The International Monetary Fund has just warned that Saudi Arabia’s cash reserves are in free-fall, and if it continues, then the world’s richest kingdom may be bankrupt by 2020.
What is the issue?
Every year in October, the International Monetary Exchange issues its World Economic and Financial Regional Surveys. According to this survey, for the very first time after the 1960s, the Arab region is set to suffer the worst financial agony. The reason behind IMF prediction is Saudi Arabia’s reluctance to balance its budget. The survey mentioned that the 15,000 members of the six branches of the Saudi royal family buy national support through massive social welfare spending.
The other hand, the vast majority of the 30 million residents of Saudi Arebia enjoy their standard of living due to government handouts and these social welfares. Most of Saudi citizens tend to lack employable skills and culturally too they are not inclined to work. The small private sector of Saudi Arabia tends to employ only foreigners. Recently too, a large fiscal spending packages was announced by the new King, Salman Bin Abdulaziz Al Saud who distributed $32 billion to the people to celebrate his coronation which will lead to more fiscal imbalance.
(With some inputs from breitbart.com)