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“Saudi Arabia Is Going Bankrupt” Taleb Exclaims After Seeing Kingdom’s Latest Budget

“Saudi Arabia Is Going Bankrupt” Taleb Exclaims After Seeing Kingdom’s Latest Budget thumbnail

In all the noise surrounding the latest market moves, political news and frenzy over tomorrow’s Fed rate hike (or pause), an important development was missed by many when Saudi Arabia released its budget for 2019 earlier on Tuesday, which at 1.106 trillion riyals, or $295 billion – the largest in the kingdom’s on record – represents a 7% increase from 1.030 trillion in 2018.

During the unveiling of the budget, Saudi King Salman said his country will continue paying public sector cost-of-living allowances for citizens and will boost spending to stimulate growth even as Saudi Arabia toils to close its deficit, which it won’t do yet again as the kingdom forecasts a 6th consecutive budget deficit in a row, estimated to hit $35 billion in 2019.

“We are determined to go ahead with economic reform, achieving fiscal discipline, improving transparency and empowering private sector,” the King said.

While state-funded Saudi “generosity” to keep its citizens happy – and not, say, thinking radical, revolutionary thoughts – is well known, analysts believe the continued cost-of-living allowances, first established in January 2018 and estimated by officials to cost more than $13 billion, are intended to stimulate sluggish growth but mostly shore up support for the royal family and Crown Prince Mohammed bin Salman after a controversy-ridden few months.

The royal allowances of 1,000 riyals a month ($266) are paid to civil servants and military personnel, and other allowances will continue for pensioners and those living on social security. Riyadh will also increase student benefits by 10 percent for the next fiscal year, the king announced.

There is just one problem: for Saudi Arabia to be able to meet its projected revenue and fund these generous payments it will need oil prices to rise higher. Much higher.

Looking at the details of the budget, a few troubling details emerge: revenue is forecast to hit 975 billion riyals while total spending will rise 7% to 1.106 trillion riyals, resulting in a 131 budget deficit, or 4.2% of GDP (nearly double the size of Italy’s projected deficit, if still quite smaller than the US deficit) as GDP is expected to grow from 2.3% in 2018 to 2.6% in 2019.

And while the government expects non-oil revenue to increase from 287 billion riyals in 2018 to 313 billion in 2019, the big question mark is what happens with oil revenue. According to the budget, Saudi Arabia expects oil revenues to grow nearly 10% from 607 billion riyals in 2018 to 662 billion in 2019, it is the assumptions embedded in this revenue forecast that are, well, concerning.

To hit 662 billion riyals in oil revenue, or $177 billion, up from $162 billion in 2018, Saudi Arabia expects near record oil output of 10.2 mmb/d sold at a price of $80/barrel, while Saudi Aramco won’t increase its allocations to the government. For reference, Brent settled just above $56 today, which means that oil has to rise at least 40% for the Saudi budget revenue assumption to be hit. Brent would have to rise an additional $15 to $95 a barrel for the kingdom to balance its budget deficit according to Bloomberg chief Middle East economist Ziad Daoud.

As a reference, analysts expect Brent in 2019 to trade around $73 a barrel, a number which may be rather aggressive considering the recent plunge in the commodity, largely the result of continued excess output coupled with declining demand from China and other key markets.

Even with these aggressive assumptions, which see Saudi Arabia oil revenue rising to a five-year high, the Kingdom will still post its sixth-straight budget deficit.

Last year, Saudi Arabia based its 2018 budget on crude averaging $63 a barrel, $17 below the latest forecast even as its OPEC-defecting neighbor, Qatar, assumed $55 per barrel in its budget forecast released last week.

So what happens if oil refuses to levitate to the desired price? As Bloomberg’s Javier Blas notes, “Saudi Arabia will need to take on further debt, spend its petro-dollar reserves or, at some point, introduce again austerity (as it was forced to do in 2015-2016).”

It goes without saying that Saudi Arabia’s bullish call is the latest sign that the kingdom expects its efforts to corral OPEC members and its allies to cut production next year will support prices. On the other hand, any more Qatar-style defections, and the Saudi budget will not only be busted, but Saudi Arabia will end up taking on a lot more debt, which means it will be at the mercy of global creditors.

