Saudi Foreign Reserves Drop Sharply, Deficit Balloons Due to Corona-Induced Oil Glut

Saudi Arabia’s foreign reserves declined nearly $27 billion in March – the steepest drop in at least 20 years – as the severe economic slowdown due to the coronavirus pandemic lowered demand for oil and sent oil prices and revenues into a tailspin. Oil revenues declined in the first quarter of 2020 at an annualized rate of 24%. The country’s net foreign assets, which include securities such as US Treasury bonds and foreign deposits, now total $464 billion – their lowest level since 2011. Meanwhile, on Wednesday, the kingdom’s Finance Ministry reported a first-quarter budget deficit of $9 billion. In 2019, Saudi Arabia had a first-quarter surplus of $7.4 billion. Finance Minister Mohammed al-Jadaan said last week the kingdom would not draw down more than $32 billion from its reserves this year and would instead increase its borrowing to nearly $60 billion to contain the widening deficit. Saudi Arabia had projected a deficit of $50 billion this year – 6.4% of gross domestic product – a 43% increase over last year’s $35 billion deficit. But that was before the coronavirus crisis and plunge in oil prices. The finance minister now says this year’s deficit could widen to 9% of GDP, but some analysts predict a deficit amounting to 22% of GDP.

Invest in the
Trusted Mideast
News source.
We are on the
front lines.

Personalize Your News
Upgrade your experience by choosing the categories that matter most to you.
Click on the icon to add the category to your Personalize news
Browse Categories and Topics
Wake up to the Trusted Mideast News source Mideast Daily News Email
By subscribing, you agree to The Media Line terms of use and privacy policy.
Wake up to the Trusted Mideast News source Mideast Daily News Email
By subscribing, you agree to The Media Line terms of use and privacy policy.