The GPM Global Forecast is a bi-weekly, members-only article series for 2016. It provides analysis and short-term forecasting on key military, political, and economic events around the globe.
Savaged by the Oil Glut, Saudi Arabia’s Credit Rating Takes a Hit
The Standard & Poor’s rating agency has cut Saudi Arabia’s credit rating by two notches, down to A- from its previous A+. The downgrade comes amid a considerable worsening of Saudi government finances due to the prolonged slump in global oil prices.
The Saudi government is in the unenviable position of being hugely dependent on the oil industry for its revenues and having large spending commitments, both domestic (subsidies, welfare programs, and a bloated and cushy government bureaucracy) and foreign (military spending and an expensive and thus far unsuccessful campaign against Houthi rebels in Yemen). The specifics of these sizable financial commitments have been outlined elsewhere on Geopoliticalmonitor.com.