Saudi plans spending cuts, reforms to shrink budget deficit

Thrugelmir

Low oil prices are starting to bite. Seems as if Saudi Arabia is digging in for the long term and not expecting any price recovery any time soon.

Saudi Arabia, its finances hit by low oil prices, announced plans to shrink a record state budget deficit with spending cuts, reforms to energy subsidies and a drive to raise revenues from taxes and privatisation.

The 2016 budget, released by the Finance Ministry on Monday, marked the biggest shake-up to economic policy in the world's top crude exporter for over a decade, and includes politically sensitive reforms from which authorities previously shied away.

The plan suggests the kingdom is not counting on a major recovery of oil prices any time soon but is instead preparing for a multi-year period of cheap oil. The International Monetary Fund warned in October that Riyadh would run out of money within five years if it did not tighten its belt.

http://uk.reuters.com/article/uk-saudi-budget-idUKKBN0UB14U20151228

purch

The Saudi's appear more interested in putting other producers out of business rather than worrying about their own economy.

CLAPTON

given the price is a political decision, one can expect anything

Generali

Prisoners' dilemma innit. Do what's best for yourself and you probably lose, do what's worst for all and you might win.

It would be much better for the Saudis if their country had a more diversified economy. Perhaps selling whisky as well but perhaps as a part of a wider union that sold services and finished goods across the world.

Thrugelmir

purch wrote: »

The Saudi's appear more interested in putting other producers out of business rather than worrying about their own economy.

No different to Amazon's business approach over many years.

CLAPTON

Generali wrote: »

Prisoners' dilemma innit. Do what's best for yourself and you probably lose, do what's worst for all and you might win.

It would be much better for the Saudis if their country had a more diversified economy. Perhaps selling whisky as well but perhaps as a part of a wider union that sold services and finished goods across the world.

Make a terrific match for an independent Scotland : a good match, both one party states, oil in common and scotland could provide the expertise in Whisky production : match made in heaven

vivatifosi

Just under a third of the workforce in Saudi Arabia is from elsewhere. I'm guessing that as a result the impact could be felt far and wide, India, Pakistan, Bangladesh, Yemen, Egypt...

https://en.wikipedia.org/wiki/Foreign_workers_in_Saudi_Arabia

Thrugelmir

vivatifosi wrote: »

Just under a third of the workforce in Saudi Arabia is from elsewhere. I'm guessing that as a result the impact could be felt far and wide, India, Pakistan, Bangladesh, Yemen, Egypt...

Treated very badly by the locals. Perhaps less wealth will bring them down a notch or two.

thequant

purch wrote: »

The Saudi's appear more interested in putting other producers out of business rather than worrying about their own economy.

I think the Saudis have a long term strategy, one that I don't think is going to end well for the middle east and the rest of the world.

In the past 20 years, they have armed themselves to the teeth. In the first Gulf war, the Saudi army were barely existent. Now they are larger in numbers and budget than the likes of Britain and France.

During that time they have exported their brand of Islam, Wahhabism around the world which has led to the radicalization of many muslims which is the root of the plethora of terror attacks which we have become use to.

It's clear, that the ideology of ISIS is influenced from Saudi. it's the only other country that I can think of, that beheads and crucifies people on a regular basis, where having sex with 6 year old girls is considered normal, death penalty for gays etc. (how come these stories are never splashed all over our newspapers?)

Now they are trying to bankrupt themselves and their neighbours. They wouldn't be doing this, unless they had already worked out what their end game is.

globalds

Riyal pegged to the dollar

http://www.telegraph.co.uk/finance/12007991/Speculators-test-Saudi-currency-as-oil-crisis-deepens.html

whilst the Russians pursue the alternative policy

http://www.wsj.com/articles/russian-ruble-falls-to-year-low-amid-oil-price-drop-1451334308


2016 looks to be interesting times .

DiggerUK

Rate rise, strong dollar, dollar peg. Makes a strange christmas cracker conundrum.

And let's not forget, most of the worlds (cheap) oil producers have their currencies pegged to the greenback.....oh, I forgot, Russia doesn't.

Perhaps the US Federal Reserve may have been playing a political game with the recent rate rise.......no of course not, they are just like the Bank of England, independent of politics..._