JEDDAH, SAUDI ARABIA — In what can only be described as the fiscal equivalent of a man waking up in a bathtub full of melted Rolexes, analysts have finally declared that Saudi Arabia’s decades-long spending spree is stumbling towards a very wobbly finish line. The kingdom, which has treated its sovereign wealth fund like a trust fund brat with a jet ski habit, is now facing the grim reality that even oil-soaked piggy banks have bottoms.
This is not a crisis. This is a farce with a very expensive set. The Saudis have been burning cash on everything from LIV Golf (where washed-up athletes go to un-wash their reputations) to a planned mega-city that looks like a mirror-covered middle finger to urban planning. They’ve bought football clubs, financed Hollywood flops, and commissioned enough yachts to form a floating shanty town for the 0.1 per cent. And now, the piper wants paying.
According to those who crunch numbers so we don’t have to, the kingdom’s break-even oil price has soared to a laughable $100 a barrel. That is not a sustainable figure. That is a cry for help. Meanwhile, the global economy is doing its best impression of a haemorrhaging patient, and demand for crude is starting to look as flaccid as a speech by a tech CEO trying to explain cryptocurrency.
The tragedy, and it is a tragedy of Shakespearean proportions if Shakespeare wrote about petro-states and PIF, is that the Saudi leadership genuinely believed they could outrun reality. They threw money at Vision 2030 as if it were a video game cheat code. They hired McKinsey consultants by the lorry-load to tell them what they wanted to hear: that diversification is easy, that tourism in the desert will flourish, that nobody will notice the human rights abuses if the hotel minibars are well-stocked.
But the numbers don’t lie. The International Monetary Fund, which has the charisma of an accountant at a wedding, has been wringing its hands. The warning signs are everywhere: dipping foreign reserves, a current account that has switched from surplus to deficit, and the sudden silence from Riyadh’s real estate agents who were busy selling plots in the middle of nowhere for the price of a London penthouse.
The irony is so thick you could cut it with a blunt scimitar. The same kingdom that once flooded the world with cheap oil to destabilise its enemies is now being destabilised by its own lavishness. Every new stadium, every absurd giga-project, is a nail in the coffin of fiscal prudence. And the world, which has grown bored of Saudi extravagance, is now watching with the detached amusement of a cat observing a hamster that has finally fallen off its wheel.
So cheers to you, House of Saud. You spent like there was no tomorrow, and tomorrow has finally arrived. It is wearing a cheap suit and holding a repossession order. Enjoy your last few rounds at the bar of international credit. The tab is coming due, and the barman does not take American Express.
