Publicly available information on Saudi Arabia's foreign assets was scant. Newspaper accounts placed foreign assets held by SAMA overseas at around US$100 billion during the early 1980s. These assets have been substantially depleted to finance current account deficits. A sizable portion has become nonperforming as Saudi Arabia has been unable to recover loans to several countries, notably Iraq. By the end of 1991, foreign assets of the government were estimated at US$30 billion if nonperforming assets were excluded. This amount was only sufficient for purposes of currency cover, a statutory requirement of SAMA. Saudi commercial banks held an additional US$30 billion to US$35 billion in foreign assets, some of which was depleted in the late 1980s to finance government bond purchases and to cover domestic liquidity. Estimates of private sector assets were even more difficult to aggregate however, based on Bank of International Settlements data and newspaper accounts, the figure could be as large as US$100 billion.

Until 1991 Saudi Arabia's foreign liabilities were restricted to foreign lines of credit necessary to conduct international trade and financing operations held by domestic commercial banks. The negative alliance of payments caused the government to engage in a sizable borrowing program on international capital markets in 1991, however, including a loan from Morgan Bank of approximately US$4.5 billion. Saudi Aramco was reported to have borrowed US$2 billion to finance parts of its oil sector development program, and several Sabic corporations borrowed for new industrial investments. Further borrowings were likely. At the end of 1991, total medium-long term debt, consisting largely of government debt, was estimated at US$9 billion and was expected to grow to US$12 billion by the end of 1992. Short-term, trade-related debt was estimated at US$11 billion at the end of 1991.

In summary, during the period of high oil prices beginning in the 1970s, the government transformed the kingdom into a modern economy with few vestiges of the pre-oil period remaining. Concurrently, the standard of living for the average Saudi grew markedly, thanks to such factors as government-provided social services and a plethora of subsidies. Despite these achievements, what struck most observers was the fragile base that supported this standard of living. Government oil revenues, supplemented by private reserves accumulated during the oil boom years, accounted for much of the gross domestic product. Whereas diversification of the economy has been an objective for most of the five-year development plans since the 1970s, oil still dominated and was likely to continue to do so. Oils predominance was apparent in 1992 as the government was allocating large sums to expand crude oil production capacity to still higher levels in anticipation of growing international demand.

The large oil sector did not mean that the kingdom had not invested heavily in industrialization: in 1992 it ranked among the major industrial economies in the Middle East. But most Saudi industries were petrod18 roleum-based, in the public sector, and heavily dependent on subventions from the government budget. The private sector has been reluctant to establish domestic processing plants, and those created have been heavily subsidized. Similarly, modern, water-intensive, and importdependent agriculture has come at a huge cost to the government.

Despite higher oil capacity and demand for Saudi Arabian crude oil and petroleum products, the kingdom will continue to face tight budgetary restrictions during the 1990s. The challenge facing the government in the aftermath of the Persian Gulf War, with all its costs, was maintaining the high Saudi standard of living while continuing to diversify the economy. With financial reserves at the bare minimum levels necessary to keep international confidence, this challenge was even more difficult.

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With the decline in oil prices in 1986, the number of books on Saudi Arabia and the Persian Gulf region markedly declined. There are, however, several excellent early monographs on the five-year plans and early development programs but few recent books that deal with the problems of deficits and stabilizing the economy. Two of the most up-to-date books on the Saudi economy are Robert E. Looney's Economic Development in Saudi Arabia and H. Askari's and B. Dastmaltschi's Saudi Arabia's Economy: Oil and the Search For Economic Development. The latter is highly recommended because of its detailed analysis of the development plans and real costs associated with them. Tim Niblock's State, Society, and Economy in Saudi Arabia provides an excellent background to the economic development effort and contains several insightful studies on the economic and social constraints facing the country. A particularly good book on the private sector is Michael Field's The Merchants. For regular coverage of the kingdom's economy three sources are recommended: Middle East Economic Digest, Middle East Economic Survey, and Financial Times. A plethora of oil journals, especially Petroleum Intelligence Weekly, are available to keep up with developments in the Saudi oil sector. The United States Embassy in Riyadh also produces a comprehensive annual summary of developments in the kingdom's oil sector. (For further information and complete citations, see Bibliography.)

Data as of December 1992