{"id":6178,"date":"2022-05-31T13:04:07","date_gmt":"2022-05-31T13:04:07","guid":{"rendered":"https:\/\/euromenaenergy.com\/?p=6178"},"modified":"2022-05-31T13:04:07","modified_gmt":"2022-05-31T13:04:07","slug":"saudi-tucks-away-billions-in-oil-money-for-next-year","status":"publish","type":"post","link":"https:\/\/emimer.com\/?p=6178","title":{"rendered":"Saudi tucks away billions in oil money for next year"},"content":{"rendered":"
\n

Bloomberg Riyadh\/London<\/p>\n<\/div>\n

Saudi Arabia will hold billions of dollars from its oil windfall in a government current account until the end of the year, when it will decide how to distribute it \u2013 marking a shift in its strategy from previous boom periods.
\nIn the past, higher oil prices and output would quickly translate into rising foreign reserves and deposits in local banks, and often lead to a swift boost in government spending.
\nThis time, the government won\u2019t spend the money until it\u2019s rebuilt reserves depleted during eight years of subdued oil prices. It could then use some of the cash to repay debts and pour it into state investment vehicles, including the powerful Public Investment Fund (PIF) and the National Development Fund, which focuses on domestic infrastructure.
\n\u201cThe surplus achieved in Q1 is shown in the government current account and has not yet been deposited to government reserves nor transferred to other groups,\u201d Finance Minister Mohamed al-Jadaan said in a statement to Bloomberg. \u201cThis allocation will occur after the surplus is realized, which means after the closing of the fiscal year.\u201d
\nThe government\u2019s current account held at the central bank rose by 70bn riyals ($19bn) in the first quarter of the year, when Saudi Arabia reported a $15bn budget surplus.
\nThe finance ministry\u2019s comments solve a mystery that had stumped some analysts covering Saudi Arabia; they were waiting to find out where those billions of dollars would show up.
\nThe world\u2019s largest crude exporter has seen revenues soar on the back of $100 oil and rising production. Oil gross domestic product is expected to grow 19% this year, al-Jadaan said at the World Economic Forum in Davos, Switzerland.
\nIf crude prices remain that high, Saudi Arabia\u2019s total oil exports are estimated to reach $287bn this year, according to Ziad Daoud, chief emerging markets economist at Bloomberg Economics.
\nOfficials had previously said that much of the extra money would be used to accelerate efforts to diversify the economy away from oil \u2013 currently Saudi Arabia\u2019s main source of income.
\n\u201cThe windfall from the additional revenues that we will get from high oil prices will be essentially invested in resilience,\u201d Faisal Alibrahim, Minister of Economy and Planning, told Bloomberg in an interview at Davos. \u201cWhether it\u2019s replenishing reserves, paying off debt or investing in unique transformational projects through our wealth fund, that really helps us accelerate the diversification plans.\u201d
\nThe kingdom\u2019s $600bn sovereign wealth fund, the PIF, is at the heart of Prince Mohamed bin Salman\u2019s plan to overhaul the economy and invest in new non-oil industries like tourism.
\nIt owns most of the kingdom\u2019s mega-projects, including Neom \u2013 a $500bn new city \u2013 as well as tourism developments on the Red Sea coast and a massive entertainment complex planned near Riyadh.
\n\u201cThe responsibility of boosting growth has shifted to state-owned entities ex-budget, led by PIF,\u201d Mohamed Abu Basha, head of macroeconomic research at Egyptian investment bank EFG Hermes, wrote in a note. That leaves \u201cthe transmission of high oil prices to the economy more indirect than at any time in history.\u201d
\nReserves jumped in March, supported by dividend payments from oil giant Aramco. But the increase was smaller than it was in the same period last year, when oil prices averaged above $60 a barrel.
\nOne part of the economy that hasn\u2019t benefited is the domestic banking system. In the past high oil prices would mean an influx of cheap deposits into the Saudi banks, helping to keep local currency lending rates low.
\nYet Saudi banks are facing the tightest liquidity conditions since 2016, as measured by the three-month Saudi Interbank Offered Rate, or SAIBOR, despite soaring oil prices. It took off even before an overall 75 basis-point interest rate hike by the US Federal Reserve so far this year.
\n\u201cThe increase in SAIBOR rates reflects some of the lag between the surge in oil prices and the domestic liquidity boost,\u201d said Carla Slim, economist at Standard Chartered Plc. \u201cExcess liquidity in the banking system, as measured by volumes deposited in Saudi Arabian Monetary Authority\u2019s reverse repo facility, has contracted sharply.\u201d
\nThe finance ministry said in its statement that money supply was ample.<\/p>\n","protected":false},"excerpt":{"rendered":"

Bloomberg Riyadh\/London Saudi Arabia will hold billions of dollars from its oil windfall in a government current account until the end of the year, when it will decide how to distribute it…<\/p>\n","protected":false},"author":1,"featured_media":6179,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[46,48,50,57,68,76,77,78,79,81,82,86,87,88,90,96,99,103,107,109,111,112,113,114,121,122,134,137,139,146,148,160,174,176,183,184,201,202,209,222,230,232,233,239,240,244,246,249,250,252,256,262,263,267,268,277,279,280,283,285,288],"class_list":["post-6178","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oil-gas","tag-aramco","tag-athens","tag-athensenergydialogues","tag-baroudi","tag-carbon","tag-climate","tag-climate-change","tag-climateaction","tag-climatechange","tag-closure-of-nuclear-power-plants","tag-co2","tag-cyprus","tag-decarbonising","tag-decarbonization","tag-democracy","tag-doha","tag-eastmed","tag-egypt","tag-embargo","tag-emissions","tag-energy","tag-energy-market","tag-energy-peace","tag-energyindustry","tag-europe","tag-european","tag-fuels-russian-gas-oil-and-gas-natural-gas","tag-gas","tag-gazprom","tag-greece","tag-greenenergy","tag-international-maritime-disputes","tag-lebanon","tag-liquefied-natural-gas","tag-maritime-boundaries-east-mediterranean","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-pollution","tag-poverty-alleviation","tag-putin","tag-qatar","tag-renewable-energy","tag-renewableenergy","tag-rosneft","tag-roudi","tag-russia","tag-russia-in-the-european-energy-sector","tag-russian-sanctions","tag-saudi","tag-solar","tag-solar-power","tag-straddling-hydrocarbons-reserves","tag-sustainability","tag-total","tag-trump","tag-turkey","tag-ukrain","tag-unclos","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/6178","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6178"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/6178\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/6179"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}