According to a recently released report by Jadwa Investments, the Kingdom of Saudi Arabia’s total foreign assets rose to an estimated $600 billion by the end of 2011, which is “very high and represents a core source of strength for the economy,” according to the bank. The report, entitled “Rapid growth in the Kingdom’s foreign assets,” finds that Saudi Arabia’s foreign assets are increasing each year.

Jadwa Investments:

“The data, known as the international investment position, gives a full picture of the Kingdom’s financial position versus the rest of the world. Produced by SAMA, it shows the value and types of assets that are owned, and the liabilities owed, by all parts of the Kingdom’s economy. Data on the position of the government and the banks are reported on a monthly basis by SAMA, but this is the first time that data has been issued which includes the private sector.

“The international investment position is an important indicator of the health of an economy in relation to its transactions with the rest of the world. In particular, it gives a guide to the ability to repay debts, absorb external shocks (such as a fall in the oil price) and support the exchange rate. For the Kingdom, the international investment position is an important strength. This is clear from a comparison with other countries.

“At the end of 2010, the Kingdom’s net international investment position was equivalent to 110 percent of GDP. Of the 42 countries for which the international investment positions are published and easily accessible (primarily in Europe and Asia) only Hong Kong, Singapore, Taiwan and Switzerland had a higher net position. The US and Eurozone both had negative net international investment positions, and Greece, Spain, Ireland and Portugal were among the five countries with the largest shortfall in foreign assets compared to foreign liabilities.

“The four years of data that were released by SAMA (see table on page 3 of the report) show a consistent improvement in the net international investment position, which climbed to $494 billion at end-2010 from $375 billion at the end of 2007. This was driven by higher oil revenues. For most of the period between 2007 and 2010, oil revenues were in excess of government spending, enabling a large build up of reserves in the form of foreign securities and bank deposits. No data is available on the makeup of the government’s holdings of foreign securities; we assume that the bulk is comprised of foreign government bonds.”

To read the full report from Jadwa Investments, click here.