This is a well placed opinion ahead of today’s OPEC meeting. They may not cut production today; but they will soon.
“Countries with fiscal buffers are right to use them to smooth their policy adjustment to support growth, but still need to pursue fiscal consolidation over the medium term because oil prices are expected to remain low,” the IMF said. “There is no room for complacency even if fiscal buffers appear strong.”
Net foreign assets fell for a seventh month to $654.5 billion at the end of August. Saudi Arabia has raised 55 billion riyals ($14.7 billion) from debt issuance this year. While the country’s debt-to-GDP ratio was below 2 percent in 2014 — indicating capacity for more borrowing — the IMF expects it to grow to 17 percent next year.
Based off current burn rates and price of crude, the IMF projects the good folks inside of House Saud will run budget deficits of 20% and decidedly run out of reserves inside 5 short years.
The rhetoric has been ratcheted up in recent weeks and I suspect this is all setting the stage for a big oil production cut at OPEC.If you enjoy the content at iBankCoin, please follow us on Twitter