IMF : Saudi Arabia May Go Broke in 5 Years
As a result of the drop in global oil prices, Saudi Arabia may run out of assets in just five years if it maintains its current policies and keeps devoting its resources to war, according to a new report by the International Monetary Fund (IMF).
The report says that countries in the Gulf Cooperation Council (GCC) are split evenly between those with “relatively large buffers (financial assets)” that should last more than 20 years, like Kuwait, Qatar and the United Arab Emirates, and “countries with relatively smaller buffers,” like Bahrain, Oman, and Saudi Arabia, that could run out of assets in less than five years.
“For the region’s oil exporters, the fall in prices has led to large export revenue losses, amounting to a staggering US$360 billion this year alone,” Masood Ahmed, the IMF’s Middle East director, told reporters in Dubai Wednesday as he released the report.
— IMF (@IMFNews) October 22, 2015
Oil prices have been cut in half since mid-2014 and Saudi Arabia has been hit the worst. The IMF estimates kingdom will post a budget deficit of more than 20 percent of gross domestic product in 2015, amounting to between US$100 billion to US$150 billion.
Saudi Arabia is the biggest producer of oil in the world and has repeatedly refused to cut back on production to increase prices despite calls by several other oil-producing nations.
Global production currently exceeds demand.