The Middle East Eye newspaper published an article by British journalist David Hurst, looking forward to the future of the Saudi economy in light of the policies of the Saudi Crown Prince Mohammed bin Salman, the collapse of oil prices, and the exceptional circumstances that the Kingdom and the world are going through due to the outbreak of the Corona virus.

Hurst criticized the Saudi crown prince's economic policies, and said that the stormy phone call made by Mohammed bin Salman with Russian President Vladimir Putin on the eve of OPEC's meeting last month, which ended in a disastrous oil price war between Saudi Arabia and Russia; reflects the pattern of government in which the kingdom is going.

Hurst said that Muhammed bin Salman undoubtedly realized the magnitude of the mistake he had made on that call. Oil prices had collapsed, and the space for storing them would soon run out, and energy companies were facing the prospect of closing oil wells.

The oil and gas sector represents about 50% of the Kingdom's GDP, and 70% of export earnings, and all of this has disappeared as a result of the price collapse, according to the author.

Oil without a buyer, empty safes, and projects turned into a mirage .. This is what Muhammad bin Salman earned on the Saudis (Al-Jazeera)

Saudi Arabia without oil,
and Hurst indicated that Saudi Arabia might become a debtor country, a hypothesis that was previously excluded, but is now a possibility.

In light of the decline in the price of Brent crude to less than twenty dollars - the writer says - the Saudi crown prince is on his way to discover what it means to dispense with the Kingdom's oil.

Hurst said that the Saudi economy has been in decline for some time. When King Salman took the throne on January 23, 2015, total foreign reserves totaled $ 732 billion, and by December last year that number had shrunk to $ 499 billion, which is what It means a loss of $ 233 billion in four years, according to the Saudi Arabian Monetary Agency.

The Kingdom's per capita GDP also decreased from 25,243 dollars in 2012 to 23,338 dollars in 2018, according to the World Bank.

The International Monetary Fund estimated that the Kingdom's net debt will reach 19% of GDP this year, 27% next year, and it may reach 50% by 2022 in light of the Corona pandemic and the oil price crisis.

According to Hurst, the closure caused by the outbreak of the new Corona virus, and led to the suspension of Hajj and Umrah seasons, which attract about ten million pilgrims and pilgrims annually; has lost the Kingdom's budget another eight billion dollars.

Causes of the Saudi Oil Crisis, Wrong Options, and Losing Price War

Bad investments
Hearst continued to touch the features of the bleak picture of the future of the Kingdom's economy, after referring to the losses resulting from the collapse of oil prices, the abolition of Hajj and Umrah, and the closure of the economy; there are other indicators that indicate the depth of the crisis, among the most important of which are bad investments.

According to Hurst, the decline in the value of sovereign wealth funds is one of the indicators of bad investment.

The Kingdom's main sovereign wealth fund - the Public Investment Fund - ranked 11th globally, after the Abu Dhabi Investment Authority, the Kuwait Investment Authority and the Qatar Investment Authority, where the value of the sovereign wealth fund for the UAE amounted to $ 1.213 trillion, then Kuwait at $ 522 billion, and Qatar at $ 328 billion , And Saudi Arabia, $ 320 billion.

Estimates provided by the International Monetary Fund before the outbreak of the Corona epidemic indicate that plans to increase the Saudi public investment fund to one trillion dollars will not be sufficient to provide the necessary income, if Saudi Arabia wants to diversify its economy rather than relying on oil.

Hurst gave examples of the decline in the value of important Saudi investment projects, such as the NEOM project, Uber investment, and others.

He said that the two main pillars of the reform plan adopted by Mohammed bin Salman collapsed, as his plan to attract foreign investment by selling 5% of Aramco's shares in foreign stock exchanges failed, as the Public Investment Fund - the main tool for diversifying the Kingdom's economy away from oil - fails chaos.

Hurst concluded that the Saudi crown prince in the post-oil era would not be able to spend a billion dollars without blowing him an eyelid as before, and that many parties in the region would rejoice at the end of Muhammad bin Salman, who hurt many people, especially in Egypt.

But the repercussions of the collapse of the Saudi economy, which for decades has been the engine of the economy of the entire region, will be quickly reflected on many Arab countries as long as their economies depend on remittances sent by millions of their children working in the Kingdom.