Saudi Government Revenues and Expenditures : A Financial Crisis in the Making

Will history repeat itself, leaving Saudi Arabia to face another financial crisis due to drastic overspending and/or a dramatic drop in oil revenue? If the situation remains on its current trajectory, by 2030 government debt due to rising expenditures over revenues will be too overwhelming for the government to cope with. When Saudi Arabia was founded in 1932 it was one of the poorest countries in the world, relying on limited revenues from agriculture and pilgrimage. Today, Saudi Arabia's economy is heavily dependent on oil. Wealth derived from oil has transformed the Saudi society from a state of poverty to one of lavish consumption, by both government and individuals. A high rate of annual population growth, coupled with meagre natural resources, raises growing concern about the country's future. Are there alternative sources of income to replace oil as the major source of government income in the future? This perfect storm raises the possibility of a potential government financial crisis, if things remain as they are. The crisis will be beyond the government's control and will lead to economic, political and social instability. In this important work, Aldukheil explains what needs to be done, what needs to be reformed, and even gives policy recommendations to prevent a crisis in Saudi Arabia Front Matter....Pages i-xv Introduction....Pages 1-5 Anatomy of the Saudi Economy....Pages 7-22 Government Expenditures and Revenues, 1960–2010....Pages 23-51 Forecasting Government Expenditures, Revenues, and Gaps, 2011–2030....Pages 53-95 Forecasting Government Expenditures, Revenues, and Gaps, 2031–2050....Pages 97-110 Financing the Gaps....Pages 111-141 Are Saudi Government Expenditures Sustainable? (The Genuine Savings Criterion)....Pages 143-170 Is a Saudi Financial Crisis Inevitable?....Pages 171-201 Summary and Conclusion....Pages 203-206 Back Matter....Pages 207-223