Throughout history, the Kingdom of Saudi Arabia witnessed several economic crises, however governmental and independent economic organizations monitored the five most severe crises that the Kingdom went through which negatively affected its economics and needed quick interventions from the government, which had a negative impact on the Saudi citizen.
These five crises are a result of relying on oil as the only source of income, due to its lack of a comprehensive vision to develop its economic policies, and the corruption of many officials, most of whom belong to the ruling royal family.
These five crises are:
The dropping oil prices of 1986
At the beginning of the eighties of the last century, oil prices dropped sharply, which prompted OPEC to set low-level production quotas in order to restore oil prices to achieve stability, but it did not succeed as most members of the organization were producing larger quantities than the shares that were distributed to them. This resulted in prices dropping during 1986 to less than $10 per barrel, thus resulting in a decline in the Kingdom’s revenues at the time from 82 billion riyals to 58 billion riyals.
İn an attempt to find a remedy for the crisis, the Saudi government took action so countries issued treasury bonds for the first time in 1987, and imposed an increase in customs duties on Imports, with the exception of basic materials. Over time the crisis became less, but the policies imposed by the government to solve the crisis were still affecting citizens.
1994 oil crisis
In 1994, oil prices fell to $12 a barrel, so the government took a number of measures, including raising the price of gasoline, electricity, and water consumption fees, the prices of tickets for domestic flights, fees for establishing a new phone line, and fees for visas and work permits.
These measures made non-oil revenues increase by 22%, but it all came from the pocket of the Saudi citizen, and despite the state recover from the crisis, did not think about the recovery of the citizen who was still affected by the crisis.
1997 crisis
In November of 1997, the Asian crisis intensified, which prompted OPEC to meet in Jakarta, and it asked to raise its production by 10% without taking into consideration the Asian crisis affecting the continent, which resulted in a decline in prices by 40%. Oil prices continued to drop until it reached $9 per barrel in 1998.
At that time the Saudi government took many measures, the most prominent of which was the transformation of the telecommunications sector into a joint-stock company with a capital of 12 billion riyals, and gasoline prices increased for the second time from 60 halalas to 90 halalas per liter. İt also increased the work visa fees from 1,000 riyals to 2,000 riyals, which led to the country’s recovery over time and the intensification of the citizen’s crises.
The global recession of 2008
In September 2008, a global financial crisis began and it was considered the worst of its kind since the time of the Great Depression in 1929.
That crisis emerged from the United States and extended to all countries of the world. At that time, the Saudi government revealed an investment support plan in the government and oil sectors. Perhaps this was the first time it deals with a crisis where the private sector bears the burden instead of the ordinary Saudi citizen.
Bin Salman crisis in 2020
In 2014, oil prices dropped to unprecedented levels, due to the Coronavirus which struck the whole world and forced countries to close on themselves and end public life.
At that time, Saudi Arabia did not find a suitable solution except that it announced, under the leadership of Saudi Crown Prince Mohamed bin Salman, that it would rely again on citizens, as oil prices dropped to zero, and the Kingdom’s crises have increased due to the open war in Yemen, and the insistence of the Saudi Crown Prince to achieve his dreams in the desert city of Neom that serves the interests of the Israeli occupation to ensure the survival of Bin Salman in his place.
MBS activated the Economic Reform Program, through which the Kingdom enhances non-oil revenues, by increasing the prices of petroleum derivatives, electricity, and water, as well as raising the prices of residence and visit visas on expatriates to unprecedented and unreasonable levels, which made thousands leave Saudi Arabia.
He increased prices for Saudi citizens, but he never thought of cutting funds from NEOM, where the costs of its construction reached $500 billion from the Saudi sovereign fund since the launch of its project by Bin Salman in 2017.
MBS also purchased a luxury house, a tourist yacht, and a painting worth $500 million, while the crisis continues to worsen with the insistence of the inexperienced young man to achieve his dreams at the expense of a people who suffer high prices, unemployment, and poverty.
