For the first time in 25 years, Saudi Arabia had had to pick a loan of over $10bn (£6.9bn) deal from international banks to keep its economy afloat as the revenues from the dwindling oil production continue to go spiraling down. Last year, the country’s oil income, its main source of revenue, fell 23 percent.
Saudi Arabia is not the only Gulf country to seek help from abroad.
It has become apparent that Saudi Arabia’s vast oil industry can no longer finance the country’s needs.
Most nations that depend on their fossil fuel resources are under severe pressure to keep themselves afloat, as the ongoing pandemic led corona virus lockdown has lead to a closed door to oil consumptions. Most of these nations are affected due to the low oil price. Earlier this year Qatar also is said to have secured a $5.5bn loan, while Oman borrowed $1bn from overseas.
In many aspects, the Kingdom is also planning to cut back its cost, raise taxation, domestic prices in order to maintain its economy. It will be leaning over its foreign reserves in order to fill its widening 2020 budget deficit.
According to news shared by the Saudi Minister of Finance Muhammad al-Jadaan, the kingdom plans to weather the economic storm by a substantial amount of $58bn over the course of 2020 that includes its borrowed sums from international banks as well. Further, it is making use of its draw-down of additional $32bn from its foreign reserves. Foreign reserves exited 2019 at $500bn, up slightly on 2017 and 2018 levels.
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