Overspending and public funds drain foreign assets

Saudi Arabia is draining the massive foreign assets it has accumulated over the past seven boom years to meet higher budget commitments, shore up domestic liquidity and support local funds, a key Saudi investment firm said yesterday.

The withdrawal of nearly SR217 billion (Dh214.8bn) in the first seven months of 2009 indicates the world's oil giant is heavily overshooting budgeted expenditure to offset a sharp downturn in private sector activity, boosting its deposits with local banks, and channeling promised liquidity into public funds, the Riyadh-based Jadwa Investment said in a study sent to Emirates Business.

The decline in the kingdom's assets this year reversed years of a steady growth that saw those investments soaring by nearly $378bn (Dh1.38 trillion) between the end of 2003 and the end of 2008, the study said.