The International Monetary Fund, which expressed concern about Saudi economic policy in the past, praised the plan hours before its public release.
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Despite the statement of intent, the plan looked vague as it gave little details on how the transformation would be achieved.
The International Monetary Fund has calculated that oil exporting countries in the Middle East and central Asia lost $390 billion (346 billion euros) in revenue due to lower crude prices previous year.
He said other Aramco subsidiary companies would also be listed along with other publicly held companies, and added that one major benefit of privatisation was that it would increase transparency and help limit corruption.
Asked where Riyadh would find the funds for a US$2 trillion dollar fund after recent borrowing, he said it would come from transferring the ownership of Aramco to the PIF.
Russian and global investors are impressed with the transformational plan proposed by Saudi Arabia to reduce its oil dependency, CEO of the Russian Direct Investment Fund (RDIF) Kirill Dmitriev told TASS.
Last year there was near-panic among the prince’s advisers as they discovered Saudi Arabia was burning through its foreign reserves faster than anyone knew, with insolvency only two years away.
The largest Arab economy, Saudi Arabia, is now expected to grow by 1.2 per cent this year, compared with 3.4 per cent in 2015. The plan was first announced by Prince Mohammed earlier this month, fuelling hopes the country was starting to consider how it can continue to drive economic development in a decarbonising world.
Lastly, the Saudi Vision 2030 plan implies that the world just doesn’t need as much oil as it used to. “If it is not at the top of the list, why not?”
The prince told local media that this is not a response to low oil prices, “If the oil price goes back up it would greatly support the vision but it does not need high prices”.
Additional diversification of the economy will be done through investment in mining and military production as well the introduction of taxes on luxury goods and sugary drinks.
The plan did call for boosting women’s participation in the labor force to 30 percent from 22 percent over the next decade and a half. The source was also not convinced that offering less than five percent of Aramco would be enough to get the sovereign fund off the ground.
“The kingdom can live in 2020 without any dependence on oil …”
Saudi Arabia has already announced an array of spending cuts.
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“I think the real issue is going to be how to make sure that these very sensible and ambitious objectives can be translated into real changes”, he said.
