HERE’S WHY SAUDI ARABIA’S SECRET US TREASURY HOLDINGS IS A HOT TOPIC, AND WHY IT MATTERS

When Saudi Arabia decided against cutting production targets in 2014, letting the price fall from around $100 to less than $50, the oil producing country wanted to throw weaker, less efficient OPEC and non-OPEC oil-producers out of the market by slashing their profit margins. But, the move backfired. (Moody’s estimates crude oil prices to average $33 per barrel in 2016 as oil cartel OPEC and many non-OPEC oil producers continue to produce without restraint as they battle for market share.)

Saudi Arabia, which generates 90% of its income from oil, currently has $654.5 billion in foreign reserves, but the cash is disappearing quickly. In 2015 alone, Saudi Arabia burned through about $100 billion of foreign-exchange reserves to plug its biggest budget shortfall in a quarter-century. Last year, Saudi Arabia bypassed Russia to take over the world’s third spot in military spending, with a defense budget of $80.8 billion. In its World Economic and Financial Surveys, the International Monetary Fund predicted that the country could be bankrupt within five years – by 2020.

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