🇸🇦 Philip Pilkington thinks Saudi Arabia has backed itself into a very dangerous financial corner.
The kingdom has roughly $420 billion in reserves against about $520 billion in external debt.
His biggest concern is the currency peg.
As long as creditors believe the riyal will stay fixed to the dollar, they can remain relatively calm. But if confidence in that peg starts to crack, capital could leave fast.
“The peg is the key.”
Under normal circumstances, Saudi Arabia could respond with tax rises, spending cuts and other painful adjustments.
But wars have a habit of overruling economic logic.
Pilkington’s warning is that Riyadh may now be trying to defend its currency, finance a war and reassure creditors at the same time.
That is an ugly tightrope.
@philippilk
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Bertrand de Blanchefort @rechtserdan ·
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@MarioNawfal Since 1974 Saudi has sold oil for dollars in exchange for US protection. Despite Trump rejecting MBS twice now the US will aid SA any day now... 🤣😂😅







































