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Dubai / Reuters
Net foreign assets at Saudi Arabia’s Central Bank dropped 1.7 percent from the previous month to 2.19 trillion riyals ($584 billion) in February, central bank data showed on Tuesday.
Assets fell 17.3 percent from a year earlier to their lowest level since May 2012. They reached a record high of $737 billion in August 2014 before starting to shrink.
The central bank, which serves as Saudi Arabia’s sovereign wealth fund, has been drawing down its assets to cover a huge state budget deficit caused by low oil prices.
Most of the foreign assets are believed to be denominated in US dollars, mainly in the form of securities such as US Treasury bonds and deposits with banks abroad. Equities are believed to account for only a small fraction, perhaps under 20 percent. Some assets are managed via global fund firms.
Deposits with banks abroad shrank 2.8 percent from the previous month to $133 billion in February, while investment in foreign securities edged down 0.7 percent to $395 billion.
Some functions of the Central bank include issuing the national currency, the Saudi Riyal, supervising commercial banks, managing foreign exchange reserves, promoting price and exchange rate stability, and ensuring the growth and soundness of the financial system, operating a number of cross-bank electronic financial systems such as MADA (previously SPAN), SARIE, and SADAD.
A board of directors oversees the operations of the Central bank. This comprises the governor, vice-governor and three other nominated members from the private sector. The terms of appointment are 4 years for the governor and vice-governor, extendable by Royal decree, and five years for the other members, also extendable by Royal decree. Members of the board cannot be removed except by Royal decree.