And while one can see an optimistic scenario in which everything goes as Saudi Arabia has planned, Nassim Taleb is not so sure, with a rather simple assessment: “Saudi Arabia is going to go bankrupt.”

Perhaps not just yet: according to the budget, public debt is expected to rise to 678 billion riyals or 21.7% of GDP, hardly an insurmountable number although, as noted above, it’s not the stock but the flow, and Taleb may well be right if Saudi Arabia’s traditional bankers decide to boycott the Kingdom, preventing it from gaining access to global capital markets, Taleb’s dour assessment may well be right.

zerohedge



64 Comments on "“Saudi Arabia Is Going Bankrupt” Taleb Exclaims After Seeing Kingdom’s Latest Budget"

  1. JuanP on Tue, 18th Dec 2018 5:51 pm 

    I know I keep asking why this site continues to copy and paste all of those articles from the hedge all of the time. The simple answer is, I really don’t know.

    https://www.zerohedge.com/news/2018-12-18/saudi-arabia-going-bankrupt-taleb-exclaims-after-seeing-kingdoms-latest-budget

  2. Anonymouse on Tue, 18th Dec 2018 6:41 pm 

    It is likely the exceptionalturds doing, somehow. He is externally found of re-posting fake news from jewish agit-prop sites and sources, zeroIQ if course, being his favorite. Maybe he somehow managed to convinced ‘admin’, the real one, that dumbasshedge was a legitimate source?

    Like this dumbass bit of exceptional nonsense. The jewnited snakes has been functionally bankrupt for what…30 years or more? I am pretty sure that Saudi Jewrabia is not any imminent danger of being forced to declare personal bankruptcy or anything like that. Long as people keep accepting uS toilet paper, the ‘sauds’ can run all the deficits till the camels come home.

  3. makati1 on Tue, 18th Dec 2018 8:08 pm 

    Actually, other then the articles by Tyler, most are from other sources and are factual, for the most part. As factual as any found on the internet. ANYTHING coming out of the USMSM is highly suspect, but gives another perspective to current events.

    Commonsense, rational thought, experience, and intelligence is required to get a good picture of where we are and where we are gong. That is the best we can do in today’s propaganda/liar filled world. It’s ALL about $$$.

  4. Pete Bauer on Tue, 18th Dec 2018 8:47 pm 

    They have trillions in their bankroll.
    Every pilgrim who goes to Mecca/Medina is a revenue for them.

    They will never go bankrupt, instead they will make us bankrupt.

  5. JuanP on Tue, 18th Dec 2018 9:25 pm 

    “Actually, other then the articles by Tyler, most are from other sources and are factual, for the most part.”

    The above article is by Tyler billy.

    dumbass

  6. Эй, братья, пожалуйста, ударьте антиамериканскую собаку, которую я сделал из гранитного форума on Tue, 18th Dec 2018 9:42 pm 

    not superretard obv. superretard in bed more cranky when up after 9
    widdle baby superretard

  7. makati1 on Tue, 18th Dec 2018 11:45 pm 

    Well, obviously you (JuanP alias Davy/MOB) didn’t understand what I wrote. I used plain English, but English comprehension is not your strong point is it?

    “Actually, … most are from other sources and are factual, for the most part.”

    Meaning, no matter what which way Tyler leans, the other articles are by other authors on other sites and discuss many views.

    I was speaking of Zero Hedge, not Tyler personally.

  8. makati1 on Tue, 18th Dec 2018 11:48 pm 

    Does this help? “… other then the articles by Tyler, most are from other sources…”

    Notice the commas? They are important in real composition. But you have to get past the third grade to learn that.

  9. Davy on Wed, 19th Dec 2018 4:49 am 

    billy, playing games with juan. LMFAO. See billy when you keep friends like dirty juan it is hard to know what is real and not. Your lunatic friend will not be around long. He is going off the deep end. How long can one game stupidity because that is all he does. He tries to censor with denial of voice with identity theft and puppeteering. Your other stupid friend anon is hardly ever here and when he is he is irrelevant. Dumbass gregt is probable in therapy. The gang is nearly dead. You are increasingly naked billy without support and cover. Grow some balls you are going to need them

  10. Davy on Wed, 19th Dec 2018 7:12 am 

    Let this be a warning to you billy3rd world. I will repeat my empty, delusional goatshit rants at you, over and over again, no matter how stupid and pathetic it makes me sound. I am the exceptional one around here, and my exceptionalism, always triumphs over 3rd world dumbass’s like and dirtyJuansock.

