Jareer Elass is a Washington-based energy analyst, with 25 years of industry experience and a particular focus on the Arabian Gulf producers and OPEC.

  • Saudi Arabia retooling its economic reform programme, On: Sun, 24 Sep 2017

  • ADNOC seeks to reduce costs, explore joint ventures, On: Sun, 30 Jul 2017

  • Riyadh faces challenges in preparing for Saudi Aramco IPO, On: Sun, 16 Jul 2017

  • Doha ends moratorium on North Field development in face of new competition from Tehran, On: Sun, 02 Jul 2017

  • Energy markets remain stable — for now , On: Sun, 18 Jun 2017

  • Qatar’s row with neighbours carries economic cost, On: Sun, 11 Jun 2017

  • Saudis accelerate plans for renewable energy, On: Sun, 11 Jun 2017

  • Trump’s Saudi trip yields mutual financial rewards , On: Sun, 28 May 2017

  • Royal decrees bolster King Salman’s position, On: Sun, 30 Apr 2017

  • Riyadh runs through financial reserves, On: Sun, 23 Apr 2017

  • GCC-Iran détente depends on Riyadh and Tehran, On: Sun, 16 Apr 2017

  • Riyadh likely to push for continued oil output restraint, On: Sun, 02 Apr 2017

  • King Salman’s Asia trip designed to boost Saudi Vision 2030 , On: Sun, 19 Mar 2017

  • Oman struggles to close budget gap, On: Sun, 05 Mar 2017

  • Riyadh laying groundwork for Aramco IPO, On: Sun, 26 Feb 2017

  • Budget deficit of $7.8 billion expected in Qatar in 2017, On: Sun, 19 Feb 2017

  • Kuwait debates issue of expatriate workers, On: Sun, 12 Feb 2017

  • Saudis take new interest in renewable energy, On: Sun, 05 Feb 2017

  • Baghdad comes to Cairo’s rescue, but at what cost?, On: Sun, 29 Jan 2017

  • For Riyadh and GCC, Trump era heralds period of uncertainty, On: Sun, 08 Jan 2017

  • Kuwait and Saudi Arabia agree to restart neutral zone oil production, On: Sun, 18 Dec 2016

  • Trump’s energy rhetoric familiar but reality different, On: Sun, 04 Dec 2016

  • Latest Saudi cabinet shake-up in line with Vision 2030 goals, On: Sun, 20 Nov 2016

  • OPEC deal could be in jeopardy before November meeting, On: Sun, 06 Nov 2016

  • Fujairah seeks to carve out energy niche, On: Sun, 23 Oct 2016

  • Baghdad and Erbil reach tentative agreement on Kirkuk oil sales, On: Sun, 11 Sep 2016

  • Merger of Abu Dhabi funds streamlines sovereign investment sector, On: Sun, 28 Aug 2016

  • Saudi petrochemical giant sets its sights on US Gulf Coast, On: Sun, 21 Aug 2016

  • Bahrain faces setback in oil field expansion plans, On: Sun, 07 Aug 2016

  • Kuwait looks to imports to meet natural gas needs, On: Sun, 24 Jul 2016

  • Boeing finds opportunity in regional tensions, On: Sun, 17 Jul 2016

  • Market factors starting to support OPEC’s policies, On: Sun, 26 Jun 2016

  • Domestic politics slow Kuwait’s oil production expansion plans, On: Sun, 19 Jun 2016

  • Iran and Oman near agreement on gas deal, On: Sun, 05 Jun 2016

  • Riyadh plays hardball on oil , On: Sun, 05 Jun 2016

  • Iraqi Kurds look to Iran to lessen dependence on Turkey , On: Sun, 15 May 2016

  • What’s after the collapse of the Doha talks? , On: Sun, 01 May 2016

  • The beginning of the road for Saudi Arabia , On: Sun, 01 May 2016

  • UAE pursuing nuclear energy to meet electricty demand , On: Sun, 24 Apr 2016

  • Saudi Arabia retooling its economic reform programme

    The revised NTP 2020 is reportedly to be completed by the end of October.


    2017/09/24 Issue: 124 Page: 18



    Amid swirling speculation of an impending transfer of power within the House of Saud, the Saudi government is in the process of retooling its national economic overhaul programme that covers the period of 2016-20.

    The timing of the changes to the kingdom’s National Transforma­tion Plan 2020 (NTP) may not be too surprising as the success of the economic reforms could be criti­cal for the political future of the plan’s chief architect, Saudi Crown Prince Mohammed bin Salman bin Abdulaziz.

    The revised NTP 2020 is report­edly to be completed by the end of October. While details are ham­mered out, the much-hyped initial public offering (IPO) of state crown jewel Saudi Aramco, expected in late 2018, is on track as it falls out­side of the purview of the NTP.

    Because he has raised extremely high expectations among the Saudi citizenry — particularly the country’s youth — for the eco­nomic and social changes he wants realised in the coming years, Crown Prince Mohammed’s cred­ibility and popularity could be in question should he not be able to follow through with his aggressive agenda.

    Since his father, King Salman bin Abdulaziz Al Saud, ascended the throne in January 2015, the young royal has amassed a dizzying amount of power and oversight of wide-reaching government re­sponsibilities, having been named deputy crown prince in April 2015 and, in June, replacing Mohammed bin Nayef bin Abdulaziz as crown prince.

