It’s easy to be optimistic about the economy if you live in a resource-rich country with a “golden goose” everyone wants to buy. However, it’s an entirely different story when demand sinks and prices plummet.
Quartz reports the drop in prices from about US$100 per barrel in 2014 to just US$50 today has “blown a hole in Saudi’s budget, forcing it to burn through its reserves and borrow billions to finance its deficit”.
Considering the IMF predicts Saudi Arabia needs oil prices to hit US$84 per barrel just to break even, financial reserves are drying up fast. With limited options, Saudi Arabia has brought out its big guns.
It’s hoping to raise a significant amount of money by privatising up to five per cent of its enormous state-owned oil company, Saudi Aramco. The sale could earn the Saudi government up to US$2 trillion, and provide a much-needed boost for the country’s economy.
Source Credit: news.com.au
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