Saudi Arabia considers paying contractors with IOUs amid projected budget deficit brought on by oil slump

Source: business.financialpost.com --- Wednesday, May 18, 2016
saudiarabia has told banks in the country that it is considering giving contractors IOUs to settle some outstanding bills, according to people with knowledge of the discussions. A projected budget deficit this year is prompting the government to weigh alternatives to limit spending. Contractors would receive bond-like instruments to cover the amount they are owed by the state which they could hold until maturity or sell on to banks, the people said, asking not to be identified because the information is private. Contractors have received some payments from the government in cash and the rest could come in “I-owe-you” notes, the people said. Related saudiarabia looks to bring in billions of foreign dollars by planning stock market reforms saudi prince’s reform plan may be stymied by decades of oil reliance saudiarabia plans $2-trillion mega-fund to wean the kingdom off oil saudiarabia has responded to the recent decline in crude prices, which account for the bulk of government revenue, by stopping payments to contractors and suppliers, tapping its foreign reserves and borrowing from local and international banks. The government started delaying payments last year to prevent the budget deficit from exceeding US$100 billion after the oil slump. Deputy Crown Prince Mohammed bin Salman told Bloomberg News in an interview in March that authorities have started paying companies back. Contractor Bonds “Much will depend on the details ...