  11. Davy on Wed, 19th Dec 2018 7:48 am 

    Let’s play king of the hill and I am the king. All the rest of you posters can eat my dust.

    I am Davy. Hear me roar, people.

  12. This is me JuanP on Wed, 19th Dec 2018 8:14 am 

    Look how clever I am stealing Davy’s handle. I have a GED and a miami beach street smart. Now you know what the P stands for…LOL. PRICK

    “Davy on Wed, 19th Dec 2018 7:12 am Let this be a warning to you billy3rd world. I will repeat my empty, delusional goatshit rants at you, over and over again, no matter how stupid and pathetic it makes me sound. I am the exceptional one around here, and my exceptionalism, always triumphs over 3rd world dumbass’s like and dirtyJuansock. Davy on Wed, 19th Dec 2018 7:48 am Let’s play king of the hill and I am the king. All the rest of you posters can eat my dust. I am Davy. Hear me roar, people.”

  13. makati1 on Wed, 19th Dec 2018 8:15 am 

    juan, I no longer want to be your friend. I have no more safe spaces to go to. You have ruined this board with your mental illness. GET HELP

  14. Anonymouse on Wed, 19th Dec 2018 8:17 am 

    Juan, I am the board sock cop. I am also your firend and gang member. Please stop this stupidity or I will have to lock you up.

  15. JuanP on Wed, 19th Dec 2018 8:19 am 

    Guys, I am getting therapy at the many bars here on the beach. I have some good medication, cocaine and rum. Boney Joe and I are a pair. The boys love us. Leave me alone I come here to play.

  16. Sissyfuss on Wed, 19th Dec 2018 9:53 am 

    Oil was at $46 and $56 yesterday and up a dollar and change today. MBS may have to reassess his math before striking out on any new plans for restructuring his 7th Century wonderland of sand. At least he will have his side business of head chopping.

  17. Davy on Wed, 19th Dec 2018 12:07 pm 

    billy I just had brainstorm.

    Me and you have a lot in common obviously. We’re both Americans, we both agree that the hedge is a great source of information, and we both have farms. Although I will admit that your farm is much closer to real permaculture then mine, and I’d be royally fucked without the global economy and shit tons of diesel and gasoline. No doubt you’d be just fine without both.

    Anyhow here’s the deal. I’ve been watching that awesome American reality TV show the surviver, and seeing as me and you aren’t going anywhere, hows about us guys forming an allegiance? Just pretend that I haven’t been attacking you and trying to run you off my board. OK? I’d even call you Sir William. You like being called Sir William, right billy?

    Together we can run off all of those guys we don’t like, like anoymouse1, JuanP, and all of my sock puppets. Keep in mind that at any time I reserve the right to pounce on you like a pesky gnat pounces on a magnificent ebony stallion.

    Do we have a deal billy?

  18. Davy on Wed, 19th Dec 2018 12:47 pm 

    Oh where, oh where has my little lost ebony twink gone? Oh where, oh where can my twinky be?

  19. JuanP on Wed, 19th Dec 2018 1:11 pm 

    sorry forum, the above is me JuanP the board prick.

  20. I AM THE MOB on Wed, 19th Dec 2018 1:33 pm 

    Sissy

    Shh..Clog don’t like that..The Saudi’s are Trump and Israel’s best friends..It was the first place Trump went on his first trip out of the states..Clogg love the rich and powerful

  21. Cloggie on Wed, 19th Dec 2018 1:33 pm 

    “The last days of the West”

    https://www.dailymail.co.uk/news/article-6511681/EU-threatens-curb-British-flights-bitter-standoff-intensifies.html

    “The EU fights back with its OWN no deal doomsday plans: Juncker threatens to ground British flights and kick out UK expats if there is no Brexit deal as bitter standoff intensifies”

    And just in case this is played down as “just another British tabloid” by resident lefties:

    http://www.spiegel.de/politik/ausland/brexit-eu-beschliesst-notfallmassnahmen-fuer-no-deal-a-1244623.html

    “EU lässt Briten in den Abgrund schauen”

    (EU lets British watch into the abyss)

    The more everybody begins to talk like this, the more a no-deal-Brexit could become a self-fulfilling prophecy.

