The cabinet of Saudi Arabia has accepted the sweeping economic transformations that are intended to move the country away from its reliance on the oil profits.
Somewhat around 80% of the Saudi Arabia’s revenue is generated from the oil but it’s been hit by the falling prices in 2015.
One fragment of this plan will see the shares that are sold In Aramco, that’s the state-owned oil giant to generate a sovereign wealth fund.
Deputy Crown Prince Mohammed bin Salman, proclaiming the reforms, defined his country as being addicted to the oil.
The Vision 2030 plan, he said would make sure “we can live without the oil by 2020.”
Among the reforms they he had stated in his interview were:
- Some of the proceeds will go towards a sovereign wealth fund worth $2tn
- Shares worth less than 5% of Aramco, a company that he valued at up to $2.5tn will be sold
- Steps will be taken to diversify economy, including investment in mineral mining & expanding the military production.
- A new visa system will allow the expatriate Muslims & Arabs to work long term in Saudi Arabia
Oil made Saudia a major economic force. However, it comes at a cost. The short-term issue is the volatile price of crude oil that is now less than half what it was in 2 years ago.
However the prince claimed that the reforms would go forward regardless of the prices.
“The Vision’s nothing to do with the crude prices,” he said.
“If oil price goes back up it’d greatly support the vision but it doesn’t need high prices. We can deal with the lowest prices possible,” he added.
In an interview with Bloomberg the Prince said the taxes on the luxury goods & sugary drinks could also be introduced. Nevertheless, he said that it’s important that the step wouldn’t leave the country’s poor worse off.
The Vast oil revenues have also permitted the Saudi govt. to offer the substantial subsidies on the utilities to its population. However, some of these have to be cut off last year in comeback to the falling oil prices.