Saudi Arabia has unveiled the most far-reaching reform programme in the kingdom’s history, in its latest attempt to wean the country off dependence on falling oil revenue and shift towards a post-oil economy over the next decade and a half. The plan, called Saudi Vision 2030, is the work of Mohammed bin Salman, 30-year-old son of King Salman and deputy crown prince, who has taken control of economic and oil strategy. He is also overseeing defence and foreign policy in a startling transfer of power to the younger generation of the ruling House of Saud. The most eye-catching measures are plans to float up to 5 per cent of Saudi Aramco, the state oil company, and to create the world’s largest sovereign wealth fund, eventually reaching $2tn — income from which is intended over time to replace falling oil revenue. The goal is to raise non-oil revenue to $100bn by 2020.
More broadly, the planned shift towards a post-oil economy requires the phasing out of the kingdom’s massive subsidies bill, by moving closer to market pricing for fuel and electricity, water and transport. The impact on lower-income families will be cushioned by direct cash transfers. Along with taxation measures, the idea is to create fiscal room for education reform and desperately needed jobs for a young, underemployed and often underqualified population. As a rule, the vast majority of Saudis work for a now unaffordably bloated public sector while the private sector relies on expatriate labour.