Saudi Arabia’s Vision 2030 has already been discussed here, see:
However, this article, based on a lengthy interview with Prince Mohammed bin Salman, Saudi Arabia’s 31 year old Deputy Crown Prince and Defense Minister, provides an unusually candid look at the Kingdom’s economic problems:
- “Saudi Arabia’s economy will probably expand 1.5 percent in 2016, the slowest pace since the global financial crisis, according to a Bloomberg survey, as government spending—the engine that powers the economy—declines for the first time in more than a decade. The state still employs two-thirds of Saudi workers, while foreigners account for nearly 80 percent of the private-sector payroll.”
- “During the oil boom from 2010 to 2014, Saudi spending went berserk. Prior requirements that the king approve all contracts over 100 million riyals ($26.7 million) got looser and looser—first to 200 million, then to 300 million, then to 500 million, and then, Al-Sheikh says, the government suspended the rule altogether.”
- “there was roughly between 80 to 100 billion dollars of inefficient spending” every year, about a quarter of the entire Saudi budget.”
- “Last year there was near-panic among the prince’s advisers as they discovered Saudi Arabia was burning through its foreign reserves faster than anyone knew, with insolvency only two years away. Plummeting oil revenue had resulted in an almost $200 billion budget shortfall—a preview of a future in which the Saudis’ only viable export can no longer pay the bills, whether because of shale oil flooding the market or climate change policies. Historically, the kingdom has relied on the petroleum sector for 90 percent of the state budget, almost all its export earnings, and more than half its gross domestic product.”
For more on the state of the Saudi economy, see: Can Saudi Arabia’s bold reforms cure growing financial woes? By Michael Stephens
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