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Saudi oil income set to surge



Strong oil prices will ally with increasing crude output by Saudi Arabia to boost its net foreign assets by more than US$94 billion through 2011 to reach their highest ever level at the end of the year, according to the IMF.

The net foreign assets of the world’s dominant oil exporter already peaked at around US$441 billion at the end of 2010 and are projected to continue their climb to hit an all time high of US$535.4 billion at the end of 2011, an increase of nearly US$94.4 billion, the Washington-based International Monetary Fund said.

Total assets, including commercial banks’ deposits with the Saudi Arabian Monetary Agency (Sama), already reached a record high of US$505 billion at the end of June 2011 as a result of a sharp rise in oil export earnings, which allowed the Gulf kingdom to record large fiscal and current account surpluses in 2010.

Although Riyadh has projected a US$10 billion fiscal deficit this year, the budget is expected to end the year in another large surplus despite a massive increase in public expenditure.

A breakdown by the IMF showed Saudi Arabia’s net foreign assets have steadily grown over the past years due to higher crude prices and production. From around US$310.3 billion at the end of 2007, the assets rocketed to nearly US$438.5 billion at the end of 2008 before receding to about US$405.9 billion at the end of 2009 as a result of a steep fall in oil prices.

But a recovery in prices and higher output boosted the net assets to US$441 billion at the end of 2010 while total assets were higher, standing at US$454 billion, including nearly US$16.3 billion in banks’ deposits with Sama.

The IMF report showed the surge in oil prices above US$100 a barrel and higher crude supplies by Saudi Arabia would boost its oil revenue to nearly US$299.6 billion this year, exceeding the 2008 record income of US$281.4 billion.