Saudi Prince Unveils Sweeping Plans to End “Addiction” to Oil

King Salman approved the “Vision 2030” plan in which he called on Saudis to work together ensure its success.

Updated
World
3 min read
In this 14 May  2012 file photo, then Crown Prince Salman bin Abdul-Aziz Al Saud, left, speaks with his son Prince Mohammed bin Salman. (Photo: AP)

The powerful young prince overseeing Saudi Arabia’s economy unveiled ambitious plans on Monday aimed at ending the kingdom’s “addiction” to oil and transforming it into a global investment power.

Deputy Crown Prince Mohammed bin Salman said the world’s top oil exporter expects state oil company Saudi Aramco to be valued at more than $2 trillion ahead of the sale of less than 5 percent of it through an initial public offering (IPO).

He added that the kingdom would raise the capital of its public investment fund to 7 trillion riyals ($2 trillion) from 600 billion riyals ($160 billion).

The plans also included changes that would alter the social structure of the ultra-conservative Muslim kingdom by pushing for women to have a bigger economic role and by offering improved status to resident expatriates. Prince Mohammed at his first news conference with international journalists, who were invited to a Riyadh palace for the event 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,” he had earlier told al-Arabiya television news channel.

A file photo of Prince Mohammed bin Salman. (Photo: AP)
A file photo of Prince Mohammed bin Salman. (Photo: AP)

Vision 2030

His “Vision 2030” envisaged raising non-oil revenue to 600 billion riyals ($160 billion) by 2020 and 1 trillion riyals ($267 billion) by 2030 from 163.5 billion riyals ($43.6 billion) last year. But the plan gave few details on how this would be implemented, something that has bedevilled previous reforms.

Raising non-oil revenue to $160 billion by 2020.
By 2030, Prince Mohammed wants to raise the revenue to $267 billion.

The 31-year-old prince gave assured answers to questions on the plan and appeared to pitch his comments to appeal across the Saudi social spectrum, and in particular to young people, who face unemployment and an economic downturn despite their country’s oil wealth.

Even before oil prices started to plunge in 2014, economists had regarded Riyadh’s fiscal policy and economic structure as being unsustainable, but reduced income from energy sales has made reform more urgent.

The plan appeared to lift sentiment on the Saudi stock market, where shares jumped by 2.5 percent in the heaviest trading for eight months, but it fell short of convincing sceptics that the kingdom can prosper in an era of cheap oil.

At the centre of the plan is the restructuring of its Public Investment Fund (PIF), which Prince Mohammed said would become a hub for Saudi investment abroad, partly by raising money through selling shares in Aramco.

Asked where Riyadh would find the funds for a $2 trillion dollar fund after recent borrowing, he said it would come from transferring the ownership of Aramco to the PIF.

We are speaking about more than $2 trillion. We expect the valuation to be more than $2 trillion. In addition to that there are other assets that will be added to the fund, and part of it is already added. (It could) turn into a global investment fund with a size of up to $3 trillion dollars. 
Prince Mohammed bin Salman

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