IMF warns Saudi Arabia may bankrupt in 2020

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The IMF says Saudi Arabia may run out of assets within the
next five years if the government maintains its current
policies .
The International Monetary Fund (IMF) has warned in a
report that Saudi Arabia may run out of financial assets
within the next five years if the government maintains its
current policies.
Saudi Arabia is expected to run a budget deficit of 21.6
percent in 2015 and 19.4 percent in 2016, according the
IMF’s latest regional economic outlook. The country needs
to adjust spending, the IMF urged.
The IMF says the region’s outlook is currently being shaped
by several key factors the most important of which include
deepening regional conflicts and slumping oil prices.
The conflicts have given rise to large numbers of displaced
people and refugees, on a scale not seen since the early
1990s, according to the report.
“Achieving fiscal sustainability over the medium-term will be
especially challenging given the need to create jobs for the
more than 10 million people anticipated to be looking for
work by 2020 in the region’s oil exporting countries,” IMF
Middle East and Central Asia Department Director Masood
Ahmed told journalists after the report’s unveiling in Dubai.
According to the research, many experts suggest low oil
prices will remain in place for the foreseeable future, RT
reported.
“For the region’s oil exporters, the fall in prices has led to
large fall in revenue, amounting to a staggering $360 billion
this year alone,” Masood Ahmed said.
OPEC members Saudi Arabia, Iran, Iraq, Kuwait, Qatar, UAE,
Algeria and Libya have all seen their revenues drop sharply
as a result of a decline in oil prices.
Saudi Arabia is currently facing a budget deficit for the first
time since 2009.
The crude price decline has strongly influenced the
kingdom’s economy since oil sales account for about 80
percent of its revenues. It has prompted the government to
cut spending, delay projects and sell bonds.
The country’s net foreign assets fell by about $82 billion
from January to August.
The government sold state bonds worth $15 billion (55
billion riyals) this year.
The budget deficit caused project layoffs in Saudi Arabia.
Companies working on infrastructure projects haven’t been
paid for six months or more. Payment delays increased
lately as the government wants to cut prices on contracts in
order to preserve cash.
Despite the perpetual appeals to reduce output and support
crude prices, OPEC has been refusing to do so as the cartel
is trying to maintain its market share.
However, last month the cartel signaled a possible change
of stance, saying it might cut output and is ready to talk to
other (non-OPEC) producers.
But experts say OPEC’s statements are not important
without a change of policy by its biggest crude producer
Saudi Arabia.