THE HINDU Editorial Vocabulary- October 24, 2016- Topic 2
Last week’s sale of $ 17.5
billion worth of sovereign bonds by Saudi Arabia, a record for an emerging
market, was no ordinary affair. The sale is part of a series of measures the
country is taking to extricate itself from a sticky situation — a deeply
entrenched structural dependence on oil in a world of persistently low oil
prices, which went from over $110 a barrel in 2012 to below $30 at the start of
2016. This has, not surprisingly, had consequences for the kingdom, most of
whose revenues come from oil. It posted a record $98-billion budget deficit, or
16 per cent of GDP, in 2015, and is expected to grow at rates less than half of
last year’s, according to the International Monetary Fund. Riyadh is only too
aware of its precarious position. It has moved away from a ‘pump at will’
policy at OPEC, one designed to keep U.S. shale oil in check but that ended up
hurting its own economy by pushing down oil prices. Consequently, at next
month’s OPEC meeting Saudi Arabia is likely to accept output cuts, even though
these cuts may not apply to its arch-rival Iran. It has also decreased
government spending, cut public wages and bonuses, and plans an IPO of Saudi
Aramco, the state oil producer, as part of Deputy Crown Prince Mohammed bin
Salman’s ‘Vision 2030’ reform plan. For now, the bond sale will help close its
budget gap and take pressure off its approximately $550 billion foreign
exchange reserves.
The success of the debt
issue, oversubscribed with orders totalling $67 billion, is due to three main
factors. First, despite the high price of the bonds and the long-term economic
and geopolitical risks associated with Saudi Arabia, the yields looked
attractive in the context of low interest rates in developed economies. Second,
oil prices have increased since the beginning of the year and are in the region
of $50 a barrel. Third, the kingdom’s salesmen are reported to have made a
solid pitch on the bond roadshow, addressing investors’ concerns over the
undiversified economy and reiterating Saudi Arabia’s commitment to peg the
riyal to the dollar. Longer-term risks remain for the kingdom, notwithstanding
the markets’ response to its bonds. A movement towards cleaner fuels and the
country’s involvement in wars in Syria and Yemen pose serious risks to its
stability. As the era of oil starts drawing to a close, Saudi Arabia, which has
so far ignored the moral case for a gentler, more gender-equitable and open
society, may now be forced to be drawn closer to the rest of the world.
Vocabulary
Affair: an event or sequence of events of a specified kind or that has previously
been referred to.
Example: The board admitted responsibility for the affair
Synonyms: event, incident, happening, occurrence, eventuality, episode, case, matter
Extricate: free (someone or something) from a constraint or difficulty.
Example: He was trying to extricate himself from official duties
Synonyms: extract, free, release, disentangle, get out, remove, withdraw
Entrenched: establish (an attitude, habit, or belief) so firmly that change is very
difficult or unlikely.
Example: Ageism is entrenched in our society
Synonyms: ingrained, established, well-established, confirmed, fixed, firm
Persistent: continuing firmly or obstinately in a course of action in spite of
difficulty or opposition.
Example: One of the government's most persistent critics
Synonyms: tenacious, persevering, determined, resolute, purposeful, dogged
Precarious: dependent on chance; uncertain.
Example: She made a precarious living by writing
Synonyms: uncertain, insecure, unpredictable, risky, parlous, hazardous, dangerous
Yield: give way to arguments, demands, or pressure.
Example: The Western powers now yielded when they should have resisted
Synonyms: surrender, capitulate, submit, relent, admit
defeat, back down
Reiterating: say something again or a number of times, typically for emphasis or
clarity.
Example: She reiterated that the administration would remain steadfast in its
support
Synonyms: repeat, say again, restate, retell, recapitulate
Consequence: a result or effect of an action or condition.
Example: Many have been laid off from work as a consequence of the administration's
policies
Synonyms: result, upshot, outcome, effect, repercussion, ramification, corollary