    #RussiaHereWeCome

    A no-deal Brexit almost certainly means a growing mutual hostility, battered egos, “Battle of Britain”-attitudes. The Americans will love it, finally a chance to make themselves important again and come to the aid of the beleaguered British with air-bridges and the like. 1917/1941 revisited.

    In continental Europe in contrast, pressure will grow to turn to Russia in a growing rift and standoff. Expect WW2 revisionism to take off.

    “Tess the European”

    https://www.dailymail.co.uk/news/article-6513049/PM-NOT-kept-jewellery-given-Donald-Trump.html

    “Theresa May has NOT kept jewellery she was given by Donald Trump when he visited the UK – amid hints it was TOO EXPENSIVE for her to buy”.

  22. I AM THE MOB on Wed, 19th Dec 2018 1:34 pm 

    Taleb is a fearmongering crank like all old ignorant right wingers..

    I can’t wait till the chaos breaks out and some young millennial socialist revolutionary lines Taleb up against the wall and shoots him in the head..

  23. Davy on Wed, 19th Dec 2018 1:38 pm 

    Lying JuanPEE,

    I never said the hedge was a good source of information. All the Anti US stuff there is bullshit. Everything else is real.

    Dumbass

  24. Davy on Wed, 19th Dec 2018 1:39 pm 

    A no-deal Brexit almost certainly means a growing risk of a euro-recession. neders dreams will be put on hold

  25. makati1 on Wed, 19th Dec 2018 1:41 pm 

    juanP quit stealing Davy’s handle. everyone knows it is you stupid. You are really a prick like everyone says around here

  26. Cloggie on Wed, 19th Dec 2018 1:42 pm 

    Davy loves to explain everything from money and economics. It is the only category he knows.

  27. Anonymouse on Wed, 19th Dec 2018 1:43 pm 

    As the board sock cop I feel you need to be banned. When is the last time you actually made an intelligent comment, stupid? Gaming is not intelligent it is for kids. Go buy a xbox.

  28. Cloggie on Wed, 19th Dec 2018 1:45 pm 

    US river basin map by Hungarian cartographer Scuzs:

    https://www.mnn.com/earth-matters/wilderness-resources/blogs/these-may-be-prettiest-maps-youll-see

    The pink part (Missisipi river basin) represents the future white ethno-state.

  29. Davy on Wed, 19th Dec 2018 1:49 pm 

    I don’t do xbox stupid.

  30. JuanP on Wed, 19th Dec 2018 1:49 pm 

    I can’t help it guys. I am an obsessive compulsive liar. Here check out my post from:

    JuanP on Tue, 28th Jun 2016 10:03 pm

    I wish I could smoke that shit, too, but I had to quit it because for me it is either stoned all day every day or don’t touch it at all. My addictive personality and obsessive compulsive nature don’t allow me to consume drugs with moderation so I had to quit because I am too old to be a pothead.

    I am obsessively and compulsively stealing Davy’s handle. HELP

  31. Chrome Mags on Wed, 19th Dec 2018 1:51 pm 

    “Saudi Arabia Is Going Bankrupt”

    If true, that’s a shame! LOL

    Just as a side note, I met a wealthy Saudi man at a high level social function, and we talked about oil. He as interested to know how I knew so much about the subject. Anyway, he thinks it’s all headed towards collapse. Not just Saudi Arabia, but the whole world economy.

  32. makati1 on Wed, 19th Dec 2018 1:52 pm 

    Juanp the first step in recovery is admitting you have a problem. I am glad you are aware.

  33. Davy on Wed, 19th Dec 2018 1:54 pm 

    On second thought. It sounds like JuanP is honest with himself.

    I wish I could be honest with myself but I can’t. Instead I live in a delusion. Things are much easier that way.

  34. I AM THE MOB on Wed, 19th Dec 2018 1:59 pm 

    Clogg

    I can’t wait till some young socialist millennial evolutionary lines you up against the wall and shoots you in the head..

