Saudi Arabia owes billions to private firms after collapse in oil revenues
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Version 0 of 1. Saudi Arabia has admiited that it owes billions of dollars to private firms and foreign workers after oil revenues collapsed, the kingdom’s new finance minister said. The arrears have left tens of thousands of foreign workers, chiefly in the construction sector, struggling for months while they await back pay. “I don’t recall the exact amount now but its billions of dollars,” Mohammed Aljadaan told reporters on Thursday. “The ministry is now every day seeking to make thousands of payment orders,” he said. The country’s council of economic affairs and development, headed by powerful deputy crown prince Mohammed bin Salman, said on Monday the kingdom would pay the outstanding amount by next month. Payments were delayed because of “the sharp decline in oil revenue and the measures taken by the kingdom to reduce spending on a number of projects,” the official Saudi press agency reported. In October, the kingdom raised $17.5bn (£14bn) from its first foray into the global bond markets as it sought to repair the damage to its public finances. Saudia, the world’s biggest oil producer, helped to push down the price by flooding the markets with cheap crude in a failed attempt to kill off the US shale gas boom. The price of a barrel of Brent crude is currently $45.84. Only two years ago it was more than $110. Aljadaan spoke after the prince chaired the first meeting of another economic body, which aims to tighten economic cooperation in the six-nation GCC grappling with lower oil revenues. Saudi Arabia, the world’s biggest oil exporter, is projecting a budget deficit of $87bn in 2016. Aljadaan, who led the country’s stock market regulator, was appointed on 1 November to replace Ibrahim al-Assaf who oversaw a series of austerity measures including subsidy cuts, reductions in cabinet ministers’ salaries and delays in major projects. Early last month the construction group Saudi Binladin said the government had transferred “some payment” in the previous two weeks, allowing it to cover some back pay to its remaining staff. The company had already finished payments to around 70,000 laid-off workers. Tens of thousands of employees of another construction firm, Saudi Oger, have gone unpaid for months. The company is led by Lebanon’s newly nominated premier, Saad Hariri. |