With the hopeless drop in the oil prices, at less than $ 30 (thirty) a barrel, the biggest global producers began to take steps to diminish the effects of the decline in their domestic economies.
In the late year of 2015, as the Kingdom of Saudi Arabia he announced the need to initiate cuts in the public spending through the population sensitive reforms such as reducing the energy subsidies and a rise in revenue from the taxes and the privatizations.
The budget for the year of 2016, published by the Ministry of Finance of that country, is the biggest reform of the economic policy leading exporter of crude in more than a decade and includes an important reform that the authorities had previously avoided.
The plan suggests that the country of Saudi Arabia is not considering a significant recovery in the oil prices in the short term and, instead, is preparing for a period of several years with low oil prices.
The government had a deficit of 367,000 million riyals (97,900 million dollars) in the year of 2015, or 15 (fifteen) percent of the Gross Domestic Product (GDP), officials said.The year of 2016 budget plan aims to reduce the amount to 326.000 million riyals, reducing the pressure on Riyadh to pay their debts by selling the assets abroad, including theability to negotiate the sale of part of the shares of the subsidiaries of its oil, Armaco Saudi National, the largest oil producer in the world.
According to the initiative of selling the shares of Armaco, the experts have opined that arises as an opportunity to leverage the value of the shares, in a few years it will not be worth anything to continue the same stage in the oil sector.
The International Monetary Fund (IMF) warned in the month of October that Riyadh would run out of funds within five (5) years if not adopt the austerity measures.
The situation does not improve in the rest of the Gulf countries;one thing was the projections of the year of 2015 with respect to a recovery in the market and over the reality that began in the year of 2016. By the end of the year of 2015, the analysts predicted that the economies of the country of Kuwait, the country of Qatar and the country of United Arab Emirates have an advantage over the crisis and that these countries do not need the oil prices skyrocketing to balance their budgets.
At the time, the figure considered breakeven oil price for the country of Kuwait, as IMF was $ 49 (forty nine).$ 56 (fifty six) for the country of Qatar, the host of the World Cup 2022 and $ 73 (seventy three) per barrel for the country of the United Arab Emirates.
Although these countries have accumulated large sums of oil money to withstand the difficult times, at the time the IMF said that the country of the United Arab Emirates had enough fiscal reserves to support the oil prices of $ 50 (fifty) for almost 30 (thirty) years. The country of Qatar and the country of Kuwait can sustain cheap oil for nearly 25 (twenty five) years, but today every barrel does not exceed $ 30 (thirty).
The reality in Latin America
Meanwhile, in the country of Venezuela, a country characterized by its entirely dependent on the oil economy, the government declared a state of economic emergency in the whole country, which will allow the president Nicolas Maduro to introduce special measures for building the strategic policies to help reshape the productive system and the financial of the country, largely affected by the crisis in the oil prices.
The country of Venezuela’s Constitution provides for the possibility that the government enact a economic emergency “when extraordinary economic circumstances that seriously affect the economic life of the nation arise”.
Other recent measures announced by the Venezuelan president, is the increase in the gasoline prices, it is not performed in the country since the year of 1989, and in that nation is the cheapest in the world;one liter costs 0,087 bolivars and its real cost should be at least 2.5 (two point five) bolivars per liter, which is what it costs to the state oil producer PDVSA to produce.
For its part, the country of Mexico, another major oil exporter, will have a decrease in the public investment by 21% (twenty one) this year, which will affect the economic growth. The analysts agree that no substantive changes are being made to compensate for the drop in the oil revenues.
Among the essential expenses to sacrifice this year of 2016 in the Aztec nation are reducing the positions in the public sector, the reduction of the current expenditure and the projects that were covered at the beginning of the current federal administration will not materialize.
The depreciation of the peso against the dollar is also analyzed in the country of Mexico.The currency strengthened because the United States of America Federal Reserve raised the rates, which caused uncertainty and therefore a greater demand.
As a non-petroleum alternative to survive this year of 2016, the country of Mexico has a domestic demand, the boosting manufacturing and the progress of reforms as the factors that will sustain most of this increase.
For the country of Brazil, another of the great influences of the Latin American economy, the falling of the oil prices is only one line further into the causes of the economic recession and the country is projected for this year.
On the descent of the barrel of Brent crude on Friday in the London market below 30 (thirty) dollars for the first time since the month of March of the year of 2004, President Dilma Rousseff said that “Despite the adverse scenario, Petrobras, the largest company in Brazil, it has the force to stay, because of its ability to produce at low costs and adapt to the circumstances”. Petrobras has reduced the investments, not because they want to, but because without it does not survive.” added the president.
Consequences in Europe
In the case of the country of Russia, whose budget depends largely on the sale of the oil, one of the measures under study is to privatize a part of Rosneft to raise funds. According to the finance minister of that country, they will auction 19.5% (nineteen point five) of the package in the famous oil state.