Saudi Arabia's foreign assets dropped by about SR190 billion in the first half of this year amid heavy public spending in a bid to boost economy dampened by global fiscal woes, the Saudi Arabian Monetary Agency (SAMA), the Kingdom's central bank, said in its June statistical bulletin. From around SR1.7 trillion at the end of 2008, the foreign assets tumbled to about SR1.5 trillion at the end of June, said SAMA. The bulk of withdrawal was from the deposits with banks abroad as they plunged by about SR131 billion to SR248.3 billion at the end of June from SR379.4 billion at the end of 2008. SAMA's investments in foreign securities, which account for over two thirds of its total assets, slumped to around SR1.1 trillion from about SR1.2 trillion in the same period. In June alone, the withdrawals amounted to about SR26 billion, slightly higher than in the previous month but far lower than the withdrawn funds of about SR42 billion in April. Experts attributed the slowdown in the Kingdom's withdrawal from overseas investments to an improvement in oil prices, which shot above $70 a barrel last month from an average $43 in the first quarter of 2009. Crude prices rallied this week as the Dow Jones industrial average increased 11 percent in the last nine days and passed the 9,000 mark for the first time since January. Benchmark crude for September increased Friday, adding 97 cents to $68.13 a barrel on the New York Mercantile Exchange. Oil prices climbed $1.70 per barrel this week. In London, Brent prices rose 76 cents to $70.01 a barrel on the ICE Futures exchange. The Kingdom's decision to withdraw from foreign assets has been prompted by a sharp decline in its oil export earnings, which were estimated by the US Energy Information Administration at around $61 billion in the first half of 2009, below half its income of $140 billion in the same period of 2008. Saudi Arabia has assumed a price of around $50 for its crude in its 2009 record budget but the price of Opec's basket averaged nearly $57 in May and around $50.2 in April. It was below the kingdom's forecasts at around $45.7 in March and nearly $41.4 in February and January. “Saudi Arabia is using its overseas assets to finance domestic requirements specified in its budget for this year… in other words, the kingdom is channeling part of those funds into domestic development because it apparently does not want to borrow at this stage,” said Malick Yunus, economist at NCB. __
