On May 28, Saudi Arabia’s central bank, the Saudi Arabian Monetary Authority, reported that its net foreign assets tumbled below $500 billion ($493 to be exact) in April. Over the past three years, Saudi foreign reserves have dropped by a third from a peak of more than $730 billion in 2014. What is noteworthy is that the pace of the decline in reserves this year has puzzled economists.


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said Saïd Amin (@said) Pinned comment
Excellent analysis Shahir-jaan. I had no idea that their reserves were decreasing at such a rapid pace.

“the pace of the decline in reserves this year has puzzled economists who see little evidence of increased government spending, fueling speculation it’s triggered by capital flight and the costs of the kingdom’s war in Yemen,”

Perhaps it's due to increased corruption?

And sure, KSA can quickly raise boatloads of money by selling shares of oil giants Saudi Aramco, Saudi Arabian Oil Co. etc. to the tune of 100's of billions of dollars, but it's still hard to see how they can grow their stagnant economy in a sustainable way. At the end of the day their future still seems to largely depend on the price of oil -- a precarious situation to be sure.
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Shahir Shahir (@Shahir) replied to Saïd Amin (@said) Pinned comment
Thanks Saiid jan. Two caveats: First, to sell the Aramco shares the Saudis will face a tough decision with respect to transparency. How can the royal family plunder the oil country’s revenue if they lift the veil on Aramco? Second, Mr. Mohammad Salman says that Aramco is worth a minimum of $2 trillion (www.bloomberg.com/news/articles/2016-04-25/saudi-prince-says-aramco-valuation-seen-at-above-2-trillion). However, the energy consultancy Wood Mackenzie estimated Aramco’s value at $400 billion (www.bloomberg.com/news/articles/2017-02-23/saudi-arabia-2-trillion-aramco-vision-runs-into-market-reality). Huge difference. Mohammad Salman says that they intend to offer 5 percent of Aramco. If Mackenzie is right then the government would be able to raise $20 billion. This will not cover the pocket money of the corrupt ruling elite.
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Shahir Shahir (@Shahir) replied to Saïd Amin (@said) Pinned comment
Sorry, late night typo. I meant "country's oil revenue".
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