An analysis by Al-Eqtisadiah showed that Saudi Arabia’s foreign monetary reserves abroad are sufficient to cover its imports for a period of 45 months, reaching about 1.68 trillion riyals by the end of last July, while imports in the same month amounted to about 37.7 billion riyals.
According to the monitoring of the economic reports unit in the newspaper, based on the data of the Saudi Arabian Monetary Agency “SAMA” and other official data for last July, the rate of Saudi foreign reserves coverage of imports is equivalent to seven times the global average of only six months, and the rate in Saudi Arabia is above the global average By 643 percent.
These data reflect the great ability of Saudi Arabia to provide locally needed supplies in case they are needed, in light of the outbreak of the Corona virus and the impact of the liquidity of countries around the world.
This huge reserve of foreign exchange gives the Saudi economy great leverage to support exchange rate policy and economic activities.
These reserves help finance part of the budget deficit resulting from the decline in oil prices, pay off debts and provide imports of goods in exceptional circumstances, as well as enable the national economy to absorb economic shocks in general, whether local or global.
The reserve assets of the Saudi Arabian Monetary Agency “SAMA” include gold, special drawing rights, reserves with the International Monetary Fund, foreign exchange and deposits abroad, in addition to investments in securities abroad.
The rate of foreign reserves coverage of imports increased during July 2020 from its levels in the previous June, when the rate was about 38 months, and it was 528 percent higher than the world average.
The increase in the rate of import coverage of foreign reserves in July compared to June came as a result of the decrease in the value of imports in contrast to the increase in foreign reserves for the same month.
In July 2020, imports decreased by 15.4 percent, equivalent to 6.9 billion riyals, compared to the previous June, which amounted to 44.5 billion riyals.
While foreign reserves increased in July 2020 by 0.1 percent, compared to last June, which amounted to 1.678 trillion riyals.
The importance of foreign reserves
Foreign reserves are of great importance to countries, and it is a major measure of the state’s ability to cover imports. Among its benefits is increased confidence in the monetary policy of the reserve state, and it also supports confidence in the exchange rate of the country’s national currency.
In terms of central bank policies for the country with reserves, it can intervene efficiently in the exchange market and resist any external pressures on its currency, which contributes to the stability of the national currency exchange rate, and creates a stable economic climate that attracts foreign investment, especially in the case of countries that adopt a flexible exchange rate and not Fixed.
Economic Reports Unit