Saudi Arabias Cash Crunch
Saudi Arabias Precarious Position
Saudi Arabia is believed to be one of the richest countries in the world. This desert country has a vast oil-rich landmass. This has led Saudi Arabia to have connections to some very powerful allies. The United States and almost all western countries may be ideologically opposed to the Saudi empire. However, economic benefits unite them. The western powers are hugely dependent on Saudi Arabias oil. On the other hand, the Saudi Arabia royal family has massive investments in financial assets in these western countries. This quid pro quo arrangement has raised many eyebrows but never enough to destabilize the transactions.
Hence, this desert country is a financial superpower of sorts. However, this financial powerhouse has come under increasing attack. Saudi Arabia is running out of cash at an accelerated pace. From having a budget surplus of 12% to a budget deficit of 18%, Saudis fortunes have turned rather quickly.
The speed at which, Saudi is burning cash could cause it to become bankrupt within the next decade or so. World institutions like International Monetary Fund and the World Bank have warned the Saudi government and the world about the deteriorating cash position. It is not long before the rating agencies start having a negative outlook on the finances of Saudi Arabia. If the situation is not managed immediately, Saudi Arabia may end up becoming another Europe.
In this article, we will discuss the causes that led Saudi Arabia to this precarious position as well as the changes that have been made to undo the problem.
Causes that Led to this Precarious Position
Changes that Have Been Made to Undo the Problem
The Sultan has proposed the following changes to avoid the Saudi financial catastrophe.
To sum it up, Saudi Arabia is in deep trouble. Unless severe changes are made to its public finance, their economy is looking at a very bleak future.
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