Saudi Considers Paying Contractors With IOUs

Saudi Arabia, facing declining oil prices, has stopped paying contractors, leading to $40 billion in outstanding bills. A similar situation occurred in Dubai during its financial crisis, where contractors were paid partially in cash and the rest in IOU notes, akin to government bonds. Contractors, unfamiliar with holding such instruments, often sell them to banks at a discount to obtain immediate cash. This practice was also seen in Saudi Arabia in the 1990s.

What actions has Saudi Arabia taken to conserve cash since the drop in oil prices?

How did the Dubai government developer Nakheel manage its liquidity squeeze during the financial crisis?

What do contractors typically do with government IOU notes when they need cash?

What challenges do contractors face when trying to sell their IOU notes to banks?

What is the expected outcome for contractors when they sell their IOU notes to banks?