The Saudis are in more financial trouble than you might think, and while this threatens the Kingdom’s grip on power to some extent, it’s a threat the Crown Prince will weather.
Still, it is with some unease that the Saudis had to close a $10-billion, one-year loan this week, the funds of which will likely end up backing the 70% stake in SABIC that it forced Aramco to acquire last year.
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It is also with some unease that the Kingdom has tripled taxes on basic goods (an increase of 15%) and cut spending by some $26 billion on major projects that were supposed to turn the reputation of MBS from brutal assassin (among other things) to progressive visionary.
But the coronavirus pandemic was never factored into this legacy equation, and its cost coupled with the oil price war that cost everyone dearly has been immense.
But the Saudis have access to money, such as we saw this week with the $10-billion, one-year loan. They are funds in multiple places that they can tap into–from SAMA to the Central Bank reserves, even if those reserves are lower than they used to, and even if that is not the ideal.
All the Saudis need to do is keep paying wages to weather the storm, though there may be some blowback from the basic goods tax hike, which is the critical thing to keep an eye on right now.