Saudi prince unveils ambitious reform plans with lesser details

Saudi Arabia’s new powerful man, deputy crown Prince Mohammad bin Salman, unveiled plans on Monday to diversify the country’s revenue source and reduce dependency on oil. After unveiling his plans to the cabinet, MbS assured that Saudi Arabia needs oil but with new plans can survive without it in 2020.

He said, “We will not allow our country ever to be at the mercy of commodity price volatility or external markets…..we have developed a case of oil addiction in Saudi Arabia”.

The plan includes:

• Launching initial public offering of state owned Saudi Aramco, for which 5% or less will be floated and the company is expected to be valued at $2 trillion or more. Even if only 5% is floated in stock market, it will create biggest IPO on earth, valued at $100 billion or more. Aramco will soon start declaring its accounts, revenues and reserves. Aramco’s right to Kingdom’s crude oil reserve is what makes it so attractive.
• Second most important factor in the plan is public investment fund, whose size will be lifted to $2 trillion, from current $200 billion. It will be increased by the help of Aramco, which will be transferred to the fund. He expects the fund size to increase to $3 trillion and become a global investment fund.
• He has plans to increase Saudi Arabia’s non-oil revenue from current $43.5 billion to $160 billion by 2020 and $267 billion by 2030.
• Plans also included other reforms like issuing green cards, bringing down Saudi Arabia’s unemployment rate to 7.6% from current 11% and greater role of women in Saudi society.

While the plans are most ambitious, ever launched in Saudi Arabia but Prince hasn’t followed through with details over how he plans to achieve it, especially non-oil revenue part.

Thus skepticism will prevail.