Running on Empty? Why Riyadh’s Economy is in ‘Dire Financial Straits’
SputnikNews.com
05.05.2016
Riyadh is in dire financial straits and there is no guarantee that the Gulf kingdom will be able to overcome the current difficulties; Deputy Crown Prince Mohammed bin Salman’s prognosis that Saudi Arabia’s economy will be diversified away from hydrocarbons by 2020 is nothing less than wishful thinking, Paul Cochrane wrote.
Clouds are gathering on Saudi Arabia’s horizon; to complicate matters further, none of these clouds have a silver lining, according to Beirut-based journalist Paul Cochrane.
“The Kingdom of Saudi Arabia (KSA) is in dire financial straits. Since the plunge in oil prices, the kingdom has been hemorrhaging money left, right and center,” Cochrane writes for CounterPunch.org.
The present situation has all the earmarks of an economic crisis: commercial banks have tightened lending to anyone outside of the government; thousands of Saudi workers have been laid off, while tens of thousands of foreign employees have been given the boot; as the government investment in the Saudi economy is drying up, the country is still unable to attract foreign direct investment.
“To try to mitigate such economic pressures, Riyadh is planning a Thatcherite sell-off of major government entities to drum up more cash. It is causing a lot of excitement and comment in the financial pages, as top of the pile is the plan to float an initial public offering (IPO) of up to 5 percent of Aramco, supposedly the world’s largest oil producer and valued at some $2 trillion,” Cochrane continues.
Furthermore, Deputy Crown Prince Mohammed bin Salman, the king’s son, has announced an ambitious plan, entitled “Vision 2030.” Prince Mohammed has even gone so far as to claim that the country’s economy will be diversified from hydrocarbons — which account for 70 percent of government revenues and 90 percent of exports — by 2020.
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