mikewot

Hhhmmm, some news trickling in from next years budget allocation from the MoF. Looks like we are going to have to do what we did in UK and start sweating our assets.

Irishbeekeeper

Sharing information is caring information...do tell

DXBtoDOH

We're hearing rumours of 60-70% cuts in various departments.

Irishbeekeeper

nice! so who are they going to let go? the southasians work for cheap, the locals wont work for those salaries!
I bet you that they are not going to wait 3 years for the VAT.

mikewot

The locals I work with are alarmed by yesterday's plummet in oil prices, now around 35 USD. Perhaps the vanity and 'innovative' projects will grind to a halt. Certainly next year is going to be interesting.
Glad I only have 3.5 months left.

norsk

History is often ignored in the ME, but surely they remember the oil price before 2005/2006...



The chart only covers up until June 2015 hence the latest slump not shown. (http://cafim.sssup.it/~giulio/other/...ce/report.html)

mikewot

Well definite sense of humour failures with a couple when I asked how good they were at holding their breath. Back to the old days of pearl diving I said

DXBtoDOH

I read recently that Dubai still has around 140 billion in debt left over from the last boom.

How much is being spent on that new canal, by the way? Including all the new bridges, flyovers, ramps and demolition?

Millhouse

more complicated than that though really... in very very crude (get it) terms:

Inflation is around 5% p.a. 10 years of that, is about 60%. So they need a 60% increase to stand still.

Add on KSA population that's growing at around 2.5% per annum. 10 years, that's a 30% increase in both oil consumption and the number of mouths to feed.

They therefore need an uplift of 60% + 30% = 78% ish on the 25USD that they saw 10 years ago. That's 45US$ +

It's actually much worse - internal consumption of oil (directly or indirectly as water and energy) is through the roof.

Millhouse

Living life on the edge again I see. Tomorrow you'll tell us you went to work without a tie.

In all seriousness, I don't think they'll be back to pearl diving, but they survived the previous crash mostly due to regional wars. These wars are now fully priced in. I wonder what will save them next time.

The simple lesson here is... never bet against america.

Irishbeekeeper

Can they sell their cash generating companies i.e. privatization
like RTA or DEWA/SEWA etc?

Millhouse

Impossible without massive (and politically impossible) restructuring efforts - they form a cornerstone of the government employment machine. DEWA is already carrying a lot of debt as well. RTA (i.e. Salik) is already securitized (which is as close to a sale as it could be).

They need people to buy the real estate or consume goods and services.

mikewot

They could make more if they charged the locals a sensible amount instead of a few pence. Hardly encourages turning down the AC on massive mansions if it only saves tuppence.
Also the green schemes going on, no I do not mean environmentally friendly but the landscaping of SZR and Al Khail etc. I assume that is desalinated water being used (the most expensive kind) and not grey water like Europe. Money to be saved there as well as the planet.

iggle

I am a QS in Abu, started a new "mega mall", 3 years worth of work plus potential variations of towers.

Could be here for 4/5 years. Very happy and secure.

mikewot

Secure and working in the ME, not usually words you find associated. I hope you have an exit strategy like the rest of us