The Treasury Department recently released a breakdown of Saudi Arabia’s holdings of U.S. debt in response to a Freedom-of-Information Act request. As of March, the amount stood at $116.8 billion. This was down 6 percent from the record $123.6 billion recorded in January.
The Treasury Department has announced that it will provide new information on specific countries to make its report on foreign ownership of U.S. debt more comprehensive and transparent. In 1974, the U.S. began releasing data on foreign ownership of Treasuries, providing a detailed monthly breakdown of how much U.S. debt was owned by each of more than a hundred countries. However, the Treasury elected to not disclose Saudi holdings.
The decision was among concessions that U.S. administrations made to maintain America’s access to the kingdom’s oil reserves. Saudi Arabia is currently the world’s biggest oil exporter. As a result of the decision, the amount of U.S. debt held by Saudi Arabia has been a secret for more than four decades. Instead, the kingdom’s holdings were reported combined with the holdings of 14 other mostly OPEC nations, including Kuwait, Nigeria, Venezuela, Iraq and the United Arab Emirates.
The report reveals that Saudi Arabia is among the top dozen foreign nations in terms of holdings of U.S. debt. China’s currently holds about $1.3 trillion in U.S. debt, while Japan holds about $1.1 trillion. However, there are indications that Treasury’s figures fall short of the full tally on the kingdom’s ownership of U.S. assets.
Last month, the New York Times reported that Saudi officials suggested the country would sell $750 billion of Treasuries and other assets in the U.S. The suggestion was made after it was revealed that a bill was introduced in Congress that would allow Saudi Arabia to be held responsible in American courts for any role in the Sept. 11, 2001, terror attacks. Selling off such a large amount of U.S. Treasuries at once could cause the securities to tank. That, in turn, could potentially destabilize global financial markets.
Tensions have been rising between the U.S. and Saudi Arabia on several fronts. The monarchy has been reeling from the decline in oil prices and expensive wars in the Middle East. Saudi Arabia spent 16 percent of its foreign-exchange reserves so far this year to cover a massive budget shortfall. With no end to low oil prices in sight, the country will most likely be forced to dip into its reserves even more in the future.