Saudi Arabia’s International Reserve Assets Reach Record High
In a remarkable achievement, Saudi Arabia’s international reserve assets soared to SR1.75 trillion ($467.5 billion) in May, marking the highest level in 18 months and a notable 6 percent increase from the previous year, according to new data released by the Saudi Central Bank, also known as SAMA.
Breakdown of Reserve Holdings
The reserve assets include monetary gold, special drawing rights, the International Monetary Fund’s reserve position, and foreign reserves. The majority of the holdings, amounting to 95 percent of the total, consisted of international currency holdings, which include currency and deposits abroad, as well as investments in foreign securities, totaling SR1.66 trillion. This category also saw a 6 percent increase during the same period.
Significance of Special Drawing Rights (SDRs)
SDRs, comprising 4 percent of the total at SR77.68 billion, play a crucial role in supplementing member countries’ official reserves. These reserves derive their value from a basket of major currencies and provide additional liquidity, stabilize exchange rates, act as a unit of account, and facilitate international trade and financial stability.
Positive Ratings and Economic Transformation
Fitch Ratings affirmed Saudi Arabia’s long-term foreign-currency issuer default rating at “A+” with a stable outlook, highlighting the Kingdom’s robust fiscal and external balance sheets. The IMF also praised Saudi Arabia’s “unprecedented economic transformation,” attributing its success to prudent government policies and effective diversification efforts.
Future Projections and Diversification Efforts
Fitch anticipates a decrease in reserves to an average of $420 billion by 2024 to 2025, while sovereign net foreign assets are projected to remain above 50 percent of GDP during this period. The IMF projects Saudi Arabia’s GDP growth to accelerate to approximately 4.5 percent by 2025, emphasizing the need to sustain non-oil growth momentum and enhance business competitiveness.