Saudi Arabia’s holding of US bonds amounted to $127.3bn in May

RIYADH: Saudi Arabia’s holding of US Treasury securities amounted to $127.3 billion in May 2021, according to new data from the US government.
The amount was down 3 percent compared to April but up 3 percent compared to May 2020. This year-on-year increase is in line with global trends, as countries around the world increased their holdings by 2.25 percent in the year leading up to May 2021.
However, analysis showed that Saudi holdings are still down from their peak of $184.4 billion in February 2020. As the global pandemic took hold in March last year, the Saudi government decreased its holding by 25 percent and by a further 33.8 percent in April, as the Kingdom’s reserves were hit by the collapse in oil prices.
“The decrease in Saudi holdings of US treasuries follows the larger trend of the Kingdom drawing down its total foreign reserves to support the economy’s rebound in the wake of the pandemic. The economy has gradually rebounded since pandemic-induced restrictions limited commercial and consumer spending,” Albara’a Al-Wazir, an economist at the US-Saudi Business Council, told Arab News.
“The increase in spending has brought a surge in imports to accommodate growing demand. In order to finance the growth in imports, Saudi Arabia targeted its foreign reserves, as was recently stated by the Saudi Central Bank’s governor,” he added.
In August last year, Saudi Arabia began to boost its holdings once again, peaking in November and then continuing to decline by low single percentages ever since.
“The rate of decline has recently slowed, with small additions depending on the vagaries of oil prices, which will continue to be the key parameter for either additions or drawdowns in the next few months. With oil prices forecast at around the $72-75 ranges, or even higher in the first quarter of 2022, there will be some expected Saudi T bill additions,” Mohammed Ramady, former professor of finance and economics at King Fahd University of Petroleum and Minerals, told Arab News.
The Kingdom is the 14th largest holder of US debt. Japan remains number one, with $1266.2 billion in US bonds, followed by China ($1078.4 billion), the UK ($467.7 billion), Ireland ($304.9 billion) and Luxembourg ($287.6 billion).
The UAE holds $57.3 billion, an increase of nearly 100 percent year-on-year. Kuwait holds $45.9 billion, up just 5 percent year-on-year.