21-month slump in deposits, reserves

Updated 02 March 2015
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21-month slump in deposits, reserves

The government’s reserves and deposits with the Saudi Arabian Monetary Agency (SAMA) dropped at the end of January to SR1.39 trillion, the lowest level in 21 months.

This was a 2 percent change on a monthly basis compared to December, and 8 percent change on an annual basis compared to January last year.


“The reserves and deposits of the government is part of the liabilities in SAMA’s financial statements, which amounts to SR2.79 trillion, equal to its assets,” Al-Eqtisadiah reported.


The assets include investments in security bonds, deposits with banks abroad, cash, foreign exchange, gold, and other assets. “The government reserves and deposits are divided into three categories, the general reserve of the government, allocations for government projects and government’s current account.”


Commenting on the fall in reserves and deposits, John Sfakianakis, Middle East director at Ashmore Group, told Arab News: “This should be seen as perfectly normal as reserves are to be used in an environment of low oil revenues.”
He also said: “Definitely reserves both on a total as well as related to government related reserves are falling. This is to be expected given the low oil revenues and government spending that can be filled by deploying reserve assets. The economy depends on government spending which can only remain high if reserves are used or debt is deployed.”
The general reserve of the government accounts for 60 percent of the total government reserves and deposits, allocations for government projects is 32 percent and government’s current account 8 percent.

The 8 percent fall in the general reserve, accounting for SR74.8 billion in January compared to December, was a major factor in the decline of the level of reserves and deposits.


Allocations for government projects dropped SR15.9 billion, a 3 percent fall during the same period, and totaled SR439.2 billion in January.



In terms of annual performance, the government’s current account is the biggest loser and a major influencing factor in the decline of its reserves and deposits at SAMA. Its decline was about SR55.7 billion equivalent to 32 percent at the end of January of the current year, to reach SR116.9 billion, compared to SR172.5 billion in the same period last year.


“The allocations for government projects registered an 8 percent fall or SR36 billion from its level at the end of January last year, to reached SR475.2 billion. The general state reserve declined by 3 percent or SR21.8 billion from its level at the end of January last year, to reach SR851.6 billion.”


Potential SABIC deal would affect Saudi Aramco IPO time frame, says CEO Nasser

Updated 20 July 2018
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Potential SABIC deal would affect Saudi Aramco IPO time frame, says CEO Nasser

JEDDAH: A potential deal to buy a stake in petrochemical maker SABIC would affect the time frame of Saudi Aramco's initial public offering (IPO), the oil firm's president and CEO Amin H. Nasser said Friday. 

The IPO of around 5 percent of Aramco, which was initially to take place this year but is now more likely to happen later, would be the world's biggest listing, raising up to $100 billion.

Nasser said that buying a stake in a chemical company like SABIC would positively affect Aramco's revenue, Al Arabiya reported.

“We are still in the very early stages of the discussion to buy a stake in SABIC,” the Aramco CEO said.

“Aramco is ready for the initial offer and the timing remains subject to the state's decision.”

Saudi Aramco said on Thursday it is looking at the possibility of buying a stake in SABIC, a move that could boost the state oil giant’s market valuation ahead of the planned IPO.
Aramco said in a statement that it was in “very early-stage discussions” with the Kingdom’s Public Investment Fund (PIF) to acquire the stake in SABIC via a private transaction. It has no plans to acquire any publicly held shares, it said.
In a separate statement, PIF also said talks about a sale were in early stages. “There is a possibility that no agreement will be reached in relation to this potential transaction,” it said.