Saudi tucks away billions in oil money for next year

Saudi tucks away billions in oil money for next year

Bloomberg Riyadh/London

Saudi Arabia will hold billions of dollars from its oil windfall in a government current account until the end of the year, when it will decide how to distribute it – marking a shift in its strategy from previous boom periods.

In the past, higher oil prices and output would quickly translate into rising foreign reserves and deposits in local banks, and often lead to a swift boost in government spending.

This time, the government won’t spend the money until it’s rebuilt reserves depleted during eight years of subdued oil prices. It could then use some of the cash to repay debts and pour it into state investment vehicles, including the powerful Public Investment Fund (PIF) and the National Development Fund, which focuses on domestic infrastructure.

“The surplus achieved in Q1 is shown in the government current account and has not yet been deposited to government reserves nor transferred to other groups,” Finance Minister Mohamed al-Jadaan said in a statement to Bloomberg. “This allocation will occur after the surplus is realized, which means after the closing of the fiscal year.”

The government’s current account held at the central bank rose by 70bn riyals ($19bn) in the first quarter of the