Just over a year after launching the plan, Saudi Arabia is going to redraft it by “stripping out some areas earmarked for change and extending the timeline of other targets,” as well as “change existing initiatives and add new ones,” according to the Financial Times (paywall). Apparently, the rethink is because Crown Prince Mohammed bin Salman’s plans were overly ambitious. [...]
Such an unbalanced economy is dangerous when energy prices slump, as they have since 2014, with crude oil falling from above $100 per barrel to around $50 today. This has blown a hole in Saudi’s budget, forcing it to burn through its reserves and borrow billions to finance its deficit. This year, Saudi Arabia’s GDP growth is set to be “close to zero,” according to the IMF. Meanwhile, renewable energy is steadily becoming more competitive with fossil fuels. [...]
Saudi Arabia is looking to raise money by partly privatizing its state-owned behemoth of an oil company Saudi Aramco, in what will be the world’s largest IPO. Alongside the economic transformation plan, proceeds from the Saudi Aramco stake sale—scheduled for next year, but possibly subject to delay (paywall)—will be vital to funding the huge investments necessary to shift the country away from its reliance on oil.
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