As Oil Prices Plummet, Saudi Arabia Opts for Austerity
MIN READMay 11, 2020 | 19:39 GMT
In the face of the COVID-19 crisis and subsequent global recession, most countries are launching significant fiscal stimulus programs to boost domestic economic activity. Governments dependent on oil and gas revenue, however, are being forced to do the opposite as the likely long-term collapse of energy prices necessitates sharp spending cuts and unpopular austerity measures. Saudi Arabia has recently joined the growing list of oil-producers now facing twin economic and political crises as a result of the pandemic.
On May 10, Riyadh announced three specific measures that Saudi Minister of Finance Mohammed al-Jadaan said were necessary to get its public finances under control for the long and painful road ahead:
- Saudi Arabia will cut or delay spending totaling 100 billion Saudi riyals ($26.6 billion), which is roughly equivalent to 10 percent of Saudi Arabia's planned 1020 billion riyal ($271.5 billion) 2020 budget. It is not clear how much of the spending cuts and...