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Troubled Saudis axing hundreds of projects

7 September 2016 14:28

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Saudi Arabia reportedly plans to abandon a third of its projects worth $20 billion in a fresh sign of the kingdom’s growing trouble with its budget books.

According to Bloomberg, thousands of projects worth $69 billion are being reviewed, which would impact transport, housing and healthcare.

A separate plan includes merging some government ministries and eliminating others, the financial data and media company reported, citing people familiar with the matter.

“The measures would impact the budget for several years,” it said.

The kingdom has been burning through $12-$15 billion per month from its financial reserves to fund government spending and its war in Yemen as well as proxy military ventures elsewhere.

Under its new rulers, Saudi Arabia has seen its public debt growing, with Bloomberg expecting it to rise to 30% of GDP by 2020.

Faced with a cash crunch, the kingdom plans its first international bond early next month which could raise as much as $10 billion. Economists, however, say such drastic measures are doing little to solve the country’s worst financial crisis in years.

In 2015, Riyadh opened its stocks to direct foreign investment in order to lure funds from overseas but foreign investors now own just one percent of outstanding shares in the $400 billion Tadawul Stock Exchange.

The failure has prompted Saudi rulers to resort to more drastic measures, planning to sell shares in the world’s richest company, Aramco.

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