Is Riyadh over-extending itself on the international stage?
Recent setbacks appear to have done nothing to quell the Saudi heir apparent’s appetite for making headlines and pushing the kingdom and its economy in a new direction, but there are plenty of potential pitfalls ahead
Lauded by investment banks and other financiers in Riyadh and abroad, Deputy Crown Prince Mohammed Bin Salman’s reforms look less impressive under the critical appraisal of experts and institutions who crunch the numbers and analyse policy responses. Usually most cautious when addressing its powerful shareholders, the IMF has criticised Riyadh’s plans for a balanced budget. Meanwhile independent critics are even harsher in their analysis of the Vision 2030 agenda – suggesting implementation is unlikely and could have downsides including hastening a devaluation that many Saudis would find very costly
King Salmans tour through Malaysia, Indonesia and Brunei is the latest sign of how keen Gulf governments are to strengthen economic ties with Southeast Asia.
Opulence and multi-bilion dollar deals underline the next phase of a very Saudi pivot towards Asia
The Saudi government tried its best to counter critics of its economy policy when it announced its 2017 budget on 22 December. Recently appointed finance minister Mohammed al-Jaadan presented a plan that, at first glance, involved an 8 per cent rise in spending to SR890bn ($237bn), up from SR825bn in the previous years budget.
The Saudi government is planning structural reforms to stimulate more investment from the private sector
Riyadh eased off on some austerity measures in its budget, but as spending cuts continue it won’t be long before the ‘rationalisation’ programme is ramped up again, amid decidedly underwhelming economic prospects
By almost any measure, Saudi Arabia’s bond issue on October 19, 2016 was a success. While analysts had been predicting an issuance of between $10bn and $15bn, the final amount was $17.5bn, setting a new record for the largest ever emerging markets sovereign bond—the previous record had been set by Argentina in April 2016, when it sold $16.5bn.
The Saudi central bank has had to step in as the country’s banks deal with a slowing economy, shrinking deposits and tighter liquidity.