Pressure to rationalize capital markets will grow as well. Here s what s been happening in three key GCC states. The Kingdom, OPEC s largest exporter, produces over 8 million barrels a day of crude 30 percent of OPEC s total. The Kingdom s GDP in 1998 has actually fallen from the year before, probably by as much as 10 percent. In May of last year King Fahd reportedly signed a secret decree to halt new projects, cut existing contracts by 10 percent, freeze government hiring, and cut government purchases.
Contractors can wait for the bonds to mature or sell the bonds at a discount to their creditors.
The latter is the more usual choice since contractors are often deeply in debt themselves. The government also approved airport departure fees in June, and in September the national airline, Saudia, announced fare increases. The government may take further steps toward privatization, though such things always go slowly in the Kingdom. Likely sectors include telecommunications and power generation. In September foreign oil companies were told they might be allowed to invest in some upstream ventures in the Kingdom.