RIYADH: Official data has revealed that Saudi Arabia has a strong capacity to withstand shocks, benefiting from substantial foreign reserves that cover imports for a highly comfortable period, far exceeding the global average and placing the Kingdom at the top among G20 countries on this metric.
The Kingdom’s foreign reserves are sufficient to cover imports for about 22 months, roughly three times the global average of around six months, according to the Al-Eqtisadiah’s Financial Analysis Unit.
The large stock of Saudi foreign currency, the largest in the Arab world and the Middle East, gives the government the strength to support exchange rate policy and economic activity.
These reserves also help finance part of the budget deficit when needed, repay debt, and secure imports of goods under exceptional circumstances. In addition, they enable the national economy to absorb economic shocks more broadly, whether they are domestic or global.
The reserve assets of the Saudi Central Bank, known as SAMA, include gold, special drawing rights, and reserve positions with the International Monetary Fund, as well as foreign currency and deposits abroad, in addition to investments in foreign securities.
Saudi foreign reserves held abroad rose 10 percent in January year on year to about SR1.78 trillion ($476 billion), while imports increased 7 percent in the same month compared with January 2025, reaching about SR81.4 billion.
The coverage ratio increased in January compared with both December 2025 and January 2025, when it stood at around 21 months. It also reached its highest level in eight months, supported by higher foreign reserves.
The Saudi government typically aims to strengthen the country’s financial position by maintaining safe levels of reserves to enhance its ability to manage shocks.
This has led it not to draw on reserves despite recent budget deficits, opting instead to borrow as an alternative – a move that has helped maintain the largest reserves in the Arab world and the Middle East.
The government withdrew SR200 billion over three months during the COVID-19 pandemic, February, March and April 2020, including SR150 billion transferred to the Public Investment Fund to seize opportunities in global markets amid the downturn, alongside increased public spending to support the private sector and economic growth.
Highest among G20 countries
The Kingdom ranked first among G20 countries in terms of foreign reserves covering imports at about 22 months, followed by Russia and Japan at around 20 months each.
China and Brazil came next at 14 and 16 months, respectively, while India, South Korea, and South Africa, along with Indonesia, ranged between six and seven months.
The US and three European countries recorded the lowest ratios, with reserves covering less than one month of imports, as they do not require large foreign currency reserves given that the dollar and the euro are among the world’s strongest currencies, unlike other economies.
Why are foreign reserves important?
Foreign reserves are of great importance to countries and serve as a key indicator of a nation’s ability to cover imports.
One of their main benefits is that they increase the flexibility of monetary policy for the country holding them, while also strengthening confidence in the stability of the national currency’s exchange rate.
At the level of central bank policy, foreign reserves enable authorities to intervene effectively in foreign exchange markets and resist external pressures on the currency.
This contributes to stabilizing the national exchange rate and creates a stable economic environment that is attractive to foreign investment, particularly in countries that operate under a floating exchange rate regime rather than a fixed one.
