Saudi Arabia’s cash reserves are in free-fall and the country
could have only five years of financial assets remaining due in large
part to the fall in oil prices, according to a
report by the International Monetary Fund (IMF).
In its World Economic and Financial Surveys, released every October,
the IMF said that the kingdom will suffer a negative 21.6 per cent
“General Government Overall Fiscal Balance” in 2015 and a 19.4 per cent
negative balance in 2016, a massive increase from only -3.4 per cent in
2014.
Saudi Arabia currently has $654.5 billion in foreign reserves, but the cash is disappearing quickly.
The Saudi Arabian Monetary Agency has withdrawn $70 billion in funds
managed by overseas financial institutions, and has lost almost $73
billion since oil prices slumped,
according to Al-Jazeera. Saudi Arabia generates 90 per cent of its income from oil.
Earlier this year the kingdom doled out a massive $32 billion
spending spree distributed to the public, to celebrate the coronation of
King Salman Bin Abdulaziz Al Saud.
In 2015 Saudi Arabia also bypassed Russia to take over the world’s
third spot in military spending, with a defence budget of $80.8 billion.
Meanwhile the war in Yemen, being carried out mostly by the kingdom,
shows no sign of abating.
The country is now expected to run a deficit of more than 20 percent of GDP in 2015, according to the IMF.
Masood Ahmed, the IMF’s Middle East director, told reporters in Dubai
that the fall in oil prices amounted to a ‘staggering $360 billion this
year alone’.
Because the oil price drop is likely to be large and persistent, the
kingdom is expected to join other oil exporters and make substantial
budget cuts, Al-Jazeera wrote.
But even this may be counter-productive if consumers and companies
decide to hold back consumption and investment in response to the cuts.
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