Saudi Crown Prince, Mohammed bin Salman bin Abdulaziz Al Saud, expects the kingdom’s economy to accelerate the pace of growth as coronavirus restrictions ease.
In a wide-ranging message delivered to the country’s Shura Council, he said he was optimistic that the economy, the Gulf’s largest, would become one of the fastest in the G20 to witness “growth in non-oil GDP in the upcoming years.”
In the text of the statement, published by the official Saudi Press Agency, he outlined “unprecedented accomplishments” in the kingdom in less than four years since the launch of Vision 2030, including the crackdown on corruption which has so far netted SR247 billion ($65.9 billion) to state coffers.
The Crown Prince said that corruption had “spread like a cancer” over the last decades to the extent that it was depleting around 5-15 percent of the state budget.
“The phenomenon perpetuated for not only one or two years but accumulated for 30 years… Truly, I consider this scourge an enemy that is endangering development and prosperity.”
He said the total amount collected from the settlements stood at SR247 billion over the last three years, representing 20 percent of the total non-oil income in addition to tens of billions of other assets.
In the speech, he said: “Saudi Arabia is one of the largest and most important economies in the world and we are striving hard to double the size and diversification of the economy.
“In 2016, the value of the non-oil GDP was estimated at SR1.8 trillion, and we in the kingdom began developing plans to double that at a fast pace. The result was an accelerated growth in the past three years by 1.3 percent in 2017, 2.2 percent in 2018, 3.3 percent in 2019 and more than 4 percent in the fourth quarter of 2019, despite some economic challenges.”
The Crown Prince said tackling unemployment is one of the country’s main aims, adding: “Increasing employment rates is the top priority of the government since work has begun according to Vision 2030 to reform the labour market and make available more jobs for male and female citizens.”
Vision 2030 has set an unemployment rate of 7 percent in 2030 as one of its goals.
He said: “In 2018, the unemployment rate reached approximately 13 percent. And due to an increase in the efficiency of government agencies, the investments of the Public Investment Fund and other government programs and initiatives, we have seen the unemployment rate go down successively to 11.8 percent at the beginning of 2020.
“By the end of 2020 we will be one of the lowest impacted G20 country by the coronavirus pandemic, citing the increase of the unemployment rate in some G20 countries to 15-20 percent and more.
The Crown Prince pointed out that women represent 64 percent of the total unemployment rate, stressing that “our next goal will be to improve the citizen’s income,” he added.
He also pointed to the kingdom’s efforts to enhance non-oil revenues and their impact on the economy, saying: “We have expanded the government’s direct and indirect spending since 2005. To keep pace with this, and to maintain the expansion in spending, the government, in accordance with Vision 2030, has undertaken a wide restructuring process for a large number of sectors that enhance the state’s non-oil revenues, and not make them subject to fluctuations of oil prices which may limit our ability to plan and set or achieve any targets.
“After the collapse of oil prices this year, oil revenues actually decreased to approximately SR410 billion. These revenues alone are insufficient to cover even the salaries bill estimated at SR504 billion in this year’s budget, not to mention the difficulty of financing other items which include capital spending by SR173 billion and social security benefits by SR69 billion as well as operation and maintenance bill estimated at SR140 billion and others, which means an economic recession and millions of jobs lost.”
He added: “If we didn’t increase non-oil revenues to about SR360 billion this year, and if we remained at 2015 levels of revenues estimated at approximately SR100 billion, we would have had to reduce the salaries of employees in the public sector by more than 30 percent, cancel allowances and bonuses completely, fully stop capital spending, and we wouldn’t have had the ability to properly operate and maintain state assets and we even would have stopped supporting expenditures’ item.
“As painful as it was to cancel the cost of living allowance, we have succeeded in preserving citizens’ salaries and most of the allowances and bonuses, and continued with capital spending, amounting to SR137 billion, and increased spending on operation and maintenance, and bearing the high costs of healthcare due to the Covid-19 pandemic, which amounted to SR188 billion with full commitment to the social benefits expenditure, subsidies and financing support.