    Rumours are running rampant that King Salman could abdicate the throne and transfer power to his 31-year-old son. To shore up support for such a historic power shift, Crown Prince Mohammed needs to demonstrate that the kingdom’s fiscal health is improv­ing, as he has been overseeing Saudi economic policy for more than two years, and would thrive should he succeed his father.

    This could be a tough sell given that continuing low oil prices have contributed to a stagnant Saudi economy that has endured several years of significant budget deficits and is expected to record GDP growth of 0.1% this year. However, a recalibrated five-year economic plan could be a strong public rela­tions move to ease concerns should a power shift be imminent.

    Launched in June 2016, the NTP set the foundation for Saudi Vision 2030, Crown Prince Mohammed’s sweeping economic revamping programme to permanently steer the kingdom from its dependency on an oil-income-based economy. Financial observers lauded the intent of that mission, which in­cluded privatisation of state assets, the cutting and eventual curtailing of energy-related price subsidies, the introduction of taxes, the creation of private sector jobs and reducing unemployment.

    However, the consensus was that target dates to hit key NTP ob­jectives were overly ambitious and that expectations for full imple­mentation of the economic over­haul under Saudi Vision 2030 were unrealistic given the bureaucratic difficulties faced in establishing new financial procedures as well as opposition from within the ruling family, the religious establishment and leading merchant families.

    In tweaking the NTP, priorities will reportedly include reform­ing the government bureaucracy by enhancing civil service pro­ductivity and pressing for more government transparency, both long-standing challenges for the kingdom. The new NTP will address increasing female pres­ence in the workforce and backing small- and medium-sized firms.

    In the revised NTP, target dates for some goals that were initially set for 2020 will be pushed to 2025 or 2030. For example, two goals stipulated in the original NTP were the creation of at least 450,000 non-governmental sector jobs and reducing unemployment from 11.6% to 9% by 2020, both of which seemed highly unrealistic in the given time frame and will likely be assigned new target dates.

    Other objectives set for 2020 that are likely to see new end dates in­clude the kingdom’s private sector funding of 40% on major projects to ease pressure on state coffers and a push to provide $72 billion of goods and services to be sourced locally, increasing the volume of locally sourced products from 33% to 50%.

    The Saudi government has stated it is committed to balancing its state budget by 2020 as part of the NTP objectives, which, given Riyadh’s continued dependency on oil revenues amid depressed crude prices and high government spending, appears improbable. The budget deficit for 2017 is forecast at $52.8 billion.

    The government trimmed ap­proximately $8 billion from its projected deficit in 2016 thanks to austerity measures, including scaled-back energy-related price subsidies and the introduction of new taxes. While financial observers laud these economic reforms as necessary steps in the right direction, the worry is that success relies not just on revenue-earning measures such as subsidy cuts and taxes but on implement­ing concrete methods to stimulate economic growth.

    To reassure investors that the re­tooling of the NTP did not suggest the country’s economic reforms were in peril, the Saudi Informa­tion Ministry released a statement stating in part: “Vision 2030 builds on early successes and is strength­ening its delivery mechanisms as it increases the scope and pace of implementation… The government privatisation programme contin­ues to gain traction and the plan for an initial public offering of a stake in Saudi Aramco remains on track.”

    Editors' Picks

    The Arab Weekly Newspaper reaches Western & Arabic audience that are influential as well as being affluent.

    From Europe to the Middle East,and North America, The Arab Weekly talks to opinion formers and influential figures, providing insight and comment on national, international and regional news through the focus of Arabic countries and community.

    Published by Al Arab Publishing House

    Publisher and Group Executive Editor: Haitham El-Zobaidi, PhD

    Editor-in-Chief: Oussama Romdhani

    Managing Editor: Iman Zayat

    Deputy Managing Editor and Online Editor: Mamoon Alabbasi

    Senior Editor: John Hendel

    Chief Copy Editor: Richard Pretorius

    Copy Editor: Stephen Quillen

    Analysis Section Editor: Ed Blanche

    East/West Section Editor: Mark Habeeb

    Gulf Section Editor: Mohammed Alkhereiji

    Society and Travel Sections Editor: Samar Kadi

    Syria and Lebanon Sections Editor: Simon Speakman Cordall

    Contributing Editor: Rashmee Roshan Lall

    Senior Correspondents: Mahmud el-Shafey (London) & Lamine Ghanmi (Tunis)

    Regular Columnists

    Claude Salhani

    Yavuz Baydar

    Correspondents

    Saad Guerraoui (Casablanca)

    Dunia El-Zobaidi (London)

    Roua Khlifi (Tunis)

    Thomas Seibert (Washington)

    Chief Designer: Marwen Hmedi

    Designers

    Ibrahim Ben Bechir

    Hanen Jebali

    Published by Al Arab Publishing House

    Contact editor at:editor@thearabweekly.com

    Subscription & Advertising: Ads@alarab.co.uk

    Tel 020 3667 7249

    Mohamed Al Mufti

    Marketing & Advertising Manager

    Tel (Main) +44 20 6702 3999

    Direct: +44 20 8742 9262

    www.alarab.co.uk

    Al Arab Publishing House

    Kensington Centre

    177-179 Hammersmith Road

    London W6 8BS , UK

    Tel: (+44) 20 7602 3999

    Fax: (+44) 20 7602 8778

    Follow Us
    © The Arab Weekly, All rights reserved