World Economy

S. Arabia Plots Major Takeovers

S. Arabia Plots Major TakeoversS. Arabia Plots Major Takeovers

Desperate Saudi Arabia is to create a £1.4 trillion ($1.8 trillion) sovereign wealth fund to raise the cash needed to keep its economy afloat amid plunging profits from lower oil prices.

The fund would be the largest in the world and could give the country the mechanism to buy—and control—some of the biggest companies in the globe, including Google, Apple and Facebook, Yahoo reported.

Cash for the fund is set to be raised by privatizing state-owned oil company Saudi Aramco.

The aim is to generate income from investments and away from oil, as the kingdom undertakes the biggest economic reforms the country has ever seen.

As part of the changes, Saudi is also set to slap citizens with more taxes and increase subsidy cuts.

Policymakers are scrambling to balance the budget of the oil kingdom as the price of crude continues at less than $40 a barrel.

The global cost of the commodity has fallen from more than $100 a barrel in June 2014, thanks to oversupply.

Saudi Arabia is the world’s largest crude oil producer and has been heavily hit by reduced profits on oil.

At the end of last year, Riyadh revealed its largest ever deficit and vowed to tackle the gap by reforming the economy.

Youth unemployment is among the highest in the world and economic growth is predicted to slow this year to 1.5%—the worst since at least 2009.

Deputy Crown Prince Mohammed bin Salman, second in line to the throne, has now revealed plans to triple Saudi’s non-oil income and balance the budget by 2020.

He told Bloomberg News that—on top of the creation of the fund—authorities are considering adding value-added taxes and its own sugar tax on drinks, as well as levies on luxury items.

Another proposed change is to charge companies who hire more foreign workers above their official quotas.

The prince said: “It’s a large package of programs that aims to restructure some revenue-generating sectors.”

Saudi Arabia already started cutting energy subsidies, raising bills for homes at the end of last year.

But the prince—King Salman’s son—added that citizens’ incomes will remain tax-free, but that the policies would make the country more like the rest of the world.

It’s thought that taxing income could trigger a huge backlash against the state and destabilize the family’s grip on the country.