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Saudi Arabia plans to borrow as much as $15 billion this year on international debt markets to help  fund its spending plans,  following last year’s $17.5 billion sovereign bond sale.
Saudi Arabia plans to borrow as much as $15 billion this year on international debt markets to help  fund its spending plans,  following last year’s $17.5 billion sovereign bond sale.

Youth Joblessness Biggest Challenge for Saudi Arabia

The public sector has in the past been a very important source of employment for nationals but with fiscal adjustment, the opportunities for public sector employment will be much less

Youth Joblessness Biggest Challenge for Saudi Arabia

Tackling unemployment among young Saudis will be one of the toughest challenges the region’s largest economy will face this year, according to an International Monetary Fund official on Wednesday.
“For nationals unemployment is already high at around 12% and the young population is still growing,” said Timothy Callen, assistant director for the Middle East and Central Asia department at the IMF, Yahoo reported.
“The public sector has in the past been a very important source of employment for nationals but with fiscal adjustment, the opportunities for public sector employment will be much less going forward.”
He was speaking a day after the IMF published an update to its World Economic Outlook in which it downgraded its growth forecast for the kingdom to 0.4% from its October prediction of 2%. The main reason for that downgrade was the recently agreed oil production cuts among both Opec and non-Opec oil producers.
Despite the projected slowdown in overall economic growth in the kingdom, the IMF expects a pick up in the non-oil economy as confidence improves.
“We are expecting a pickup in non-oil growth–somewhere around 2% which, while better than 2016, still needs more to sustain employment,” said Callen.
“One big focus needs to be education and training where the government is already doing a lot of work.” He said he expected the fiscal deficit in the kingdom this year to be less than 10% of GDP.
Saudi Arabia is seeking to reduce its dependence on oil by investing in industries from renewable energy to manufacturing. It plans to borrow as much as $15 billion this year on international debt markets to help fund its spending plans, following last year’s $17.5 billion sovereign bond sale.

  Vision 2030
Saudi Arabia’s Vision 2030 strategy is being driven by deputy crown prince Mohammed bin Salman and includes a plan to set up the world’s biggest sovereign wealth fund and to sell part of the state-owned oil company Aramco. The government has also raised the cost of fuel and plans to introduce new value added taxes and fees on expatriate employees.
Despite the projected slowdown in growth in the region’s largest economy, analysts do not anticipate a spillover effect in neighboring countries.
“The economy of Saudi Arabia has been slowing down since 2016 hence the revised downward forecasts are not a surprise,” said John Sfakianakis, director of economic research at Riyadh-based Gulf Research Center. “Headline GDP for 2017 will be impacted by the oil sector which impacts real GDP. Real GDP in 2016 remained elevated due to the oil sector. The impact for the rest of the (Persian) Gulf Arab states (Kuwait, UAE, Qatar, Bahrain, and Oman) will be a bit of the same this year as 2016. I don’t see a significant negative impact above and beyond what we have seen in 2016.”
There are good reasons for the international financial experts to have subtle doubts about the efficacy of the Vision 2030. Indeed, the grandiose plan has taken the Saudi people by surprise since its inception. The ruling elite in the country has embarked on a path of unprecedented transformation of the economy without disturbing the stability of the nation.
The plan tries to reduce the role of the country’s massive public sector and expand the engagement of the private players in the economy. The idea mooted by the Crown Prince was to empower private enterprises so that they can play a major role in offering employment to the emerging young generation.
The mega role played by the private sectors will increase the growth of the GDP from 40% to 60%. This in turn will reduce the rate of unemployment from 11% to 7.6%.

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