Saudi Arabia’s financial situation sparks attention

a banner that displays the image of Saudi King Salman along with the phrase “Salman, we hear and obey,” near Mecca, Saudi Arabia. A drop in oil revenue is forcing Saudi Arabia to weigh its first cuts to welfare and investment in years. (AP Photo/Mosa’ab Elshamy)

When Saudi Yasser Khalifa came up on “Non-Summit”, Korean entertainment program, to discuss the welfare of Saudi society, it instantly became a hot topic in South Korea. Khalifa talked of the economical situation of Saudi citizens, explaining that there more rich people than poor ones in Saudi Arabia.

He explained that this happens because people in Saudi Arabia can ask for “loans” from the government. The government for example would give approximately 1 million dollars if you want to buy a “house”, and for a “car” they’d be wiling to give you 50.000 dollars. He also added that people don’t need to pay the government back for these “loans”.

This comment became such a hot topic in South Korea over the following days, as people became more interested in the lifestyle of Saudi people. Saudi Arabia has been known for its luxurious lifestyle, that the recent news of Saudi princes and citizens alike spark attention all over the world.

Saudi Yasser Khalifa, one of “Non-Summit” contributes.

This comes at the same time that Saudi Arabia’s government decides to reduce its expenses by 10% attempting to stop the deficit in the government’s budget. Meanwhile the International Monetary Fund (IMF) predicts that the budget deficit of the kingdom will rise till 20% of the total GDP of the country.

The government started its austerity measurements after the oil prices started to go lower than expected. The government afterwards released a statement saying that even though their economy is damaged but they’re not suffering, this comes as they halt a number of welfare projects, and attempt to participate in more profitable projects. They started cooperating with Sudan on a number of agricultural projects as well as electricity and dam related projects.

Dr. Ibrahim Ibn Abdel-Aziz Al-Asaf, minister of finance, ensured that Saudi Arabia reducing its budget shouldn’t be seen as an emergency that Kingdom had to undergo, but as a step of a long process the country is undergoing for the long run in order to control its expenses. He added that this shouldn’t be seen as a result of economical fears.

Among the precautions the government undertook to support its financial situation are reducing the debts margins and supporting public sector, which continues to grow steadily.

These measures are considered to be the first cuts to welfare and investment in Saudi Arabia in years, and though Saudis aren’t as affected as other countries suffering from the same drop in oil prices, but this will prove to be a big change in the Saudi society over the upcoming months.