World Economy

Saudi Arabia Unveils ‘Vision 2030’

Saudi Arabia Unveils ‘Vision 2030’ Saudi Arabia Unveils ‘Vision 2030’

The Saudi cabinet has approved sweeping economic reforms aimed at moving the country away from its dependence on oil profits.

Close to 80% of Saudi Arabia’s revenue comes from oil but it has been hit by falling prices in the past year, BBC reported.

One part of the plan will see shares sold in state-owned oil giant Aramco to create a sovereign wealth fund.

Announcing the reforms, Deputy Crown Prince Mohammed bin Salman described his country as being addicted to oil.

The ‘Vision 2030’ plan, he told the Saudi-owned Al-Arabiya news channel, would ensure “we can live without oil by 2020”.

Among the reforms he announced in his interview were:

* Shares worth less than 5% of Aramco, a company he valued at up to $2.5 trillion, will be sold

* Some of the proceeds will go towards a sovereign wealth fund worth $2 trillion

* A new visa system will allow expatriate Muslims and Arabs to work long term in Saudi Arabia

* Steps will be taken to diversify the economy, including investment in mineral mining and expanding military production.

He also said there were plans for Aramco, or to give it its full name Arabian American Oil Company, to be transformed into a holding company with an elected board, according to Reuters, with subsidiaries of the firm also to be sold by initial public offering.

Oil prices are still less than half the peak of $115 a barrel seen in June 2014. But the prince said the reforms would go ahead regardless of prices.

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“The vision has nothing to do with crude prices,” he said. “If the oil price goes back up, it would greatly support the vision but it does not need high prices. We can deal with the lowest prices possible.”

The plan was due to include regulatory, budget and policy changes that will be implemented over the next 15 years to make the country less reliant on crude. “We hope citizens will work together to achieve Saudi Vision 2030”, CNBC quoted him as saying.

The prince is second-in-line to the Saudi throne and also serves as defense minister.

As the world’s largest oil exporter, the bulk of Riyadh’s state revenues come from energy exports. But with crude prices extending their declines—the per-barrel price of global benchmark Brent is down 60% since the rout first started in June 2014. The country logged a record $98 billion budget deficit for 2015.

Officials are already taking action to diversify revenue sources before existing state coffers get depleted.

Analysis from McKinsey, a global management consulting firm, before the announcement Monday, suggested the kingdom could double gross domestic product growth from 3.4% in 2015 and create as many as six million jobs by 2030 by focusing on eight non-oil sectors, including manufacturing, mining, tourism, healthcare and finance.