The goal is to increase the current public investment fund from $160 billion to $2 trillion, and to use that investment power to transition to an investment-based economy rather than an oil-based economy.
Advertisement
His “Vision 2030” envisaged raising non-oil revenue to 600 billion riyals by 2020 and 1 trillion riyals by 2030 from 163.5 billion riyals previous year. In addition to heading the economic council, he doubles as the defense minister.
Boosting Foreign Direct Investment (FDI) from 3.8 per cent of GDP to the global level of 5.7 per cent.
The plan is ambitious. “It is a visionary kind of move to not only help the Saudi economy and Saudi citizens but also help the foreigners in the country”. The Internet is one of the few spaces where people can discuss sensitive issues since there are no political parties and protests are banned.
Meanwhile, the plan also includes major structural reforms, privatisation and efforts to increase government efficiency, he said. It dwarfs all in the industry, with crude reserves of 265 billion barrels, more than 15% of global oil deposits.
Historically, the kingdom has relied on the petroleum sector for 90 percent of the state budget, nearly all its export earnings, and more than half its gross domestic product.
In the wide-ranging interview, Mohammed bin Salman said a planned partial initial public offering of the state-owned oil company Saudi Aramco was part of the reform program.
Under his plan, Saudi Arabia wants to boost non oil revenues six-fold to $266 billion by 2030, sell part of national oil company Aramco on the stock market, and create a $1.9 trillion public fund to invest at home and overseas. Subsidiaries of the company would also be part of the share sale, he said.
“If Saudi Aramco is listed then it must announce its statements and it will do that every quarter”, he said. No doubt, Saudi Arabia is world’s largest producer and exporter of oil and has one quarter of world’s known oil reserves – more than 260 billion barrels – but it is also a fact that it is an exhaustible source and income from oil is falling due to sharp reduction of its prices in the worldwide market. The Saudi government took full control of the company in a series of buyouts that ended in 1980.
The key architect of the diversification plan, deputy crown prince Mohammed bin Salman, said that if it works Saudi Arabia “can live without oil by 2020”.
Similarly, the government is planning on increasing non-oil revenue by $100 billion by 2020 through cutting subsidies and imposing new taxes in a country used to seeing heavily subsidies utilities and no tax.
Another major obstacle facing the Saudi monarchy is unemployment, now at 11.7 per cent.
“Now, we are working diligently on reforms within the water ministry so that things will be in accordance with the agreed plan”, the Prince has said, without elaborating. That’s a larger portfolio than that of the crown prince, the only man ahead of him on the succession chart. The Kingdom of Saudi Arabia (KSA) has recorded 70% of its earnings from oil during previous year.
The “Vision 2030” document targets raising the private sector share in the economy to 60 per cent from 40 per cent, reducing unemployment to 7.6 per cent from 11 per cent and growing non-oil income to 1 trillion riyals ($267 billion) from 163 billion riyals ($44 billion).
Advertisement
Batrawy reported from Dubai, United Arab Emirates.
