Saudi Arabia unveils first targets in sweeping reform plan

Saudi Arabia has unveiled the first concrete targets in its ambitious effort to move its crude-dependent economy away from oil.

In a press conference in the early hours of Tuesday in Jeddah, officials revealed sweeping plans to create some 450,000 non-government jobs by 2020, boost non-oil revenues and cut the cost of public wages.

The National Transformation Programme (NTP), endorsed by the Saudi cabinet late on Monday, is part of Saudi Vision 2030, a reform drive led by Deputy Crown Prince Mohammed bin Salman, the 30-year-old son of King Salman.

It aims to transform the state-dominated economy of the world’s largest oil exporter into a private-sector powerhouse with diverse industrial interests and major international investments.

Saudi authorities have for years discussed plans to diversify the economy, but this effort has been given fresh urgency by the collapse in oil prices by more than half since mid-2014, which has led to a dramatic drop in state revenues.

Minister of State Mohammed al-Sheikh described the NTP to reporters as a five-year roadmap laying out targets to be met by government ministries and departments.

“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.

At the heart of the reform effort is a previously announced plan to float less than five percent of oil giant Saudi Aramco on the stock market, with the proceeds to help form what will become the world’s largest state investment fund, with some $2 trillion in assets.

Sheikh said the NTP will be implemented through more than 500 initiatives at a cost of 270 billion riyals ($72 billion) over the next five years, with 40 percent of the funding coming from the private sector.

– ‘Transparency crucial’ –

A plan to cut the share of public wages in the budget from 45 percent to 40 percent will decrease the total cost of state salaries from 480 billion to 456 billion riyals by 2020.