Saudi Arabia's national debt is about to surge
The country's debt could rocket to as much as 50% of GDP by 2020, from 6.7% this year, the report said.
It's not great timing.
The country's sovereign credit ratings were cut to "A+/A-1" from "AA-/A-1+" by the credit-rating company Standard and Poor's earlier this month.
In a release, S&P said a "pronounced negative swing" in Saudi Arabia's fiscal balance prompted the downgrade.
Over the 10 years that ended in 2013, S&P noted that Saudi Arabia's budget surpluses - or money available after all government expenses had been met - averaged about 13% of gross domestic product. This situation, however, has changed rapidly as the price of oil has crashed, and in 2015 Saudi Arabia is expected to see a budget deficit equal to 16% of GDP.
The country has been hit by low oil prices. The OPEC oil-producing cartel, of which Saudi Arabia is a key member, decided against cutting production targets last year, letting the price fall from around $100 to less than $50.
The policy is aimed at forcing weaker, less efficient oil-producers out of the market by slashing their profit margins.
Khalid al-Falih, the chairman of Saudi Aramco, the state's oil company, told the Financial Times: "We knew that it was going to be painful but the extent of the pain went beyond our expectations."
Here's the Brent crude oil price, a benchmark for oil, over the past two years:
- Srinagar freezes at minus 4.8, season's lowest so far
- New Fund Offers explained – Should you bite the bullet or stick to the tried and tested?
- Bullish domestic markets push up Rupee to 83.37/USD
- No Monday blues: Sensex scales 70,000-peak for the first time; Nifty crosses 21,000-level
- Initial Public Offerings (IPOs)