

Finance Minister Mohammed Al-Jadaan has said the government would only draw down reserves by up to 120 billion riyals over the whole year, as originally planned in the budget.

$47billion

Decline in Saudi Arabia's net foreign assets during March and April

The central bank data released on Sunday showed that May's consumer spending was down sharply year-on-year, with electronic points-of-sales transactions combined with cash withdrawals declining 32 per cent.

But demand picked up relative to April, with the total up nearly 20 per cent on a monthly basis. The kingdom eased many of its coronavirus-related precautions in May, including a curfew that had curbed business hours, and many Saudis have been front-loading purchases ahead of an expected increase to value-added tax July 1.

With reserves at the lowest in almost a decade, Saudi Arabia has tried to rein in spending at home as it faces a double crisis from the outbreak and a major decline in energy revenue. The government, which counted on crude for over 60 per cent of its income this year, is now contending with oil output cuts and prices well below its breakeven level.

Marginal gains

Global benchmark Brent crude rose nearly 40 per cent in May from April, and has traded at over $40 a barrel this month - still far short of the $76.10 the International Monetary Fund estimates Saudi Arabia needs to balance its budget.

The IMF sees Saudi Arabia's economy contracting 6.8 per cent this year.