Saudi regime ‘covering up’ poverty crisis, corruption, says report

The authorities in Saudi Kingdom are making strenuous efforts to cover up the country’s poverty crisis as the ruling family, seeped in corruption, continues to grow wealthy, according to a new report.

Quincy Institute for Responsible Statecraft (QIRS), a US-based think tank, said the ordinary Saudi citizens are grappling with grinding poverty, while the ruling royal family continues to live in denial about it.

The regime in Riyadh has rarely released statistics on the level of poverty, although it is estimated that around 20 percent of the country’s population live in poverty, mostly women.

In its reports, the World Bank has often pointed to impending poverty and income inequality in the kingdom, a country decried for its poor record on poverty and addressing the scourge.

The QIRS report states that with the Saudi pension system on the verge of running out of resources, Riyadh is currently exploring the idea of ​​raising the retirement age and increasing contributions.

Quoting opposition activist Abdullah al-Awda, director of research for Democracy Now for the Arab World (DAWN), the report highlighted a “dangerous” change in the regime’s approach that Crown Prince Mohammed bin Salman has firmly implemented.

“What I see now is the deception and provocation of all the components that have ensured the stability of Saudi Arabia for a very long time,” al-Awdah said.

“We always hear that Mohammed bin Salman is popular in the kingdom, but where are the independent statistics to prove this claim? Nothing,” he added.

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Al-Awdah highlighted the simmering poverty crisis in the kingdom coupled with so-called economic “reforms” that severely affect the middle and working classes.

He also cautioned against austerity measures that are fast gaining momentum, such as doubling the value-added tax, increasing fuel prices, and efforts to privatize hospitals and schools.

Floundering investments

For decades, the ruling Saudi royal family has done little to alleviate the suffering of the burgeoning poor population in the oil-rich country. Since recognizing poverty means recognizing income inequality and the unfair distribution of wealth, the royals have sought to deflect attention from it.

Under King Salman and his controversial heir apparent, Mohammad bin Salman, the situation has only turned grimmer. The much-hyped Vision 2030, according to experts, will not only not help the poor, but is likely to throw the middle class into poverty due to imprudent austerity measures.

The Saudi economy has already been damaged by massive investments ordered by the crown prince without planning or oversight mechanisms, leading to institutionalized corruption and nepotism.

One of the recent investments pertained to Saudi wealth fund buying the McLaren car company’s stake for 550 million pounds, which was revealed by the British Telegraph newspaper.

The absence of any public or parliamentary oversight over the crown prince’s imprudent decisions is seen as posing a big danger to the country’s wealth and plunging it into further poverty.

The rise and fall of the Saudi economy

The future of oil as black gold, as well as the future of the world’s largest oil exporter, has become uncertain due to fluctuations in the value of oil.

Recently, Reuters reported that the Public Investment Fund is considering selling part of its stake in the Saudi Telecom Company and has appointed Goldman Sachs Bank and Al-Ahly Capital to clinch the deal.

The Public Investment Fund owns 70% of the capital of the Saudi Telecom Company, equivalent to 1,400 million shares. Bin Salman holds the position of head of the investment fund.

The news agency stated that the Saudi government will maintain large financial safety margins.

"Deposits in the central bank exceed 10 percent of GDP, and dependence on oil is currently feasible… But indicators of weak governance and exposure to geopolitical shocks restrict the rating.”

It also expected the budget deficit to shrink to 3.3 percent of GDP in 2021 from 11.3 percent in 2020, assuming an average price of $63 per barrel.

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