The Saudi cabinet has approved on an ambitious economic reform to restructure the kingdom's oil dependent economy. The economic restructuring plan involves diversification, massive privatization of state assets, increasing taxes while decreasing expenditure and subsidy. The Kingdom of Saudi Arabia (KSA) has recorded 70% of its earnings from oil during last year.
Salman bin Abdulaziz, the Saudi King, has announced cabinet backing for the Saudi Vision 2030 plan while addressing the nation over television on Monday. Following the announcement, share prices in Riyadh Stock Exchange have been witnessed to rise sharply, according to a report published in The Guardian.
In an interview with the state owned Al-Arabiya news channel, Mohammed bin Salman, the Deputy Crown Prince for KSA has represented his country as addicted to oil. While narrating The Vision 2030 plan, he reiterates that KSA may survive without oil until 2020, according to a report published in BBC.
Though the reform plan includes expanding the tax net, the Saudi government doesn't intend to impose more extensive taxes. The Deputy Crown Prince also reiterates that his government won't impose any tax on income, capital or basic goods of the citizens. The new plan requires time to get implemented fully. Prince Mohammed has observed 2015 as the year of quick fix, while 2016 as the year of more organized quick fix and 2017 as the initiation for implementing the reform plan, reports The Wall Street Journal. According to Prince Mohammed, KSA intends to move beyond its ultraconservative image through opening doors to all nationalities for tourism in line with its tradition and values. At present, KSA doesn't entertain any tourist visas except for Muslim pilgrimage. The 15-year blueprint also includes creation of a $2 trillion Saudi sovereign wealth fund and strategic economic reforms referred as the National Transformation Program. The Deputy Crown Prince confirms selling off around 5% of Aramco which will be transformed into a holding company with subsidiaries listed via an IPO. Aramco is probably going to be the world's most valuable company while the wealth fund will be the largest of its kind. As a whole, the blueprint aims to make the Arab world's largest economy dependent on investment instead of energy during the years to come. In late 2015, KSA has initiated increasing the domestic price of fuel, water and electricity. However, the moves have encountered some resistance since the Saudi citizens are accustomed with cheap utilities and no taxes. Analysts are keeping sharp eyes on the Saudi governments reforming moves and subsequent impacts.
