Latest images
RegisterTODAY IS
Latest topics
Sun 29 Aug 2021, 22:15 by JudeTHE OLIVE BRANCH | GOD IS MY SALVATION
LIVE TRAFFIC FEED
SAUDI ARABIA DECLARES SPENDING MORATORIUM AS OIL ROUT BANKRUPTS KINGDOM
END TIME NEWS, A CALL FOR REPENTANCE, YESHUA THE ONLY WAY TO HEAVEN :: CHRISTIANS FOR YESHUA (JESUS) :: RECESSION, ECONOMIC CRISIS, FINANCIAL MELTDOWNS, MONEY WOES
Page 1 of 1
SAUDI ARABIA DECLARES SPENDING MORATORIUM AS OIL ROUT BANKRUPTS KINGDOM
Jude Sat 10 Oct 2015, 04:58
Submitted by Tyler Durden on 10/08/2015 09:41 -0400
As we’ve documented extensively for the better part of a year, the Saudis’ move to “Plaxico” themselves by artificially suppressing crude prices in an attempt to preserve market share by bankrupting the largely uneconomic US shale space has far-reaching implications for global liquidity.
When the supply of exported petrodollar capital turned negative for the first time in decades last year, it effectively ushered in a new era wherein the “great accumulation” (to quote Deutsche Bank) of USD-denominated assets by the world’s reserve managers came to an abrupt end removing a decades-old, perpetual bid for DM debt.
But that’s the bigger picture. At a more granular level, the Saudis bankrupted themselves, as slumping crude killed the current account and simultaneously created a budget deficit that amounts to 20% of GDP.
This has led directly to Riyadh’s return to the debt market and the entire debacle will only be exacerbated by the escalation of the proxy wars in Yemen and Syria (as it turns out, bombing Yemeni weddings is expensive).
Last month, when King Salman arrived in Washington to a fleet of Mercedes S-Classes, we asked if perhaps cutting back on spending was in order and indeed, in the wake of the country's move to tap debt markets, rumors have been circulating for months that the Saudis have enlisted the help of "advisers" to help rein in the ballooning deficit.
Now, as Bloomberg reports, Riyadh has effectively declared a spending moratorium in the wake of self-inflicted crude carnage:
Saudi Arabia is ordering a series of cost-cutting measures as the slide in oil prices weighs on the kingdom’s budget, according to two people familiar with the matter.
The finance ministry told government departments not to contract any new projects and to freeze appointments and promotions in the fourth quarter, the people said, asking not to be identified because the information isn’t public. It also banned buying vehicles or furniture, or agreeing any new property rentals and told officials to speed up the collection of revenue, they said.
With income from oil accounting for about 90 percent of revenue in the Arab world’s largest economy, a drop of more than 40 percent in crude prices in the past 12 months has put pressure on the nation’s finances. While Saudi Arabia’s public debt is one of the lowest in the world, with a gross debt-to-GDP ratio of less than 2 percent in 2014, the kingdom’s net foreign assets fell for a seventh month to the lowest level in more than two years in August.
And so, as the kingdom continues to draw down its petrodollar stash in a desperate attempt to shore up its finances while defending both the riyal peg from a skeptical market and the Mid-East from the spread of Iranian, Shiite influence, the budget cuts are coming, and that leads directly to the following question: if the lifestyles of everyday Saudis ends up being threatened by the government's inability to sustain the status quo, what happens to social stability and what are the implications for the future of the ruling family?
To learn more about this article, please click on link: http://www.zerohedge.com/news/2015-10-08/saudi-arabia-declares-spending-moratorium-oil-rout-bankrupts-kingdom
As we’ve documented extensively for the better part of a year, the Saudis’ move to “Plaxico” themselves by artificially suppressing crude prices in an attempt to preserve market share by bankrupting the largely uneconomic US shale space has far-reaching implications for global liquidity.
When the supply of exported petrodollar capital turned negative for the first time in decades last year, it effectively ushered in a new era wherein the “great accumulation” (to quote Deutsche Bank) of USD-denominated assets by the world’s reserve managers came to an abrupt end removing a decades-old, perpetual bid for DM debt.
But that’s the bigger picture. At a more granular level, the Saudis bankrupted themselves, as slumping crude killed the current account and simultaneously created a budget deficit that amounts to 20% of GDP.
This has led directly to Riyadh’s return to the debt market and the entire debacle will only be exacerbated by the escalation of the proxy wars in Yemen and Syria (as it turns out, bombing Yemeni weddings is expensive).
Last month, when King Salman arrived in Washington to a fleet of Mercedes S-Classes, we asked if perhaps cutting back on spending was in order and indeed, in the wake of the country's move to tap debt markets, rumors have been circulating for months that the Saudis have enlisted the help of "advisers" to help rein in the ballooning deficit.
Now, as Bloomberg reports, Riyadh has effectively declared a spending moratorium in the wake of self-inflicted crude carnage:
Saudi Arabia is ordering a series of cost-cutting measures as the slide in oil prices weighs on the kingdom’s budget, according to two people familiar with the matter.
The finance ministry told government departments not to contract any new projects and to freeze appointments and promotions in the fourth quarter, the people said, asking not to be identified because the information isn’t public. It also banned buying vehicles or furniture, or agreeing any new property rentals and told officials to speed up the collection of revenue, they said.
With income from oil accounting for about 90 percent of revenue in the Arab world’s largest economy, a drop of more than 40 percent in crude prices in the past 12 months has put pressure on the nation’s finances. While Saudi Arabia’s public debt is one of the lowest in the world, with a gross debt-to-GDP ratio of less than 2 percent in 2014, the kingdom’s net foreign assets fell for a seventh month to the lowest level in more than two years in August.
And so, as the kingdom continues to draw down its petrodollar stash in a desperate attempt to shore up its finances while defending both the riyal peg from a skeptical market and the Mid-East from the spread of Iranian, Shiite influence, the budget cuts are coming, and that leads directly to the following question: if the lifestyles of everyday Saudis ends up being threatened by the government's inability to sustain the status quo, what happens to social stability and what are the implications for the future of the ruling family?
To learn more about this article, please click on link: http://www.zerohedge.com/news/2015-10-08/saudi-arabia-declares-spending-moratorium-oil-rout-bankrupts-kingdom
Jude- Admin
- Join date : 2010-12-13
Location : United States -
Similar topics» THE HILL GOSSIP - LOOK AFTER TRUMP LANDED IN SAUDI ARABIA, THE SAUDI KING DID SOMETHING INCREDIBLE FOR TRUMP
» WHY THE U. S. IS LOSING SAUDI ARABIA
» U. S. ALLY, SAUDI ARABIA BEHEADS 87!!.....
» MERS DEATHS IN SAUDI ARABIA RISE TO 186
» GERALD CELENTE: ALL HELL IS ABOUT TO BREAK LOOSE IN SAUDI ARABIA
» WHY THE U. S. IS LOSING SAUDI ARABIA
» U. S. ALLY, SAUDI ARABIA BEHEADS 87!!.....
» MERS DEATHS IN SAUDI ARABIA RISE TO 186
» GERALD CELENTE: ALL HELL IS ABOUT TO BREAK LOOSE IN SAUDI ARABIA
END TIME NEWS, A CALL FOR REPENTANCE, YESHUA THE ONLY WAY TO HEAVEN :: CHRISTIANS FOR YESHUA (JESUS) :: RECESSION, ECONOMIC CRISIS, FINANCIAL MELTDOWNS, MONEY WOES
Page 1 of 1
Permissions in this forum:
You cannot reply to topics in this forum