  35. I AM THE MOB on Wed, 19th Dec 2018 1:59 pm 

    Clog

    Sorry revolutionary not evolutionary.

  36. JuanP on Wed, 19th Dec 2018 2:01 pm 

    HA HA, I am a prick who makes this place disagreeable for everyone because I can. I am me JuanP. I am stuck on myself and like the attention. How is that Mak for honesty?

  37. makati1 on Wed, 19th Dec 2018 2:02 pm 

    Good start Juan now is the time to get off this board and get into therapy before you hurt someone.

  38. Cloggie on Wed, 19th Dec 2018 2:03 pm 

    I can’t wait till some young socialist millennial evolutionary lines you up against the wall and shoots you in the head..

    Forget it, they’re all snowflakes. It’s gonna be a long wait.

    But tell me mobster, how would you like your pogrom: medium or well done?

  39. Anonymouse on Wed, 19th Dec 2018 2:04 pm 

    yea, dumbass, turd.

  40. Cloggie on Wed, 19th Dec 2018 2:04 pm 

    Sorry revolutionary not evolutionary.

    You looked it up, eh?

  41. Davy on Wed, 19th Dec 2018 2:14 pm 

    Stop calling me a dumbass. Dumbass.

  42. I AM THE MOB on Wed, 19th Dec 2018 2:20 pm 

    Word’s dumbest billionaire spends lots of money making a private train that only carries four people at a time.

    https://www.latimes.com/local/lanow/la-me-ln-elon-musk-tunnel-20181218-story.html?fbclid=IwAR3wJBmhCuVVW2XEOz7sm-ldAtxD5RuT23yK_srM0bvo9bSgpACOlq9kup0

  43. Davy on Wed, 19th Dec 2018 2:43 pm 

    Maybe it wasn’t such a good idea for me to make so many enemies here after all?

    Hey guys. If I promise to behave myself and stop being such a dick, would you guys consider not attacking me back anymore?

  44. Anonymouse on Wed, 19th Dec 2018 3:31 pm 

    Presumably, I dont need to tell anyone, that the majority of these comments of late, are not coming from me, but from the bi-polar, delusional mind, such as it is, of the exceptionalurd slash I AM THE DAVYTURD.

    Sockpuppeting and fake posts. All the inbred hill-billy’s (and their socks), are doing it.

  45. Anonymouse on Wed, 19th Dec 2018 4:28 pm 

    I didn’t say that JuanPturd did.

  46. JuanP on Wed, 19th Dec 2018 4:29 pm 

    Anonymouse I said this not your above:

    Davy on Wed, 19th Dec 2018 2:43 pm
    Maybe it wasn’t such a good idea for me to make so many enemies here after all?
    Hey guys. If I promise to behave myself and stop being such a dick, would you guys consider not attacking me back anymore?

    Maybe that was makati1

  47. makati1 on Wed, 19th Dec 2018 5:38 pm 

    Does the name thief realize time differences? 2:02PM board time is 3:02 AM here. I mentioned this once before but he seems to be too stupid to understand time zones.

    I am NEVER online after 9PM my time – 8AM Board time (Missouri time)… or before 6PM Board time – 7AM my time.

    Every post above after my 11:48PM comment is Davy.

    BTW: For the time challenged: It is THURSDAY 7:38AM here as I post this.

  48. Davy on Wed, 19th Dec 2018 5:50 pm 

    billy, if you were smart you would ask JuanP to stop the nonsense instead you promote it. You deserve what is coming. It won’t stop until JuanP stops. Got it?

  49. makati1 on Wed, 19th Dec 2018 5:59 pm 

    Davy, I fully support JuanP’s harassment. It is payback for all of your bullying, arrogant, delusional bullshit over the years. You can protest all you want but it falls on deaf ears here. You are a zero Davy.

    Just like the countries the US has abused over the years have begun to turn on it, so are all those you putdown and bullied here turning on you. Payback is a bitch. Both you and the US have a lot coming.

  50. Davy on Wed, 19th Dec 2018 6:05 pm 

    Enjoy billy there is more to come. Whine to your only friends left JuanP and anon.

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