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

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.

"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.

The Saudi economy has been struggling

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.

Last October, Deputy Economy Minister Mohamed Al Tuwaijri said that if these reforms are not followed, the kingdom faces bankruptcy within a few years.

"If we don't take any reform measures, and if the global economy stays the same, then we're doomed for bankruptcy in three to four years," he said.

The Saudi economy is highly dependent on oil Source: Flickr/Day Donaldson

Is the economy heading for a recession?

Economic experts suggested last year that the kingdom is headed for recession in 2017, for the first time since 1999. 

According to an analysis by BMI Research, the kingdom's oil sector growth will continue to slow as austerity measures are implemented. The report predicted that the Saudi economy will contract by 0.2 percent in real terms this year. In 2016, the economy grew by just 0.8 percent.

But at the end of last year, Saudi Arabia's deficit shrank to $79 billion, roughly $8 billion less than the original budget's projections and significantly lower than the nearly $100 billion deficit of 2015.

"Our economy, thank God, is sturdy and it has enough strength to cope with the current economic and financial challenges," King Salman said introducing the 2017 budget, according to CNBC.

But despite optimism at the end of 2016, concerns still persist. Bank lending to the private sector shrank in March and April for the first time in 11 years.