“All of this makes us remember the importance that our nation is not to be affected by any volatility in any sector whatsoever, and that diversification of revenues is important and vital to the state’s sustainability, and we are seriously working on that through the investments of the Public Investment Fund and supporting new sectors such as tourism, sports, industry, agriculture, transportation, space, mining, in addition to working with the private sector.”
The Crown Prince also talked about the achievements that have been made in the digital sector.
“We have invested more than SR55 billion in the digital infrastructure of the kingdom, which resulted in an increase in the average internet speed… We tripled the number of homes connected to the optical fibre network from 1 million homes to 3.5 million.”
On the contribution of the Public Investment Fund to the development of the economy, He said: “[It] has become one of the major drivers of growth for the Saudi economy. We were able to double the volume of the Public Investment Fund from SR560 billion to more than approximately SR1.3 trillion , with a steady pace towards achieving the goal of Vision 2030 that the fund’s assets exceed SR7 trillion.
“Without the process of reforming the Public Investment Fund… in addition to setting policies to pump huge investments into Saudi Arabia over the past years… we would have lost more than half of the non-oil growth, along with the absence of a large number of jobs that have been created and the collapse of demand for many services, products and materials as well as the bankruptcy of a large number of companies, especially in light of low oil prices.”
The fund’s local investments amounted to SR78 billion in 2017, then SR79 billion in 2018 and SR58 billion in 2019. It is targeting SR96 billion in 2020 with a total of SR311 billion during the past four years which, he said, has contributed to the creation of more than 190,000 jobs.
In 2021 and 2022, the fund will pump about SR150 billion annually into the Saudi economy with an annual increase until 2030.
On tourism, the Crown Prince said: “Saudi Arabia has made great strides and witnessed qualitative leaps in new and promising areas, increasing its contribution to the gross domestic product to 3.6 percent in 2018.
“Such a starting move has created new labor sectors and contributed to the employment of hundreds of thousands of Saudi female and male citizens.”
Regarding the sports sector, he said its contribution to the GDP grew from SR2.4 billion in 2016 to SR6.5 billion in 2018, an increase of 170 percent within only two years.
In the sector of entertainment, the Crown Prince said: “We are keen to facilitate the obtaining of licences for events, which increased the number of events being held in the kingdom to more than 3,400 in 2019, resulting in the creation of tens of thousands of fixed jobs and hundreds of thousands of seasonal jobs.”
He praised Vision 2030’s impact on the housing sector which has faced challenges which accumulated until home ownership became one of the most prominent social problems in the country, and one of the main concerns for Saudi citizens over the past two decades.
Vision 2030 aims to seek to raise the percentage of citizens’ ownership of housing by 5 percent by 2020 too 52 percent but that figure has reached 60 percent today.
“I have no doubt that we will surpass the 2030 target of 62 percent in 2025, which means that we will exceed the target in 2030. We will be one of the most advanced countries in the world in terms of home ownership.”
In the cultural sector, the Crown Prince said 11 commissions have been established to have “a very significant impact on creating jobs, developing the economy, improving the quality of life and making our country more capable of attracting international talent and tourists”.
The Crown Prince also highlighted recent reforms in Saudi Arabia, saying: “In the past, Saudi women could not travel without a permit, could not attend sports and cultural events, couldn’t drive a car, or practice a lot of work and could not solve their issues without a guardian. The Saudi woman has suffered from this situation for decades. Today, the Saudi woman enjoys an unprecedented phase of empowerment… Today, the Saudi woman is effectively a partner with the Saudi man in the development of our nation without discrimination.”
Regarding the rights of expatriates, he added: “We have taken numerous measures to restructure the contractual relationship in a manner that preserves their rights and contributes to raising the degree of professionalism in the labour market. We have worked to correct the conditions of nearly half a million expatriates in the kingdom, to attract qualified workers with added value.”
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