The Myth Was That Saudi Has Huge Cash Reserves -- It All Depends -- April 11, 2015

AFP is reporting:

The Saudi budget deficit will be more than twice its own forecast, a leading research firm has said, forcing the kingdom into the debt market for the first time in more than a decade.

Hit by plunging crude prices, the world's biggest oil exporter will post a deficit of $106 billion, compared with a government projection of $39 billion.

The kingdom that exports 7.0 million barrels per day on average will see oil revenues fall by 35 percent to $171.8 billion in 2015.

Total revenues are forecast down 33.7 percent at $185 billion, while public spending is expected to remain almost unchanged at $290.9 billion.

Jadwa said the government is highly expected to return to the debt market for the first time in around 15 years despite its massive reserves.

Saudi Arabia has massive foreign reserves, which stood at $714 billion at end February, but Jadwa said borrowing would eliminate the need for the reserves to be the sole source of deficit financing. 

Cash reserve: $700 billion.

Deficit this year: $100 billion.

One can do the math. Yes, $700 billion is a huge cash reserve, unless one reduces it by $100 billion every year.

My hunch is that Saudi's 2015 budget did not forecast costs to fight ISIS. A single F-15 costs upwards of $30 million.  

In addition, among the top 20 economies projected for 2035, Saudi Arabia will be among the fastest growing. Growing economies use a lot more energy, and Saudi's domestic oil consumption issue is a well known problem for the kingdom.