Saudi Arabia approves plan to diversify economy
Plan is expected to further flesh out sweeping reforms called ‘Vision 2030’ announced by Saudi Arabia’s Deputy Crown Prince
Saudi Arabia plans to more than triple the government's non-oil revenues and clamp down on public-sector salaries over the next five years, cabinet ministers said on Monday as they described reforms designed to reduce the economy's dependence on oil and build a sustainable future.
The National Transformation Plan (NTP) aims to boost non-oil revenue to 530 billion riyals ($141 billion) by 2020, creating some 450,000 non-government jobs, according to comments by ministers and documents distributed to reporters in Jeddah.
The plan aims to "enhance the level and quality of services" provided by government and "achieve a prosperous future and sustainable development," it said.
The NTP, which includes over 500 projects and initiatives as well as performance indicators for ministries and other government agencies, will cost around 270 billion riyals to implement, the document showed.
Minister of State Mohammed Al al-Sheikh said the cost would have no impact on Saudi budget spending, and added that a further 300 billion riyals was expected to be contributed to NTP initiatives by the private sector.
The plan is part of a wider, long-term reform drive known as Vision 2030, which was announced by Deputy Crown Prince Mohammed bin Salman in April. He aims to overhaul many aspects of Saudi Arabia's economy and society as the kingdom prepares for a future of shrunken oil revenues and a rising population.
The finances of the world's top oil exporter have been hit hard since the summer of 2014, when crude prices plunged, producing a state budget deficit of nearly $100 billion last year.
The plan aims to increase the percentage of government debt to gross domestic product to 30 percent from 7.7 percent now.
Under Vision 2030, new non-oil revenue is expected to come from the introduction of a value-added tax, "sin taxes" on sweet drinks and tobacco, and fees imposed on the private sector.
Al al-Sheikh said there were no plans to introduce income tax for citizens. The text of the plan proposed to spend 150 million riyals on preparing income tax for residents, a phrase normally applied to expatriates. Al al-Sheikh said the only tax commitment approved so far was for VAT and said that further questions on taxation should be addressed to the finance minister.
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