Saudi Arabia foreign reserves to rise for third straight month, central bank chief reveals

Ahmed Al- Kholifey, governor of SAMA, said the Kingdom’s foreign reserves are set to rise for a third straight month. (Reuters)

DAVOS: The Kingdom’s foreign reserves are set to rise for the third straight month when the Saudi Arabian Monetary Authority (SAMA) issues its regular monthly update on Sunday.
The impending increase in reserves for the month of December was revealed by Ahmed Al- Kholifey, governor of SAMA — the Kingdom’s central bank — on the sidelines of the World Economic Forum annual meeting in Davos.
“Monthly reserves will be inching up again. It is a good thing, showing there is great momentum in Saudi Arabia’s economy,” he said at an event organized by the Bahrain Economic Development Board.
In November, reserves rose by $1 billion (SR3.748 billion) to $486.9 billion, after an $8.3 billion leap the previous month.
A full quarter of consecutive rises will ease fiscal pressure in the Kingdom, after low oil revenues led to a steady drain on reserves for the previous three years. SAMA’s reserves peaked at $737 billion in the summer of 2014, before the value of oil fell on world markets.
The oil price has been in steady recovery for most of the second half of last year, as the deal between OPEC and some non-OPEC producers to limit crude output took effect.
Al-Kholifey said: “From the point of view of a central bank governor, $70 a barrel would be good.”
Asked if a rising oil price would distract policymakers from pushing through with the Vision 2030 strategy to reduce the economy’s dependence on oil, he replied: “I know that has happened in the past, but this time it’s different.”
The figures to be announced on Sunday relate to the last month before the introduction of value added tax (VAT) on Jan. 1.
The revenue from VAT is likely to further boost SAMA reserves when figures are reported next month, but the cost of recent allowances for public sector employees will offset some of the benefit from VAT.