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Saudi Arabia under severe fiscal pressures

Staff Writer |
For the first time since 2011, Saudi Arabia's foreign reserves have dropped below $500 billion.

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The Saudi Arabian Monetary Authority said on Sunday that its foreign reserves had fallen by $8.5 billion in the past month, dropping to $493 billion. In total, foreign reserves have dropped by $36 billion this year, according to Bloomberg.

The news comes despite the kingdom raising $9 billion from its first international sale of Islamic bonds earlier this year, news outlets reported.

"The fact that reserves continued to fall despite the raising of $9 billion continues to imply a lot of government spending, but we aren't seeing meaningful signs of it in the Saudi economy," Monica Malik, chief economist at Abu Dhabi Commercial Bank, told Reuters.

Low oil prices have taken a toll on the Saudi economy, forcing it to dig deep into its foreign reserves. In response, Riyadh has begun making wide-reaching economic reforms, including instituting austerity measures and implementing taxes.

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