REUTERS
Saudi Arabia has withdrawn its overseas funds as the oil-rich kingdom seeks to cut its widening deficit and reduce exposure to volatile equities markets amid the sustained slump in oil prices, The Financial Times reported.
Foreign reserves of the Saudi Arabian Monetary Agency (SAMA) have declined by nearly $73 billion since the third quarter of 2014, according to the report.
At the same time, the kingdom keeps spending to sustain the economy and fund its military campaign in Yemen.
The country's central bank tries to offset a rapid decline in reserves asking domestic banks to finance a bond program.
Over the years Sama has built up a broad range of institutions handling its funds, including other names such as Aberdeen Asset Management, Fidelity, Invesco and Goldman Sachs. BlackRock, which bankers describe as the manager handling the largest amount of Gulf funds, has already reported net outflows from Europe, the Middle East and Africa, the report reads.
As reported earlier, analysts at Wood Mackenzie Ltd reported that about $1.5 trillion of potential investment in new oil projects was not viable with crude prices at $50 a barrel, while operators want to cut costs by 20% to 30% on new projects.
In September, Goldman Sachs predicted that the current glut of oil would keep crude prices low for the next 15 years. It forecast the average oil price to be at $50 a barrel, but noted prices could fall as low as $20 a barrel due to excessive supplies.