Saudi Arabia has withdrawn $50B-$70B from global asset managers over the last six months to plug its budget deficit, according to Insight Discovery.
Deposits into Saudi Arabian banks fell by about $4.53 billion from June to July and the country's three-month interbank lending rate climbed 12 basis points Tuesday from this year's low in March. The slump in oil prices forced governments to fund spending through bond sales and to use cash accumulated during the boom.
Sillitoe said it was difficult to determine when Saudi Arabia will "be back in the market to give new mandates" to fund managers. "None of this should come as much surprise", given the current-account deficit and risk of capital flight.
Saudi Arabia isn't the only Gulf nation anticipating a cash drain. SAMA also plans to raise between 90 billion riyals (US$24 billion) and 100 billion riyals in bonds before the end of the year as it seeks to diversify its US$752 billion economy, people familiar with the matter said in August.
The government has offered few specifics about how it will cut spending, but it reportedly is considering measures long considered forbidden or unnecessary, including alternative energy. The kingdom's finances are depleted by continued subsidies, hand-outs to public sector workers and the Yemen conflict.
Given the fall of oil prices, the Saudis withdraw assets, worth dozens of billions dollars, from investment funds. Financiers from different countries call this organization, which has overgrown with a wide range of agencies on assets management, to be an operator of the biggest quantity of the Saudi Arabia's funds.
Saudi Arabia is leading a military coalition fighting Houthi rebels in Yemen.