Saudi Arabia is having to borrow money? burned through 62 billion dollars just this year.

Why is Saudi Arabia having to borrow money? On the surface this sounds crazy ever since the Arab Oil embargo of 1973. However, if you look closer it is because of Iran and Isis and Russia and the Houthis. The existence of the Saudi Arabian monarchy is threatened by all these things at once. So, they are sort of in a position where they are cutting off their own noses to spite their faces in a way. Will Saudi Arabia survive all this economically ten years from now? Likely not, because solar will be cheaper than oil worldwide by then. This could be the end for Saudi Arabia we are witnessing right now. And also for Iran, and Russia too because of the end of oil in the next 10 years. 

The biggest problem here as I see it is this likely won't be the end of ISIS even if Saudi Arabia, Iran and Russia (at least as we know them now are gone economically at least in their present forms).

 

However, I wouldn't feel too sorry for Saudi Arabia yet because: "Its foreign currency reserves, while depleted, still amounted to $660 billion at the end of June." 

 

 

OPEC leader Saudi Arabia is having to borrow money

by Ivana Kottasova and John Defterios   @CNNMoney August 6, 2015: 1:29 PM ET

Saudi Arabia is not as rich as you thought.

The oil kingdom is facing a big hole in its budget, caused by the slump in oil prices and a sharp rise in military spending. That's forcing the government to raid its reserves, and it may even borrow from foreign investors, analysts say.

Saudi Arabia has already burned through almost $62 billion of its foreign currency reserves this year, and borrowed $4 billion from local banks in July -- its first bond issue since 2007.
Its budget deficit is expected to reach 20% of GDP in 2015. That's extraordinarily high for a country used to running surpluses. Capital Economics estimates that government revenues will fall by $82 billion in 2015, equivalent to 8% of GDP. The IMF is forecasting budget deficits through 2020.
Oil's slump from $107 a barrel last June to $44 right now is largely responsible for the squeeze. Half of the country's economic output and 80% of government revenue is generated by the oil industry.
Yet Saudi Arabia has only itself to blame. Its aggressive fight to defend OPEC's share of the global oil market has led to a massive supply glut.
Riyadh is refusing to cut output, hoping to drive other producers, such as U.S. shale companies, out of business.
At the same time, it is ratcheting up spending. It has intervened in a war in neighboring Yemen, and has been involved in airstrikes against ISIS in Syria. Its military budget grew by 17% last year to roughly 10% of GDP.
King Salman also lavished generous bonuses on public sector workers after his accession to the throne in January. The gesture was popular, but stretched the kingdom's finances even further.
Saudi Arabia opens up its stock market ... but not to you
"We will see increased borrowing in the coming months," Fahad al-Mubarak, the governor of the Saudi Arabian Monetary Agency, told local media last month.
The country's central bank would not comment on how many bonds it might issue.
Analysts suggest the Saudis could issue around $5 billion worth of bonds a month through the end of this year, some of those to foreign investors.
Still, it could quickly revert to drawing on reserves, rather than borrowing, if global interest rates rise.
Its foreign currency reserves, while depleted, still amounted to $660 billion at the end of June.

CNNMoney (London) First published August 6, 2015: 12:53 PM ET