King Salman said in a televised announcement that the Cabinet approved the plan, known as Vision 2030, and called on Saudis to work together to ensure its success.
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In a far-reaching interview broadcast on the Saudi-owned Al-Arabiya, 30-year-old Deputy Crown Prince Mohammed bin Salman effectively cemented his status as the world’s most powerful millennial.
The BBC notes that more than 70% of the kingdom’s revenue came from oil in 2015, but oil prices continue to plummet and Saudi Arabia’s economy is suffering, per Al Jazeera. Deputy Crown Prince Mohammed bin Salman said the company is valued above $2 trillion.
“So we directed the Council of Economic Affairs and Development to set the Kingdom’s economic and development vision to achieve and hopefully to make our country a model for the world”.
IPO of Saudi Aramco is a country-wide plan for economic transformation, in order to be less dependent on oil, and helping the country to raise cash during a period when oil prices are at historic low.
At the centre of the plan is the restructuring of its Public Investment Fund (PIF), which Prince Mohammed said would become a hub for Saudi investment overseas, partly by raising money through selling shares in Aramco.
The reform plan’s goals aim to tackle housing and unemployment issues, but at the same time it would push for women to play a bigger economic role in the socially conservative country. “It is estimated at between $2 trillion and $2.5 trillion”, Mohammed told the channel.
“When King Abdul Aziz founded the Saudi Kingdom (in the 1940s), there was no oil”, he remarked.
Saudi Arabia’s plans follow other long-term economic reform plans announced by neighboring Persian Gulf countries, Kuwait, Qatar and the United Arab Emirates. He has since worked with a group of technocrats to slash expenditures, reform energy subsidies and lay out a vision for a post-oil economy. “We think it is nearly impossible to go under $30 because of global demand”, Prince Mohammed said in the news conference. The market is one of the 10 biggest emerging markets today, similar in size to Mexico. “That creates a problem that we’re not even going to see the oil market rebalance, not even by the first half of next year”, he told AFP.
CNBC’s Nyshka Chandray said that the kingdom has already spent $1.25bn this year on consultancy fees in the run up to the announcement.
It is also to include major structural reforms, privatisations and efforts to increase government efficiency, the prince said.
“There are some important changes here, including the detailed information about what the leadership actually has in mind for Saudi Aramco”, Kinninmont said.
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The Washington-based International Monetary Fund said the Saudi agenda was “ambitious” and “far-reaching”, although the agency warned it would be hard to implement the plan.
