Saudi government approves economic diversification plan
The Saudi Arabian Cabinet has approved a major plan to diversify the economy away from oil, aiming to generate 450,000 non-government jobs by 2020.
The National Transformation Program (NTP) 2020, endorsed by Cabinet on Monday, also seeks to cut public expenditures by 40 per cent over the next five years and boost the contribution of the private sector.
NTP is one of several programs designed to achieve the goals of the Saudi Vision 2030, an 84-page document released in April by Deputy Crown Prince Mohammed bin Salman, 30, who is leading the reform charge.
At the heart of Vision 2030 is a plan to float less than 5 per cent of state oil firm Saudi Aramco on the stock market.
The proceeds would become part of the world’s largest state investment fund, with $2.7 trillion in assets.
Profits from the investment fund would help economic diversification and provide an alternative to oil revenues that have fallen by about half since 2014.
The collapse has accelerated Saudi efforts to move away from petroleum which still accounts for the bulk of government income in the kingdom, which projected a deficit of $118 billion this year.
At a press conference in the Red Sea city of Jeddah, officials described the NTP as the first step in achieving the vision.
The 112-page NTP document is a five-year roadmap that lays out targets to be met by each government ministry, and their cost.
The NTP will be implemented through 543 initiatives across 24 government bodies at a cost of 270 billion riyals ($97 billion) over the next five years, Minister of State Mohammed al-Sheikh told the press conference.
“This is Phase One of addressing the challenges,” he said, adding there will be “no substantial fiscal impact” on the state budget, partly because some savings have already been made.
Neither would income taxes be imposed, Mr Sheikh said.
By publishing the extent to which government targets are met, the NTP says it will ensure the transparency crucial to its success.