The crown prince's reforms pushed the Treasury to not rely on oil
A study by the Japanese International Monetary Affairs Institute confirmed that the financial and economic reforms implemented by Saudi Arabia within the framework of "Vision 2030" launched by Crown Prince Mohammed bin Salman saved the country's economy from a difficult situation, especially with the decline in oil prices and the repercussions of the Corona pandemic.
The study, titled “Saudi Finance Moves Toward No Dependence on Oil,” noted the Kingdom’s steps to achieve a basic goal of the vision, which is to reduce dependence on oil, and “increase its non-oil revenues to one trillion riyals” (equivalent to approximately $ 266.7 billion) by 2030 “Which is of great importance … and this matter will greatly increase its financial stability.”
She pointed out that after Prince Mohammed bin Salman announced the vision in 2016, “The Kingdom’s non-oil revenues increased by 78.7% from 186 billion Saudi riyals to reach 332.4 billion Saudi riyals, as the average annual increase during this period in particular was 22%. The Kingdom continued to maintain this same pace, and it will achieve its goal of increasing its non-oil revenues by one trillion riyals in 2030. ”
The study indicated that “the Kingdom’s non-oil revenues are witnessing a steady expansion, which increases expectations about achieving economic reforms”, pointing in particular to the procedures for privatizing the government sector through the “privatization program.” “The number of privatization projects is increasing year by year, and they have grown to support part of the government’s non-oil revenues,” he said.
These measures contributed to saving the Saudi economy from “a decline in economic activity due to the outbreak of the emerging (Corona) virus,” and the recovery of the economy after 2021 depends on an increase in non-oil revenues and progress in privatization, according to the study. Despite the great challenge posed by the pandemic and its violent repercussions, in addition to the oil price reaching zero levels, Saudi Arabia managed to overcome this due to its new strategy in developing its financial revenues. The reforms of “Vision 2030” had a profound effect on the cohesion of public finances.
The study stressed the interest in “reforming the industrial structure of the Kingdom, whose gross domestic product is about 2.8 trillion riyals in 2019, in which oil-related industries represent 43%.” The industrial sector in the Kingdom is considered one of the most promising and important sectors in the development of non-oil revenues, which is what He required that the government pay special attention to him by achieving his independence through a special ministry that is responsible for the processes of organizing, developing and motivating him.
The “Institute of International Monetary Affairs of Japan” is a research institute specializing in financial issues and international currencies. Since 2011, it has been an integrated public-interest research institution by a decision of the Japanese Prime Minister. It consists of departments of economics and developmental economics and a section devoted to visiting researchers, with the number of researchers reaching 35 economic researchers.
While it is not easy for a country like Saudi Arabia that was totally dependent on oil to move to a more dynamic way to maximize its financial resources, the political will with a long-term economic outlook was able in a short period of time to create opportunities to increase financial revenues.
Saudi efforts in the strategy of reducing dependence on oil are not limited to some key sectors only, but also extend to non-oil exports, such as blue ammonia, which Saudi Arabia exported its first shipments to Japan last month, for use in generating carbon-free energy.
It establishes “Vision 2030” for the post-oil stage by strengthening a number of important economic sectors, such as tourism, entertainment and sports, in exchange for entering into smart investments in technical projects through the Saudi Sovereign Fund, which is the eighth largest sovereign wealth fund in the world, with total assets estimated at $ 390 billion.
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