Government | Wednesday 8 June, 2016 6:38 am |

Saudi Arabia on Tuesday took first step toward a revitalized and rejuvenated path to progress and prosperity by unveiling plans to more than triple its non-oil revenue by 2020 while cutting state handouts. This is a broad bid to reshape the Kingdom’s economy amid falling energy prices.

The initiative, called the National Transformation Program, offers details on how the ruling monarchy plans to achieve long-term economic change in an era of cheap oil.

The overall target is ambitious: Riyadh expects non-oil revenue to more than triple by 2020 to SR530 billion ($141.33 billion).

The changes, focused on generating revenue from sources other than oil, aim to revamp the country’s economy by rolling back the role of the state.

Developing industries like mining and tourism and the creation of some 450,000 private-sector jobs by 2020 are part of the NTP, which will cost around SR270 billion to implement in its initial five-year phase.

The plan also envisages introduction of indirect taxation and the reduction of subsidies on water and electricity, which the government said could provide savings of as much as SR200 billion by 2020. The government also plans to cut the amount of money it spends on public wages from 45 percent of the budget to 40 percent.

A prolonged period of cheap oil has made diversifying the economy a priority for the government.

Efforts to reduce oil dependence have been tried before with little success, but some analysts have said the new urgency means there is greater political will to support the current plan.

“It’s a challenging exercise, but they have to do it,” said John Sfakianakis, a former economic adviser to the Saudi government and the Riyadh-based director of research for the Gulf Research Center.

“At stake is stability, the country’s greater social and political stability.”

The Council of Economic and Development Affairs, a body headed by Deputy Crown Prince Muhammed Bin Salman, second deputy premier and minister of defense, drafted the NTP. It is a key part of a road map for long-term economic change known as Vision 2030, which was unveiled in April.

The vision also includes plans to sell under 5 percent of state-owned oil giant Saudi Arabia Oil Co. and to transfer ownership of the company, known as Saudi Aramco, to the Kingdom’s sovereign-wealth fund.

The Council of Ministers meeting, chaired by Custodian of the Two Holy Mosques King Salman approved the plan late Monday. A total of 24 government entities were involved in preparing the NTP.

Meanwhile, the Council of Ministers strongly condemned Monday’s terrorist attack on Jordan’s intelligence headquarters in Albaqa’a camp, which killed several people, Minister of Culture and Information Dr. Adel Al-Toraifi said.

The Cabinet commended the decisions taken by the leaders of the GCC in their 16th consultative meeting to implement the vision of the Custodian of the Two Holy Mosques on strengthening the GCC joint action according to its scheduled timetable.

The Cabinet congratulated the Custodian of the Two Holy Mosques, the Crown Prince and the Deputy Crown Prince on the advent of the holy month of Ramadan, stressing the King’s call on the Islamic nation to translate the objectives of this great month into sincere worship to Allah Almighty along with the keenness of the Kingdom of Saudi Arabia on consolidating unity of the Islamic nation.

The Cabinet said that the King’s directives to take advantage of the completed sites of the expansion of the Grand Mosque come as an extension to his blessed efforts in serving Islam and Muslims, facilitating the performance of Umrah and prayers by the visitors of the House of Allah in the holy month of Ramadan and creating the appropriate atmosphere for them.