THERE is no doubt that the Kingdom of Saudi Arabia and its capacity as the engine of the Gulf region will continue to be the regional and global center of attention because of its huge role in the global economy. Due to this, opinions are plenty concerning any development that takes place in Saudi Arabia.
This is particularly when considering the situation of the region, whether in terms of decline in the oil prices and its overall financial effect on the regional countries, or the economic financial crisis and its repercussions on the region.
Therefore, the royal decrees of financial nature, which were issued few days ago by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz, were of interest for the GCC countries because such decrees not only rejuvenate the Saudi market but also the GCC market.
Such decisions can only be understood by those who know how to tackle emergency situations without impacting the daily lives of common people, especially when spending on high-profit feasible projects for the state and its citizens, not the kind of decisions that are ineffective after 20 or 25 years. These decisions are part of Saudi Arabia’s plans for those who were striving to take advantage of it.
A lot was being said — without facts — throughout the past few months regarding financial scarcity, reaching a point where it almost led people into believing the Bedouin adage “When people talk about the scarcity of water, they die of thirst”. This is due to many unsubstantiated ideas on which observers based their opinions.
This happened despite the recent statements made by the Saudi Finance Minister concerning the government’s move to disburse delayed dues to companies, which was a positive indication but did not stop the pessimists due to lack of their ability in conducting proper analysis on the economic and financial facts concerning Saudi’s financial circle.
They did not even take into account the country’s reputation in the global capital markets, the demand for buying its long-term debt bonds, and the level of manifold coverage of it despite having low-interest returns.
Today, the royal decrees remind all of us of the vow that King Salman made in the past, which affirms the ability of Saudi Arabia to overcome any economic turns regardless of the intensity. This is because the country’s GDP is about two trillion riyals and it enjoys huge financial ability, which makes it capable of fulfilling its financial obligations.
As per economy studies, restraint in money flow and lack of spending are two causes for financial crises. Unfortunately, when some unknowingly arise to analyze the economic decisions, they attempt to support their ideas with scientific principles, forgetting the historic context of the nature by which the country is managed.
Therefore, they misread these decisions. A testimony to that is the decision taken by King Salman to suspend the issuance of allowances and bonuses, which was considered by critics as the final decision and the start of an economy crisis.
However, the government was clear in its statement, indicating restoration of bonuses and allowances when the economic circumstances that influenced such decisions diminish.
Some of those who expected “scarcity of water” were wrong, even when the rain did not come in its usual season. Such wrong expectations almost made people die of thirst. Credit goes to those who realized from the beginning that the measures being taken are only temporary in order to recalibrate the budget balance of the country by cutting down unnecessary expenditures.
Now that the economic circumstances which had existed at that time no longer exist, those who benefitted are the ones who had betted on the ability of Saudi Arabia to overcome this passing economic crisis. It is because of their faith in Saudi Arabia, which should be the principal faith of all Saudis and Gulf nationals.
By Ahmed Al-Jarallah
Editor-in-Chief, the Arab Times