Saudi Arabia confronts an unprecedented series of challenges as 2020 unfolds. The Saudi budget has struggled to balance an ambitious program of diversification away from an oil-based economy, massive new arms procurement, the quagmire of the Yemeni civil war and navigating the US confrontation threatened by steeply declining oil prices. Observers had predicted that the Saudi budget could not sustain current expenditure levels beyond the next two or three years. The steep decline has now fallen over a cliff, dramatic production reductions negotiated with Russia and the rest of OPEC have not stabilized prices at levels adequate to support the Saudi budget nor is there any indication that this situation will change in the mid-term future.
The Kingdom has only $450 billion in foreign exchange reserves, according to most sources, and will need to both borrow and continue liquidating some of their foreign exchange holdings. Will Saudi Arabia be able to increase liquid reserves to cover future imports and sustain credit ratings? What happens then? The Kingdom has failed to adjust budget expenditures for the last several years. How difficult will it be to catch-up now or is it too late?
David Rundell (moderator), Dr. Hani K. Findakly, Dr. Bessma Momani, and Dr. Ghiyath F. Nakshbendi.