Saudi Arabia approved the so-called National Transformation Plan last night, a key part of a blueprint to prepare the kingdom for the post-oil era. The plan outlines a number of initiatives to be undertaken by different ministries. Here is what we know so far:
• Non-oil revenue is seen rising to 530 billion riyals (Dh519bn) by 2020 from 163.5bn riyals. Public-sector wages and salaries would fall to 456bn riyals from 480bn, and make up 40 per cent of total spending versus 45 per cent.
• Public debt will increase to 30 per cent of economic output from 7.7 per cent, while the kingdom’s credit rating is seen rising two levels to Aa2 from A1.
• Taxes would be imposed on “harmful products”.
• The plan sets aside costs for the “preparation and implementation” of income tax on residents as well as “the unified income tax”. Mohammed Al-Sheikh, a cabinet minister, said there were no current plans to tax foreigners and referred further questions to the finance ministry. He also reiterated the government won’t impose taxes on Saudi nationals.
• The private sector would fund about 40 per cent of the initiatives included in the plan
Investments, jobs, privatisation & exports
• The initiatives included in the plan will create 450,000 jobs by 2020.
• Non-oil exports would climb to 330bn riyals from 185bn riyals by 2020. Foreign direct investment would rise to 70bn riyals from 30bn riyals.
• The plan budgets 300 million riyals over five years to create a “centre of excellence” to support the privatisation of state-owned companies. The minister of environment, water and agriculture said the government plans to privatise the Saline Water Conversion Corporation.
• The initiative for reforming and “restructuring of primary health care” is estimated to cost 4.7bn riyals.
• Oil output capacity is expected to stay at 12.5 million barrels per day by 2020 with refining capacity seen at 3.3 million barrels per day from 2.9 million.
• Output capacity of dry gas would reach 17.8 billion cubic feet per day versus 12 billion currently. The country will produce 4 per cent of its power from renewable energy by 2020.
• The mining sector is to contribute 97bn riyals to economic output from 64bn riyals.
Read the full National Transformation Program here
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