Saudi Arabia's foreign assets continued to decline for the sixth straight month in May, but at a slower pace, after almost a decade of steady growth driven by rising oil prices, official data released Saturday show. Foreign assets controlled by the Saudi Arabian Monetary Agency (SAMA), the Kingdom's central bank, declined 1.07% to SR1.483 trillion ($395.47 billion) in May, compared to a month earlier. The Kingdom has shed $47.7 billion in foreign assets since November 2008, according to a report posted on SAMA's website. SAMA governor Muhammed Al-Jasser said last month the Kingdom was not selling foreign assets. He said Saudi Arabia was using its accumulated foreign assets to stave off an economic decline. “Oil prices are going down, revenue from oil is going down, but our spending continues to be very robust. That's what we accumulate foreign reserves for,” Al-Jasser said. Saudi Arabia injected SR31.4 billion ($8.37 billion) in the fourth quarter of 2008 to support its financial system through a variety of measures including direct deposits into local banks. Net foreign assets of commercial banks continued to rise in May to SAR93.5 billion, compared with SAR83.2 billion in April, as lenders maintain tight controls over credit. Banks in Saudi Arabia have increasingly parked their cash with SAMA and foreign institutions after the global financial system was hit by the collapse of Lehman Brothers last autumn. The Kingdom's banks had net foreign assets of just SAR45 million in September 2008, according to SAMA's data. The central bank has been trying to spur lending by reducing its reverse repo, or deposit, rate, which it cut to 25 basis points this month. But the central bank data show that the rate cuts may be shifting deposits away from SAMA to foreign banks. According to John Sfakianakis, the chief economist at SABB, the Saudi affiliate of HSBC Holdings PLC (HBC), Saudi commercial banks' reverse repo deposits at SAMA shot up almost 100 times to SR88.2 billion at the end of May, from SR930 million in October 2008.
