Saudi Arabia plans to move from oil-based economy to investment

Deputy Crown Prince Mohammed bin Salman’s plans also included changes that would alter the social structure of the ultra-conservative Muslim kingdom by pushing for women to have a bigger economic role and by offering improved status to resident expatriates. “We will not allow our country ever to be at the mercy of commodity price volatility or external markets,” Prince Mohammed said at his first news conference with international journalists. “We have developed a case of oil addiction in Saudi Arabia,” he had earlier told al-Arabiya television news channel. 

The 31-year-old prince appeared to pitch his comments to appeal across the Saudi social spectrum, and in particular to young people, who face unemployment and an economic downturn despite their country’s oil wealth. His “Vision 2030” envisaged raising non-oil revenue to $160 billion by 2020 and $267 billion) by 2030 from $43.6 billion last year. But the plan gave few details on how this would be implemented. 

Even before oil prices started to plunge in 2014, economists had regarded Riyadh’s fiscal policy and economic structure as being unsustainable, but reduced income from energy sales has made reform more urgent. At the center of the plan is the restructuring of its Public Investment Fund (PIF), which Prince Mohammed said would become a hub for Saudi investment abroad, partly by raising money through selling shares in Aramco. 

The partial privatization of Aramco was also central to the plans, and Prince Mohammed said it would be transformed into an energy company. So big is the state oil company because of its rights to the kingdom’s crude reserves, that selling even 1 percent of its value would create the biggest initial public offering (IPO) on earth, he said. 

Since the prince was appointed to oversee Saudi long-term planning through the Council of Economic and Development Affairs, he has enjoyed a dizzyingly rapid rise since his father became king 15 months ago, Under the plans, Saudi Arabia would produce or assemble half of its defence equipment internally in order to create job opportunities, he said, and Riyadh would make foreign investment easier.