* Ikrami Abdullah from Riyadh
Saudi Arabia's foreign reserves are sufficient to cover its imports for four years, "44 months."
According to the analysis of the reports' unit in the newspaper "AlEqtisadiah" that based on the data of the Saudi Arabian Monetary Agency and other official recourses for the end of December, the rate of coverage of Saudi foreign reserves for imports is seven times the global average that is only six months old, which means that the rate in Saudi Arabia exceeds the world average by 641 per cent.
Given this huge stock of foreign exchange, the Saudi economy has great strength to support exchange rate policy and economic activities.
These reserves also help to finance part of the budget deficit resulting from the decline in oil prices, debt repayment and imports of goods in exceptional circumstances.
The national economy can also absorb economic shocks in general, whether local or global.
Saudi Arabian Monetary Agency reserve assets include Gold, special drawing rights, IMF reserves, foreign exchange and deposits abroad, as well as investments in securities abroad.
Saudi Arabia's reserves abroad stood at 1.86 trillion riyals at the end of December, while imports in the same month amounted to 41.9 billion riyals.
The rate of coverage of foreign reserves of imports during the last December, from levels in the month of November, where the rate was about 51 months and was above the world average of 747 per cent.
The lower rate of coverage of foreign reserves for imports in December compared to November of the same year, as a result of the rise in imports against the decline of foreign reserves.
Imports rose in December 2018 by 12.5 percent to 4.7 billion riyals, compared to November of the same year of 37.2 billion riyals.
While foreign reserves declined in December 2018 by 1.5 percent, equivalent to 29.2 billion riyals, compared to November of the same year of 1.89 trillion riyals.
The importance of foreign reserves
Foreign reserves are of great importance to countries as it is a major measure of the country's ability to cover imports.
One of the benefits of the foreign reserve is to increase confidence in the monetary policy of the reserve country.
It also supports confidence in the exchange rate of the nation's national currency.
In terms of the policies of the Central Bank of the state reserves, it can intervene efficiently in the exchange market and resist any external pressure on its currency, which contributes to the stability of the exchange rate of the national currency.
There is a stable and attractive economic climate for foreign investment, especially in the case of countries that adopt a flexible and non-fixed exchange rate.
* Economic Reports Unit
