The Saudi Arabian central bank’s foreign reserves rose in December for a third consecutive month, a sign that higher oil prices may be easing pressure on the government’s finances, official data showed on Sunday.
The bank’s net foreign assets grew $2.0 billion from November to $488.9 billion last month, after increasing $1.0 billion in November and $8.3 billion in October. It was the first time since mid-2014 that the reserves have risen for three straight months.
The government has been using the reserves, which peaked at $737 billion in August 2014, to cover a big budget deficit caused by low oil export receipts.
The central bank did not explain the reasons for the December data, but a jump in oil prices to three-year highs has lifted revenues, and this may have reduced the need for the government to draw down the reserves - though not entirely removed it, as Riyadh is still running a deficit.
Other factors may also be responsible for the rise in reserves, such as changes in the pattern of transfers of money to Saudi Arabia’s sovereign wealth fund, and weakness of the US dollar, which boosts the non-dollar portion of the assets.
Also, the government launched a massive crackdown on corruption in November, saying it aimed to recover $100 billion of illicit funds in financial settlements with suspects. Some money from settlements may have bolstered the reserves.
The foreign assets, the vast majority of which are believed to be in US dollars, are held mostly in the form of securities holdings and bank deposits. Securities holdings rose in December while deposits edged down.
Sunday’s data also showed outstanding bank loans to the private sector shrank 0.8 percent from a year earlier in December, the 10th straight month of falling bank lending.