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Saudi holdings in US Treasury unveiled

Tuesday, 17 May 2016 12:46 PM [ Last Update: Tuesday, 17 May 2016 12:47 PM ]

The US Treasury Department has disclosed a breakdown of Saudi Arabia’s holdings of US debt after 41 years.

The US Treasury Department on Monday released a breakdown of Saudi Arabia’s holdings of US debt, ending a longstanding policy of keeping the figures secret that had been in place for more than 41 years.

The stockpile of the world’s biggest oil exporter stood at $116.8 billion as of March, up from $82.7 billion two years earlier, Bloomberg reported.

The sum ranks the kingdom among the top dozen foreign nations in terms of holdings of US debt, and compares with China’s $1.2 trillion trove, and $1.1 trillion for Japan.

The US had kept the monarchy’s holdings under wraps since 1974, an unusual blackout born out of the aftermath of the Arab oil embargo, when a surge in crude prices left the American economy reeling and the US struggling to lure petrodollars.

Now the question of Saudi holdings is gaining importance as the monarchy faces fiscal pressure from the decline in oil prices since 2014 and costly wars in the Middle East, Bloomberg added.

In the past year, Saudi Arabia burned through 16 percent of foreign-exchange reserves to bridge its biggest budget shortfall in a quarter-century, according to data from the nation’s central bank. The signs of strain are prompting concern over Saudi Arabia’s potential influence on the world’s largest and most important bond market.

Yet Monday’s disclosure may bring more questions than answers, because the tally represents only about 20 percent of Saudi Arabia’s $587 billion of foreign reserves, and central banks typically put about two-thirds of their coffers in dollars, Bloomberg has further quoted data by the International Monetary Fund data.

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