Saudi Crown Prince Says Reforms Saved Budget as Revenue Plunged
Saudi Crown Prince Mohammed bin Salman said economic reforms he championed had saved the kingdom from even greater austerity as revenue plunged this year, as he released a rare statement touting his yearslong overhaul.
Oil income is expected to drop by nearly a third to 410 billion riyals ($109.3 billion) this year as the fall in crude prices takes a toll on the kingdom, Prince Mohammed said in a statement published by the official Saudi Press Agency on Thursday.
Yet non-oil revenue is expected to rise 14% to 360 billion riyals, he said, with domestically unpopular tax and fee hikes helping to lessen the blow to the budget. Increasing non-oil income has been a key component of the prince’s economic transformation plan, dubbed Vision 2030, announced in 2016.
He also underscored his commitment to tackling Saudi unemployment and said the “next goal will be improving citizens’ income.”
The promises were potentially a nod to discontent among many Saudis as government austerity measures cut deeply into the pockets of the poor and the middle class, already struggling during the pandemic-induced downturn.
Facing a double crisis from the novel coronavirus and lower oil revenue, Saudi officials have tripled the kingdom’s value-added tax, raised customs fees and slashed a cost-of-living allowance for public sector workers. Citizen unemployment rose to 15.4% in the second quarter, its highest level on record.
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Other key points from Prince Mohammed’s statement include:
- Returns achieved by the Public Investment Fund, Saudi Arabia’s main sovereign wealth fund, “are not less than 7%, and we have investments with returns exceeding 70%, and others exceeding 140%,” he said.
- The fund will invest 150 billion riyals next year and in 2022 into the Saudi economy, rising each year until 2030, he said. Some of this could be funded by liquidating the PIF’s existing assets, the prince added.
- Prince Mohammed said that if non-oil revenue had remained at 2015 levels this year, officials would have been forced to cut public-sector salaries by 30% and eliminate capital spending.
- The government has collected 247 billion riyals from anti-corruption campaigns over the past 3 years, Prince Mohammed said, an amount equivalent to 20% of total non-oil revenue.
- He touted cultural achievements and a loosening of social restrictions under his watch — which coincided with a harsh political crackdown that drew international censure
- Saudi Arabia had successfully fought extremism over the past few years, the prince said, adding that “today, extremism isn’t considered acceptable in Saudi Arabia, and no longer appears on the surface, but is outcast, hidden and withdrawn.”
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