Saudi Arabia braces for economic impact
Saudi Arabia and other Gulf Cooperation Council states must make dramatic cuts in spending, and not just on megaprojects, as unsustainably large annual deficits have arrived.
Saudi Minister of Finance Mohammed al-Jadaan may have provided the most cogent and direct message to citizens about their economic future. It's going to be different, and it may require some painful adjustments. The same could have been said by just about any Group of 20 finance minister on the outlook for a post-COVID-19 recovery. But for Saudi Arabia, the reckoning was bound to come sooner or later; the coronavirus pandemic has hurried the future along.
Oil revenue dependency and massive public spending on salaries and social benefits have limits. The system is overloaded. Jadaan said, "The Saudi economy still depends greatly on public spending and therefore we have to maintain public finance so we can continue to support the economy for the years to come. Public finance needs to be regulated more. … We will reduce expenditure, God willing, even if some of the steps taken will be painful; they are for the benefit of everyone, for the benefit of the country and for the benefit of its citizens."
