Despite being one of the richest countries in the world for a long time, falling crude oil prices might force Saudi Arabia to go deep in debt within just the next 5 years. The opinion was shared by University of Virginia political science professor James D. Savage. According to professor Savage, Saudi Arabia is already feeling the financial crunch as the budgets are in deficit by 15 to 20 percent of the country’s GDP. By IMF’s (International Monetary Fund) estimation, the Saudi cash reserve will last only 5 more years under current circumstances.
Professor Savage’s analysis arrives on the back of S&P (Standard & poor) downgrading Saudi Arabia’s rating by two ticks as crude oil prices continue to fall. This year Saudi’s budget deficit could reach 87 billion USD as their foreign reserve went down from 737 billion USD in 2014 to 640 billion USD in 2015. 80% of Saudi Arabia’s revenues come from oil. The construction sector in the country has taken a major hit as government is focused on cutting spending. The country might also sell international bonds for the first time to raise money.