Saudi Arabia’s international reserve assets reached in May a 18-month high of SAR1.75 trillion ($467.5 billion), representing a 6 percent annual increase, according to new data from the Saudi Central Bank (SAMA).
These holdings include monetary gold, special drawing rights (SDRs), the International Monetary Fund’s (IMF) reserve position, and foreign currency reserves. International currency holdings – such as deposits abroad and investments in foreign securities – constituted 95 percent of the total, amounting to SAR1.66 trillion, up 6 percent during this period.
SDRs and the IMF reserve position
SDRs made up 4 percent of the total at SAR77.68 billion, increasing by 0.3 percent. SDRs are an IMF-created supplementary foreign exchange reserve asset, valued based on a basket of major currencies. They provide additional liquidity, stabilize exchange rates, and facilitate international trade and financial stability.Â
The IMF reserve position, which represents the amount a country can draw from the IMF without conditions, totaled SAR12.72 billion, down 14 percent during this period.
Fitch’s affirmation of Saudi Arabia’s credit rating
In March, Fitch Ratings affirmed Saudi Arabia’s long-term foreign-currency issuer default rating at “A+” with a stable outlook. The agency cited the Kingdom’s robust fiscal and external balance sheets, as well as improvements in governance driven by social and economic reforms.
Projected decline in reserves
Fitch expects Saudi Arabia’s reserves to decrease to an average of $420 billion by 2024-2025, due to a narrowing current account surplus, offset by investments from entities like the Public Investment Fund. However, sovereign net foreign assets are projected to remain above 50 percent of GDP during this period, well above the “A” median of 6 percent.
IMF’s praise for Saudi Arabia’s economic transformation
The IMF recently praised Saudi Arabia’s “unprecedented economic transformation,” attributing its success to prudent policies and effective diversification efforts. The IMF projects the Kingdom’s GDP growth to accelerate to around 4.5 percent by 2025, with non-oil growth reaching 3.5 percent in 2024 before further increasing.
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