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. “We think it is nearly impossible to go under $30 because of global demand”, Prince Mohammed said in the news conference, according to Reuters.
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He said, “We will not allow our country ever to be at the mercy of commodity price volatility or external markets…..we have developed a case of oil addiction in Saudi Arabia”.
What he termed ‘Vision 2030′ envisaged raising non-oil revenue to 600 billion riyals ($160bn) by 2020 and 1trn riyals ($267 billion) by 2030 from 163.5bn riyals ($43.6 billion) previous year.
“We plan to achieve a better future for the country and its people by utilizing our country’s capabilities and potential and benefiting from its location and resources”.
The fall in oil prices is largely due to OPEC kingpin Saudi Arabia’s own refusal to cut output as it seeks to drive less competitive players out of the market, in particular U.S. shale producers.
The policy, however, is yet unclear as to how this transformation would be achieved. “Without a doubt, Aramco is one of the main keys of this vision and the kingdom’s economic renaissance”.
Masood Ahmed, the IMF’s director for the region, is warning it should brace for losses of between $490 billion (435 billion euros) and $540 billion (480 billion euros) this year, compared to 2014 when oil prices were higher.
Second most important factor in the plan is public investment fund, whose size will be lifted to $2 trillion, from current $200 billion. We expect the valuation to be more than $2 trillion. In addition to that there are other assets that will be added to the fund, and part of it is already added.
Prince Mohammed was optimistic about the reform package, predicting that the sales of Aramco stock could make the Public Investment Reform more like a three-trillion-dollar behemoth than its declared $2 trillion target.
The Saudi 2030 vision will probably be viewed positively by market participants. The kingdom said it might sell less than 5 percent of the company in what would be the world’s largest initial public offering.
By “selling even 1% of Aramco, it will be the largest IPO in the world”, he said.
Analysts said it could take Saudi Arabia many years to implement such far-reaching changes and fundamentally transform the economy.
SWFs are used commonly as investment arms for oil-dependent nations seeking to diversify revenue streams, and are among the world’s largest institutional investors.
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Promoting domestic tourism among Saudis is not just aimed at capturing some of that tourism money, but also at forging a stronger national identity among the country’s youth, hundreds of thousands of whom have studied overseas on scholarships and are active users of social media and the Internet. The country logged a record $98 billion budget deficit for 2015.
