RIYADH, Saudi Arabia — Stung by falling oil prices, Saudi Arabia has cut spending and subsidies as part of harsh austerity measures that threaten the lavish welfare programs underpinning its stability. The oil-exporting giant’s economy has gone from producing windfalls to deficits, and Saudi rulers increasingly struggle to provide the cushy government jobs, expensive state handouts and tax-free living that have long bought them domestic obedience.
...
... in October, the International Monetary Fund warned that the government, which projects a deficit of $87 billion for 2016, could run out of money within five years if it did not tighten spending.
TennPaGa wrote:
They could certainly run deficits, yes. As MangoMan acknowledges, they can't actually run out of money. OTOH, there are risks with such a strategy. I would expect that Saudi Arabia does not have a broad-based economy
90% is from oil, according to the article.
Whistling tunes / We hide in the dunes by the seaside
Whistling tunes / We're kissing baboons in the jungle
I thought their deliberate over-production was designed to crash the price of oil below the point of profitability for expensive American producers and drive them out of the market. Is this just blowback? How deliciously ironic.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
ochotona wrote:
Saudi Aramco laid off a bunch of people at its Houston R&D center down the road here. They are trying to conserve cash. They are getting stressed.
Interesting!
Whistling tunes / We hide in the dunes by the seaside
Whistling tunes / We're kissing baboons in the jungle
Reub wrote:
Would you run out of money if you had the world's largest oil well in your backyard and have the ability to determine it's price?
No, but your accumulated liabilities may overwhelm your cash flow which continues to decrease in value. It's self-delusion to think anyone can set the price of anything short of a total monopoly.
SA will just issue bonds to make up the shortfall. But SA isn't a currency issuer. They are constrained by the liabilities and oil revenue. They don't really have a productive economy with everyone and their mother living off the oil socialism. A house of cards, indeed!
Last edited by MachineGhost on Sat Mar 26, 2016 12:33 pm, edited 1 time in total.
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