Saudi Arabia's foreign assets are forecast to reach a new peak of SR1.9 trillion at the end of 2011, the National Commercial Bank (NCB) said. The sustained strong oil prices coupled with higher crude output pushed the Kingdom's foreign assets to a record high of more than SR1.8 trillion at the end of May this year. The bank said the country boosted supply to one of its highest levels of 9.4 million bpd to offset Libya's supply disruption. It noted that in recent years, the Kingdom's policy of stockpiling foreign assets has been noticeable, adding that this policy has not changed. "The economic outlook for the Kingdom of Saudi Arabia in 2011 is encouraging and very positive," Saudi Arabian Monetary Agency (SAMA) Gov. Muhammad Al-Jasser said in a speech posted on the central bank's website. "The Kingdom posted a real gross domestic product growth of 4.1 percent in 2010 and expects an average rate of 4.3 percent in 2011. But the package of decisions taken by Custodian of the Two Holy Mosques King Abdullah recently to enhance the purchasing power of citizens and increase investment in housing and health may lead to higher growth estimates of around 6 percent for the current year," he added. As a result, net foreign assets (NFA) reached a new record by surpassing the SR1.8 trillion mark in May. Over the three months period of March to May, NFA grew by 10.9 percent, 13.2 percent, and 15.6 percent, respectively. Foreign currencies and gold grew by a remarkable 25.1 percent, while deposits with banks abroad expanded by 23.9 percent year-on-year during May. The main composition of NFA constituting over 70 percent, investments in foreign securities, gained 12 percent and has been growing in double digits through the preceding five months, NCB said, citing data by the Saudi Arabian Monetary Agency (SAMA) which controls those assets. "The government stated that it will not tap into foreign assets to fund the royal decrees announced earlier this year. We expect NFA to reach close to SR1.9 trillion by the end of 2011 as Libya's supply shortage will take time to recover, which will keep oil prices elevated for an extended period of time." From SR1,806.7 billion ($482 billion) at the end of April, SAMA's foreign assets soared to a record high of SR1,856.2 billion ($495 billion) at the end of May. The increase meant that Saudi Arabia's foreign assets swelled by a whopping SR140 billion in the first five months of 2011, the biggest increase in such a period of time, according to financial analysts in the country. The surge was a result of a sharp rise in oil prices, which averaged nearly $109 in May, nearly $50 above Saudi Arabia's budget forecasts. As crude prices hovered at $100 a barrel, Saudi Arabia is experiencing robust revenues and, accordingly, accelerating the Kingdom's current and fiscal accounts surpluses, NCB said in a study. A breakdown showed SAMA's deposits with banks abroad grew from around SR344.5 billion at the end of April to SR360.1 billion at the end of May. Investment in foreign securities swelled from SR1,267 billion to SR1,293.8 billion.
