Despite the withering effect from the oil price plunge and the hostilities in Yemen, the Saudi economy still has the fundamentals to fall back on. Certainly, this is true for the short term while sustaining it in the medium and long-term requires careful planning.

The latest statistics put the value of Saudi Arabia’s sovereign wealth fund (SWF) at $672 billion (Dh2.47 trillion) — one of the richest globally. The reserves are held by the Saudi Arabian Monetary Authority. Within the Gulf and the broader region, only the UAE holds higher reserves.

Evidently, budgetary surpluses of recent years have contributed to the sizeable SWF. The budget posted a surplus of $103 billion in fiscal year 2012 when oil prices averaged $109 per barrel but this fell to $53 billion in 2013 on the back of lower oil prices. The threat of budgetary deficits emerged in the second half of 2014 with the extraordinary fall in oil prices.

Much to their credit, Saudi officials used the massive surpluses to retire outstanding public debt. Saudi Arabia maintains low levels of public debt, at around 1.6 per cent of the gross domestic product at the start of 2015. Yet, Moody’s expect it to climb to 6.4 of the GDP by year-end, reflecting the need to plug the projected budgetary shortfall.

The public finance deficit is seen at double-digit figures for this year and is expected to slide to a single digit number in 2016.

One rating agency projects a budgetary shortfall of 16.7 per cent of GDP in 2015, and 8.7 per cent next year.

Clearly, this presumes possible positive developments like an end to the war in Yemen. The Saudi budget for fiscal year 2015 was prepared ahead of the breakout of hostilities. A possible rise in oil prices would be another welcome development.

Saudi authorities prepared the budget for fiscal year 2015 with a projected shortage of $39 billion on the back of expenditures and revenues of $230 billion and revenues of $191 billion, respectively. Still, steady low prices and the war in Yemen have added to the strains on its resources.

Another source of comfort is derived from substantial current account surpluses, amounting to $106 billion in 2014. According to the International Monetary Fund (IMF), the current account surplus stood at 14 per cent of GDP in 2014, putting the kingdom among the top 10 countries in terms of current account surplus.

The fact that Saudi Arabia is the largest oil exporter in the world provides added relief and security for its trading partners.

According to the authoritative ‘BP Statistical Review of World Energy’, Saudi Arabia accounts for 13.1 per cent of global oil production and has 15.7 per cent of proven oil reserves.

The Saudi economy is competitive by global standards, having been rated 25th on this score among all the countries in the world. This was in the latest Global Competitiveness Index published by the World Economic Forum.

Qatar and the UAE fared better than Saudi Arabia. (The GCI ranks economies on the basis of a number of variables including infrastructure, macroeconomic stability, goods and market efficiency, labour market efficiency, financial market sophistication, technological readiness and market size.)

Unmistakably, the Saudi economy remains resilient despite all the challenges.