Expect Further FX Reserve Drawdowns in Saudi Arabia: Abu Dhabi Commercial Bank

Saudi Arabia faces economic challenges as foreign currency reserves decline, impacting fiscal positions. The drop in FX reserves is sharp, returning to 2011 levels. This decline is partly due to fiscal deficits and support measures. Future pressures are expected with lower oil prices, leading the government to focus on raising debt. Forecasts suggest government debt will rise from 24% to over 30% of GDP, with a larger fiscal deficit than official estimates.

What are the main reasons behind the drawdown in Saudi Arabia's foreign currency reserves?

• Rising inflation rates

• Increased military spending

• Decreased foreign investments

• Fiscal deficits and support measures

What is expected to increase pressure on Saudi Arabia's FX reserves in the second quarter?

• Rising inflation rates

• Lower oil prices and production

• Increased foreign investments

• Higher oil prices

What strategy is the Saudi government likely to focus on to limit reserve drawdowns?

• Cutting public spending

• Raising debt

• Increasing oil production

• Boosting tourism

By how much is the Saudi government debt expected to increase as a percentage of GDP this year?

• From 20% to 25%

• From 24% to 30%

• From 30% to 35%

• From 24% to 28%

What historical period is mentioned in relation to previous reserve drawdowns?

• 2010 to 2012

• 2015 to 2017

• 2018 to 2020

• 2012 to 2014