Bankruptcy in Saudi Arabia: Mohammed Al-Tuwaijri, the Saudi Deputy Economy Minister raised a weighty issue during a TV talk. He posed and asked if the Kingdom of Saudi Arabia could be heading towards bankruptcy in the next 3-4 years.
The Deputy Minister went ahead to highlight a number of economic factors that may be driving the Kingdom towards this direction. He emphasized that if the correct measures are not put in place, then bankruptcy was inevitable.
He explained that while the prices of a barrel of oil remains to be $40 to $45, the government has not taken radical measures to prevent the this trend and as such it is possible to go bankrupt.
He said that the main reason is the fluctuation of the oil prices, which serves are the main income for the kingdom. He added that strategic reserves were on the decline and the Kingdom faces insufficient options to acquire funding.
At this point in time, we cannot make a conclusion that the definite end is bankruptcy. There are a number of countries that have gone through such tough economic declines and still managed to survive. However, the only challenge is that the Kingdom is somewhat different from other countries.
Saudi has a great wealth of resources, but seems to rely on the oil resource to finance 90% of its expenditure. It is high time that the government considers other resources, especially after the sharp decline of over 70% in the oil prices. This drastic drop sounds warning alarms to the Kingdom of Saudi Arabia.
This is a situation that has never been experienced before and cannot be compared with the previous economic challenges. The high rate of terrorism in the region is the main cause for the sharp drop in oil prices.
The Yemen war and the restlessness in Iran are the main causes of the change in the oil market. As a result, the government should focus on the other wealthy resources, besides the oil.
There are tons of skilled young men and Women in Saudi, who should be given the opportunity to chart a new path for the development of the country.
The national cadre should also be revamped and enhanced with necessary support through training and incentives. The Kingdom should invest in the youth by ensuring that they get quality education and relevant skills so as to take advantage of the numerous opportunities at hand.
The time has come for the young generation in Saudi to start investing and exercising their entrepreneurial skills instead of waiting to be employed by the government. In any case, the government can only accommodate a handful of people, with the largest majorities remaining jobless.
The Kingdom should focus on ways to enhance the Hajj and Umrah sector, as it plays a vital role in the economy. Domestic tourism should be promoted so as to appeal to more people to visit the holy places all year long. The national industries need to be boosted and the government should encourage foreign investments.
Better relations have to be achieved between the Kingdom and the West as well as the East. This can be done by building the seaports, promoting free trade ports and also opening the free trade zones through the airports in the region.
The government needs to take advantage of the strategic position of the country since it is located between Africa, Southeast Asia and Africa. If it can seize these investment opportunities, then it can overcome the economic crisis and avoid bankruptcy in Saudi Arabia.
Source: Saudi Gazette