Reform plan on track, says Saudi Arabia
• Concern over efficiency programme being revised
Saudi Arabia’s government has assured investors that its Vision 2030 economic reform programme, including the sale of a stake in national oil giant Saudi Aramco, is on track despite plans to adjust parts of it.
News last week that Riyadh is revising a section of Vision 2030 known as the National Transformation Programme (NTP) — an effort to make the government and society more modern and efficient — triggered speculation among foreign analysts that the whole reform drive might be in jeopardy.
One analyst suggested the power of Crown Prince Mohammed bin Salman, in charge of economic policy, might be waning and that broad resistance to reforms might be building. Another speculated the Aramco sale could be delayed.
Behind the unease is the fact that Vision 2030, launched in 2016, has so far done little to free the economy from dependence on oil exports. It has begun to shrink a big state budget deficit with austerity steps, but has not yet created major new sources of non-oil growth or jobs.
The Saudi information ministry said on Saturday Riyadh remained committed to the reforms and was merely streamlining the NTP to make it easier to carry out. “Vision 2030 builds on early successes and is strengthening its delivery mechanisms as it increases the scope and pace of implementation,” the ministry said.
Riyadh plans to sell about 5% of Aramco to raise money for reinvestment in non-oil industries. Officials have said that they aim to complete the sale by end2018, raising about $100bn. “The government privatisation programme continues to gain traction and the plan for an initial public offering [IPO] of a stake in Saudi Aramco remains on track,” the ministry said.
“The IPO process is well under way and Saudi Aramco remains focused on ensuring that all IPO-related requirements are completed on time and to the very highest standards.” The ministry said Riyadh had allocated 200-billion riyals ($53bn) to support private investment. The allocation includes a 15-billion riyal boost to the capital of the Saudi Industrial Development Fund, which lends to strategic projects, and 37.5-billion riyals for a SaudiChinese investment fund focusing on infrastructure. State support for smaller firms would rise, the ministry said.
It did not discuss Saudi Arabia’s budget reforms in detail but noted they were separate from the NTP. In August, finance minister Mohammed al-Jadaan reiterated Riyadh’s commitment to balancing the budget by 2020.
The NTP, which originally included hundreds of steps, from speeding up court cases to encouraging Saudis to play more sports, is being simplified to 36 objectives. Ten ministries are involved in the revised plan, down from 18, and they will be given more autonomy.
The ministry of health would “lead the health portfolio, and it will have the decision-making power to adjust existing initiatives, add new ones and collaborate with other stakeholders”, the statement read.
Some of Riyadh’s austerity steps have been unpopular and it has reversed or delayed a few as the economy has slowed.
The stock market rose on Thursday partly because of widespread rumours that King Salman would soon abdicate and pass the throne to Prince Mohammed. Such a move could make it easier for the prince to push through reforms for the economy.
VISION 2030 BUILDS ON EARLY SUCCESSES AND STRENGTHENS DELIVERY AS IT INCREASES THE SCOPE AND PACE