U.S. Discloses Saudi Holdings of Treasuries for First Time
May 16, 2016 — 11:22 AM CDTUpdated on May 16, 2016 — 2:11 PM CDT- Kingdom held $116.8 billion as of March, Treasury data show
- Figures had been grouped with mostly OPEC nations since 1974
The
Treasury Department released a breakdown of Saudi Arabia’s holdings of
U.S. debt, after keeping the figures secret for more than four decades.
The
stockpile of the world’s biggest oil exporter stood at $116.8 billion
as of March, down almost 6 percent from a record in January, according
to data the Treasury disclosed Monday in response to a
Freedom-of-Information Act request submitted by Bloomberg News. The
tally ranks Saudi Arabia among the top dozen foreign nations in terms of
holdings of U.S. debt, and compares with China’s $1.3 trillion trove,
and $1.1 trillion for Japan.
“The
politics has always been secretive, so have their finances,” said David
Ottaway, a Middle East Fellow at the Woodrow Wilson International
Center, a research institute in Washington. “It does answer the question
of how much they own, which is surprisingly not that much.”
Yet
the disclosure may bring more questions than answers, because Saudi
Arabia’s foreign reserves amount to $587 billion, and central banks
typically put about two-thirds of their coffers in dollars, according to
International Monetary Fund data. Some nations accumulate Treasuries in
offshore financial centers, meaning the holdings show up under the data
of other countries. For example, Belgium, which held $143 billion of
U.S. government debt as of February, is home to Chinese custodial accounts, analysts say.
In
a sign that Treasury’s figures on the kingdom’s ownership fall short of
the full tally, the New York Times reported last month that Saudi
officials threatened to sell $750 billion of Treasuries and other assets
in the U.S. if Congress enacts a bill allowing the monarchy to be held
responsible in American courts for any role in the Sept. 11, 2001,
terror attacks.
Calls
and e-mails to the Saudi Finance Ministry and the Saudi Arabian
Monetary Agency outside of regular working hours weren’t answered or
returned.
The
U.S. started releasing data on foreign ownership of Treasuries in 1974.
Since then, the Treasury’s policy had been to not disclose Saudi
holdings, and it grouped them instead with those of 14 other mostly OPEC
nations, including Kuwait, Nigeria and the United Arab Emirates,
Bloomberg reported in January. The group held $281 billion as of February, down from a record of $298.4 billion in July.
For
more than a hundred other countries, from China to the Vatican, the
Treasury had provided a detailed monthly breakdown of how much U.S. debt
each owns. The figures for March are scheduled for release at 4 p.m.
New York time Monday.
1970s Decision
The
special arrangement was a product of the 1973 oil shock following the
Arab embargo. It’s among concessions that U.S. administrations made over
the years to maintain America’s strategic relationship with the Saudi
royal family and access to the kingdom’s oil reserves.
The
question of Saudi holdings of Treasuries is gaining importance as the
monarchy faces fiscal pressure from the decline in oil prices and costly
wars in the Middle East.
In
the past year, Saudi Arabia burned through 16 percent of its
foreign-exchange reserves to plug its biggest budget shortfall in a
quarter-century, according to data from the kingdom’s central bank. The
signs of strain are prompting concern over Saudi Arabia’s potential
influence on the world’s largest and most important bond market.
Saudi holdings of Treasuries peaked at $123.6 billion in January, the data released Monday show.
“As
we look at official and central bank and investment holdings of
Treasuries around the world, we’ve seen a lot of fluctuations, we’ve
seen a gradual erosion of positions that have been held for some time,”
said Jim Vogel, head of interest-rate strategy at FTN Financial in
Memphis, Tennessee. The impact of those reductions has been mitigated by
purchases by overseas private investors, he said.
Following is a table of U.S. debt holdings of the oil-producing nations for which the Treasury released data Monday:
| Country | USD Bln |
| Saudi Arabia | 116.8 |
| United Arab Emirates | 62.5 |
| Kuwait | 31.2 |
| Oman | 15.9 |
| Iraq | 13.4 |
| Qatar | 3.7 |
| Nigeria | 3.1 |
| Bahrain | 1.2 |
| Algeria | 0.7 |
Source: U.S. Treasury Department. Data as of March.
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