Saudi Arabia

A top Saudi prince has announced new elements of a plan to reduce the kingdom’s heavy dependence on oil, amid a drop in world prices that has sent shock waves through the Saudi economy. The plans include publicly selling shares of the state oil giant, Saudi Aramco, and routing much of its worth into a public investment fund, said the prince, Mohammed bin Salman, in an interview with Bloomberg published Friday, the International New York Times reported. The fund could become the world’s largest, he said, with more than $2 trillion in assets.

In pressed white robes and clutching crisp résumés, young Saudi men packed a massive hall at a university in the capital city this month to wait in long lines to pitch themselves to employers. It was one of three jobs fairs in Riyadh in two weeks, and the high attendance was fueled in part by fear among the younger generation of what a future of cheap oil will mean in a country where oil is everything, the International New York Times reported.

Officials in Riyadh are heaving a sigh of relief amid indications that Saudis are willing to shoulder unprecedented cuts to long-cherished government subsidies. But with predictions of more economic pain to come it is unclear whether they will accept further reductions to their incomes, the Financial Times reported. Facing its worst fiscal outlook in 15 years amid falling oil prices, the government announced an austerity budget last December, slashing spending to plug the gap and lifting petrol, electricity and water prices for consumers and gas and feedstock prices for industry.

One of the Middle East's longest-running debt disputes edged closer to being resolved on Thursday when Saudi Arabian family conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB) presented a revised restructuring plan. AHAB has around 22.5 billion riyals ($6 billion) of claims against it after the hospitality, food and real estate group collapsed in 2009 along with Saad Group, a separate Saudi business empire led by Maan al-Sanea. Since then, the two groups have conducted a high-profile battle in the courts over who was to blame.

Saudi Arabia is considering selling shares in refining ventures with foreign oil firms but would not offer a stake in the crude oil exploration and production operations of state oil giant Saudi Aramco, sources familiar with official thinking said, Bloomberg News reported. Some Aramco managers have been informed that the company is looking at listing shares in "joint downstream subsidiaries" at home and abroad, the sources said. One option is to create a holding company that would group together Aramco's stakes in the downstream subsidiaries, one source said.

Saudi Arabia is considering selling shares in its state-owned oil company, a move that comes amid a broad privatization effort afoot in the kingdom, but also at a vulnerable time for Riyadh because of tumbling energy prices, The Wall Street Journal reported. Any move to list shares in Saudi Arabian Oil Co., better known as Saudi Aramco, would almost assuredly be limited in scale, and could exclude its strategic production assets altogether.

Saudi Arabia today unveiled spending cuts in its 2016 budget, subsidy reforms and a call for privatizations to rein in a yawning deficit caused by the prolonged period of low oil prices, the Financial Times reported today. The Gulf kingdom has kept oil production at high levels in an attempt to force out higher-cost producers, such as shale, and retain its market share. But this year’s deficit ballooned to 367bn Saudi riyals ($97.9bn,) or 15 percent of gross domestic product, as oil revenues fell 23 percent to Sr444.5bn.

Saudi insolvency law has for some time been something of an unknown quantity for non-Saudis, The National Law Review reported. A wide-ranging reform is due to take effect in 2016, which will express elements of the rescue culture and is likely to make restructurings more common. Increased certainty in the outcome of insolvencies will benefit both Saudi businesses and domestic and foreign creditors alike.

Saudi Arabia has decided to tap international bond markets for the first time, in a sign of the damage lower oil prices are inflicting on its public finances, the Financial Times reported. Saudi officials say the kingdom could increase debt levels to as much as 50 per cent of gross domestic product within five years, up from a forecasted 6.7 per cent this year and 17.3 per cent in 2016. Work on finalising the bond programme is likely to start in January, according to a senior official.

The IMF has asked Saudi Arabia for more details of its plans to deal with its ballooning fiscal deficit, warning the world’s biggest oil producer could deplete its financial reserves within five years unless it builds on efforts to balance the budget, the Financial Times reported. Masood Ahmed, the IMF’s regional director, pressed Riyadh to outline details of its proposed spending cuts and clarify its position on additional revenue generation measures such as taxes, as it deals with a fiscal deficit hovering around 20 per cent this year and next.