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Andrew Torchia
Dubai - The Saudi Arabian central bank's foreign assets, which the government has been liquidating to cover a budget deficit caused by low oil prices, fell at the slowest pace for a year in May, official data showed on Thursday.
Net foreign assets shrank by a little over $1 billion from the previous month to $492 billion, their lowest level since May 2011. It was the smallest drop since assets increased for a single month in May 2016.
On a year-on-year basis, foreign assets shrank 14.2 percent in May. They hit a record high of $737 billion in August 2014 before starting to fall along with oil prices.
Reasons for the slow drop in May were not immediately clear, but the government's fund transfers often swing widely depending on payments for infrastructure projects and investment plans.
The state budget deficit shrank sharply in the first quarter of this year but analysts do not believe that pace of improvement has continued, since oil prices have fallen back and Riyadh has eased some austerity steps to aid economic growth.
The government restored financial allowances for civil servants that were originally cut as an austerity measure last September, and it has not proceded with a previously announced plan to hike domestic fuel and power prices around mid-year.
Officials have not revealed a new date for the energy price hikes. The government also plans to launch a programme of payments to poorer Saudis to help them cope with such austerity measures but that scheme, originally due to start at mid-year, has also not gone ahead.
Bank lending data released by the central bank on Thursday suggested private sector business activity remains sluggish.
Outstanding bank loans to the private sector shrank 0.7 percent from a year earlier in May, after a 0.3 percent drop in April. It was only the third time in 11 years that bank lending shrank; the first time was in March this year, when it declined 0.1 percent.
(Reporting by Andrew Torchia; Editing by Hugh Lawson)
© Reuters News 2017
