“The intention also is to transform the society”, said culture and information minister Adel Al Turaifi on Tuesday, a day after the NTP was endorsed by the Saudi cabinet.
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Economists said the proposal is unlikely to see the light soon because it could hamper the kingdom’s ability to attract the foreign investment it needs to revive growth hit by the oil slump.
Under the new program Riyadh intends to boost non-oil revenues to $141 billion (530 billion Saudi riyals) within four years, from $43 billion (163.5 billion Saudi riyals) at present.
It will cost the government around $72 billion to implement and includes over 500 projects and initiatives as well as performance indicators for ministries and other government agencies.
He said that feedback was also important for the success of the NTP, part of the Vision 2030 reform drive led by deputy crown prince Mohammed bin Salman to wean the top oil exporter off its traditional source of revenue.
A sharp fall in the price of oil since the middle of 2014 has strained the kingdom’s finances, forcing it to run a record budget deficit of about $98 billion past year.
It predicted Saudi would post a 14 per cent budget deficit this year from 16 per cent last year. Al al-Sheikh said the only tax commitment approved so far was for VAT and said that further questions on taxation should be addressed to the finance minister.
According to the NTP, the production of dry gas for industrial use will rise from 12 billion cubic feet per day to nearly 18 billion.
The proposal was included in the country’s National Transformation Plan (NTP), an ambitious multi-year program released this week.
The kingdom also plans to sell less than 5 percent in Saudi Arabian Oil Co, increase employment to address a looming youth bulge and create the world’s largest sovereign wealth fund. Seeking to diversify its assets with more overseas acquisitions, the fund invested US$3.5 billion last week in U.S. ride-hailer Uber Technologies Inc. “However, there are some uncertainties to our forecast without greater details of the fiscal plans”, Malik said.
Whether the plans are achievable has become a constant subject of conversation in the kingdom.
Saudi Arabia now employs millions of expatriates who do everything from manual labor to management.
Earlier this year, commercial bankers in the country said that SAMA had contacted them privately and urged them not to do derivative trades against the riyal. But the International Monetary Fund also praised the country’s efforts to promote changes and reduce its dependence on crude sales.
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Much of the savings from subsidy reforms of water and electricity prices (SAR200 billion) is likely to be reflected in the higher targeted non-oil revenue (rising to SAR530 billion in 2020 from SAR163.5 billion). They range from promoting non-oil industries such as tourism to privatising the postal service, using more renewable energy, automating customs procedures and adjusting public-sector salaries.
