Saudi Arabia’s central bank depleted its net foreign assets in March at the fastest clip since at least 2000, showing the severity of the damage inflicted on public finances by the slump in oil prices.
The drop of more than 100 billion riyals ($27 billion) brought the stockpile to $464 billion, the lowest since 2011, according to data compiled by Bloomberg. Last week, Saudi Finance Minister Mohammed Al-Jadaan said the kingdom would only draw down reserves by up to 120 billion riyals over the whole year.
The world’s biggest oil exporter is having to dig deeper into reserves despite scaling back spending and looking to rely more on debt to withstand the historic collapse in commodity markets. Crude sales account for the majority of the government’s revenue.
The price of Brent crude crashed by more than 50 per cent in March and has fallen further since then, trading around $20 a barrel — far short of the $76.1 the International Monetary Fund estimates Saudi Arabia needs to balance its budget.
Already under lockdown to contain the spread of the coronavirus pandemic, Saudi Arabia is bracing for a second impact from the oil rout and unprecedented production cuts negotiated by OPEC and its allies.
The finance minister has said the government wouldn’t lean more than anticipated on its reserves, with the kingdom planning to boost borrowing to 220 billion riyals this year as it absorbs the shock to its budget.
Saudi Arabia has already tapped international bond markets twice this year and has borrowed a total of $19 billion from local and international investors, according to data compiled by Bloomberg.
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