Saudi Arabia Suffers Crisis Flashback But Finds New Ways to Cope - Bloomberg:
It’s a different Saudi Arabia that confronts another collapse in oil prices.
When the kingdom last stared down the crash in crude, it wielded reserves that peaked at over $735 billion in 2014. The stockpile was down by over a third just three years later, channeled almost entirely toward deficit spending.
Saudi Arabia may now be blowing through its reserves at the fastest pace in at least two decades, but the government is barely using the holdings to cover fiscal needs. Following its debut in international bond markets in 2016, borrowing covered most of the budget deficit in the first quarter.
Goldman Sachs Group Inc. predicts the central bank’s reserves, down more than 100 billion riyals ($27 billion) in March alone, will stabilize soon.
“Despite a further anticipated decline in oil revenues in the second quarter, we expect the rate of reserve burn to slow,” Farouk Soussa, a Goldman Sachs economist, said in a report.
It’s a different Saudi Arabia that confronts another collapse in oil prices.
When the kingdom last stared down the crash in crude, it wielded reserves that peaked at over $735 billion in 2014. The stockpile was down by over a third just three years later, channeled almost entirely toward deficit spending.
Saudi Arabia may now be blowing through its reserves at the fastest pace in at least two decades, but the government is barely using the holdings to cover fiscal needs. Following its debut in international bond markets in 2016, borrowing covered most of the budget deficit in the first quarter.
Goldman Sachs Group Inc. predicts the central bank’s reserves, down more than 100 billion riyals ($27 billion) in March alone, will stabilize soon.
“Despite a further anticipated decline in oil revenues in the second quarter, we expect the rate of reserve burn to slow,” Farouk Soussa, a Goldman Sachs economist, said in a report.
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