Saudi Crown Prince: Oil revenues alone became insufficient to cover citizens’ needs

Saudi Arabia’s oil revenues alone were becoming insufficient to cover the needs of the Kingdom’s growing population, a fact that was the driving force behind the announcement of the country's ambitious Vision 2030 plan to diversify the economy, Crown Prince Mohammed bin Salman said.

The Crown Prince was speaking during an interview that was nationally broadcast to the Kingdom late Tuesday night on the five year anniversary of the launch of Vision 2030.

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“We went from a population of two to three million, to nearly 20 million Saudis since the discovery of oil. So, oil revenues now barely cover the needs and the way of life that we have grown accustomed to since the 1960s, 70s, 80 and 90s. So if we continued on the same old path, there is no doubt that with the population growth, it would affect us in the next 20 or 10 years on the quality of life that we’ve grown used to for the past 50 years,” Prince Mohammed bin Salman said.

The Crown Prince appeared on the Liwan Al Mudaifer Show discussed developments of the Vision 2030 plan. It is the fifth anniversary of the plan, which aims to transform the Kingdom and prepare it for a post-hydrocarbon age.

He also spoke on plans to eventually reduce the percentage of value-added tax (VAT) in Saudi Arabia, calling the decision to enact the rate hike a painful one that he personally had to undertake.

“This step was painful for me personally as I do not want to affect or harm the Saudi citizen in any way shape or form by my main job is to guarantee and build the citizens’ future in the long term, for the next 20-30 years,” Prince Mohammed said.

The Kingdom tripled its VAT rate on July 1 last year, as authorities responded to the unprecedented economic fallout of the coronavirus pandemic.

Vision 2030 achievements

The Saudi Council of Economic and Development Affairs recently reviewed what had been achieved so far by the Kingdom's Vision 2030 plan five years after its launch. The plan focused during the five years on establishing and enabling infrastructure, building institutional and legislative structures, setting public policies, and enabling initiatives, while announcing that the focus in its next phase will be on following up implementation, advancing achievement, and further enhancing the citizen’s and private sector participation.

The council reviewed the steps taken to raise the quality of life of Saudi Arabians, including several initiatives taken to make the Kingdom a leading global destination. Achievements included facilitating access to emergency health services within four hours at a rate of more than 87 percent, compared to 36 percent before the launch of Vision 2030, reducing the rate of road accident deaths annually to 13.5 deaths per 100,000 people from 28.8 deaths per 100,000 people, and a higher rate of sports participation once per week up to 19 percent in 2020, compared to 13 percent before the launch of the vision.

Within the housing sector, home ownership across the Kingdom increased to 60 percent compared to 47 percent five years ago.

Initiatives aimed at providing an environment that supports business potential and broadens the economic base were also reviewed. Chief among the achievements included the doubling of assets of the Public Investment Fund to reach about 1.5 trillion riyals in 2020, from less than 570 billion riyals in 2015.

Since the launch of Saudi Vision 2030, the rate of foreign investment flows out the Kingdom had decreased by 58 percent since 2015, while foreign direct investment flows into Saudi Arabia had grown to reach 17.6 billion riyals, an increase of 331 percent from 5.3 billion riyals before the launch of the Vision. These initiatives also included the launch of projects that contribute to the welfare of society, providing jobs and attracting international investments, prominently NEOM, Qiddiya, and the Red Sea projects, among others.

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