{"id":26797,"date":"2015-05-01T03:59:19","date_gmt":"2015-05-01T01:59:19","guid":{"rendered":"http:\/\/www.w-t-w.org\/en\/?p=26797"},"modified":"2015-05-01T03:59:45","modified_gmt":"2015-05-01T01:59:45","slug":"26797","status":"publish","type":"post","link":"https:\/\/www.w-t-w.org\/en\/26797\/","title":{"rendered":"Saudia Arabia Struggles with Oil"},"content":{"rendered":"

Nafeesa Syeed and Rinat Gaynullin write: \u00a0<\/a>Saudi Arabia is burning through foreign reserves at a record pace as the largesse of the new king and regional turmoil ratchet up pressure on public finances already hurt by the oil price slump.<\/p>\n

The kingdom spent $36 billion of the central bank\u2019s net foreign assets — about 5 percent of the total — in February and March, the biggest two-month drop on record, data released this week show. The fall was in part due to King Salman\u2019s order to give government employees and pensioners a two-month bonus after he ascended to the throne of the world\u2019s biggest oil exporter in January.<\/p>\n

The early months of Salman\u2019s rule also saw a sharpening of the country\u2019s rivalry with Iran — most strikingly over the Saudi-led air offensive in Yemen — and mounting security threats at home, challenges that had already led to a surge in military spending in 2014. The 48 percent drop in oil prices last year has prompted the government to use reserves and borrow from domestic banks to maintain spending on wages and investments.<\/p>\n

The task of balancing Saudi Arabia\u2019s economic and regional policies is increasingly falling to a new generation of princes, including the king\u2019s son, Prince Mohammed Bin Salman. The prince, who was made second-in-line to the throne on Wednesday, heads a newly-created economic council and, as defense minister, is instrumental in the bombing campaign against Houthi rebels and their allies in Yemen.<\/p>\n

The budget deficit is expected\u00a0 to widen to 14.5 percent of gross domestic product this year, compared with a gap of 1.9 percent in 2014. The king\u2019s handouts are likely to boost domestic consumption, supporting non-oil economic growth, she said.<\/p>\n

Saudi Arabia accumulated tens of billions of dollars in reserves amid high oil prices. King Salman\u2019s predecessor King Abdullah increased social and infrastructure spending after the 2011 revolts toppled rulers elsewhere in the region.
\nMilitary Spending<\/p>\n

Military spending had increased well before the kingdom gathered a coalition of mainly Sunni-led countries behind its Yemen campaign. The \u201cbig $10-$15 billion\u201d procurement deals have already been signed for the next three years, Michael Stephens, head of the Royal United Services Institute in Qatar, said by phone.<\/p>\n

Saudi Arabia\u2019s desire to play a larger role in the region means it\u2019s likely to continue spending, Ibrahim Sharqieh Frehat, a professor of conflict resolution at Georgetown University in Qatar, said by phone.<\/p>\n

The kingdom became the largest buyer of defense equipment last year, surpassing India, with inbound shipments jumping 54 percent.<\/p>\n

\u201cWe are going to see this policy continuing and being reinforced,\u201d which sits \u201cneatly with the vision of the king of taking a regional leadership role,\u201d said Frehat.<\/p>\n

\"Saudi<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Nafeesa Syeed and Rinat Gaynullin write: \u00a0Saudi Arabia is burning through foreign reserves at a record pace as the largesse of the new king and regional turmoil ratchet up pressure on public finances already hurt by the oil price slump. … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[13],"tags":[],"class_list":["post-26797","post","type-post","status-publish","format-standard","hentry","category-finance"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t