Saudi Arabia’s Net Foreign Reserves Fall Despite Aramco Dividend

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(Bloomberg) — Saudi Arabia’s net foreign assets fell to 1.572 trillion riyals ($419 billion) in March, even as oil giant Aramco increased its dividend the same month. 

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Foreign reserves fell from 1.625 trillion riyals the previous month, according to the central bank’s monthly report published on Sunday. They currently stand at their lowest level since July 2010, according to data compiled by Bloomberg.

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“The drop in SAMA’s FX reserves came in parallel to a drop in government deposits at SAMA,” said Mohamed Abu Basha, head of macroeconomic research at Cairo-based investment bank EFG Hermes. That’s an “indication the government had heightened expenditure needs during the month.” 

The world’s biggest energy company, Aramco, unexpectedly increased its dividend in March and said it would hike spending as it looks to deploy an avalanche of cash generated by last year’s surge in oil prices. It realized net income of $161 billion for the full year, the most since it listed and up 46% from 2021.

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Read: Saudi Aramco Posts Blowout Annual Profit and Raises Dividend (2)

Aramco boosted its dividend — a crucial source of funding for the Saudi Arabian government — to $19.5 billion for the final quarter, up 4% from the previous three-month period.

Read: IMF Says Saudi Budget to Win From OPEC Cuts With Oil Price Boost

Saudi oil revenues last year reached nearly $326 billion, a near-record windfall that combined with higher production volumes to make its economy the fastest growing in the Group of 20. It also helped the government run a fiscal surplus for the first time in nearly a decade.

The International Monetary Fund projects Saudi economic growth will slow to 3.1% this year and next — from almost 9% in 2022 — after sharply improving the outlook for 2023 in one of the fund’s biggest positive revisions in its latest global forecasts.

—With assistance from Tarek El-Tablawy and Abeer Abu Omar.

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