June 20, 2016

Vision 2030: Saudi Arabia Beyond Oil

On April 25, 2016, the Saudi government presented Vision 2030, a sweeping plan for moving the kingdom beyond oil dependence. This plan includes: the privatization of a portion of the Saudi national oil company Aramco; the expansion of the resources and role of the Saudi Public Investment Fund; and the development of the country’s ports, cultural resources, and tourist sites to take advantage of its strategic position at the center of the Arab and Islamic world. Scholars and a cross section of Saudi opinion leaders examine the implications of the reform plan in a series for AGSIW.


Saudi Arabia Transforming

May 10, 2017

Saudi Arabia has embarked on an ambitious program of national transformation aiming to diversify the economy away from oil dependence, expand the private sector, and transform government practice. Yet difficult challenges remain. AGSIW’s conference, “Saudi Arabia Transforming,” focused on the key drivers reshaping Saudi Arabia, a year after the release of Saudi Vision 2030.
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As Reform Agenda Waffles, Citizens Take Life to the Streets

By Karen E. Young
April 27, 2017

Saudi Arabia’s recent reversal of the September 2016 reduction in public sector salaries and benefits is a troubling sign. It could be a signal to bond holders that the Saudi government is not committed to the economic reform agenda, its Vision 2030 plan, which predicated the government’s pitch to investors and lenders over the last year as a revolution in fiscal policy and path to economic diversification away from oil. Some investors will see this as a bait and switch. If the reform agenda stalls, credibility with investors will decrease.
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A Saudi Course Correction

By Kristin Smith Diwan
April 27, 2017

On April 25 the Saudi government reached the one-year mark since the launch of its ambitious program of governmental reform, Saudi Vision 2030. Just days prior, King Salman bin Abdulaziz offered a course correction of sorts: a raft of proclamations shifting policies and shuffling government appointments. The changes map the difficult course the Saudi leadership is pursuing in a time of reduced oil prices, a prolonged military effort in Yemen, and a momentous generational transition in power. The personnel changes represent a frank acknowledgement of the need for new leadership on the Yemen portfolio, while hinting at a new base of political support among young royals. Meanwhile, the policy changes mark a surprising attentiveness to the opinion of a Saudi public finding its voice through social media.
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Restructuring of Saudi Arabia’s Energy Industry Gathers Pace

By Diane Munro
March 2, 2017

Saudi Arabia is powering ahead with ambitious plans to reorganize its massive energy sector. The restructuring is part of its strategic plan to reduce domestic oil dependence and adopt a more commercial approach to its business operations at state oil company Aramco as part of Vison 2030 and ahead of the historic initial public offering set for 2018. Saudi Arabia’s Minister of Energy, Industry, and Mineral Resources Khalid al-Falih is overseeing a fundamental shift in the country’s energy strategy and Aramco’s business models, including a more proactive approach to maximizing profits. Falih’s most urgent task when he assumed his post less than a year ago, however, was reversing the catastrophic two-year plunge in oil prices. His pragmatic, diplomatic approach with fellow OPEC ministers was largely responsible for a bold and unexpected shift in policy, which led to an agreement on new production quotas with key non-OPEC producers that went into force on January 1. To date, the new accord has delivered a revenue dividend in the form of a 20 percent increase in oil prices, which has more than offset the lower output levels.
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Reformers are Holding Ground: Saudi Arabia’s New Fiscal Policy

By Karen E. Young
January 11, 2017

The Saudi budget for 2017 demonstrates that fiscal reform works; at least, it shows that with a reduction in spending will come a decline in deficit. The government aims to reduce the fiscal deficit to 7.7 percent of gross domestic product in 2017 from 11.7 percent in 2016. The act of budgeting and projecting spending and revenue is a central tenet of governance in Saudi Arabia, as in any other state. In Saudi Arabia, however, government spending drives most economic activity. The reining-in of government expenditure and the hopeful acceleration of private sector growth, the logic behind Saudi Arabia’s Vision 2030 plan and National Transformation Program, both announced in mid-2016, will have a first full year’s fiscal planning evaluation. Saudi governance and fiscal policy will be tested in 2017, with leaders and technocrats making difficult choices of how to spend oil revenue, the volatile and dominant source of government income, along with newer sources of capital, in international and local debt, and increased taxes and fees.
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Saudi Arabia’s Impeccable Timing in Debt Markets

By Karen E. Young
November 9, 2016

Saudi Arabia’s unprecedented bond sale to international investors raised $17.5 billion in October. The timing was impeccable. Given Donald Trump’s victory in the U.S. presidential election, markets could be bracing for several months, or more, of volatility and uncertainty. While the immediate reaction for U.S. debt issues is an expectation that Trump’s infrastructure spending promises could result in higher yields for U.S. Treasury bonds, there is also the uncertainty of his comments during the campaign that made light of possible U.S. default on debt payments. Governments rely on international bond investors to make long-term fiscal plans, and to cover short-term fiscal deficits. A government’s ability to project confidence, its reserve assets, the capacity of its business environment, and the structural reforms and policies to demonstrate a commitment to an economic vision are the essentials of debt pricing. It is never an exact science, but rather an exercise in risk analysis. Saudi Arabia accessed capital markets at a moment, just weeks ago, that now seems tranquil in comparison to the tumult the presidential election has generated.
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Mobilizing Private Investment in Saudi Infrastructure

By Lama Kiyasseh
November 2, 2016

Accessing diverse funding sources is front and center of Saudi Arabia’s new policy reform, which propelled the kingdom to issue its first international $17.5 billion bond offering on October 19. While this issue is oversubscribed, generating excitement in the market, it is unlikely to meet the growing demand for investments in Saudi infrastructure. Given sustained low oil prices and tighter fiscal management policies called for as part of Saudi Arabia’s Vision 2030, Deputy Crown Prince Mohammed bin Salman is seeking to increase private sector participation. The role of public-private-partnerships (PPPs) as one model for the delivery of infrastructure projects has garnered attention from policymakers, financiers, and the broader stakeholder community.
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Saudi Vision 2030 and “A Day in Riyadh”

By Fahad Nazer
October 25, 2016

During the last week of September, Saudi Arabia’s Riyadh Development Authority – along with other governmental agencies including the Ministry of Foreign Affairs, the Ministry of Commerce, and The King Abdulaziz Center for National Dialogue – organized a five-day event at the United Nations secretariat building in New York City called “A Day in Riyadh.” In a clear attempt at rebranding, the organizers of the event sought to challenge Western assumptions about Saudi Arabia in general and its capital, Riyadh, in particular.
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For Saudi Economic Reforms, Timing is Everything

By Karen E. Young
September 28, 2016

Saudi Arabia’s economic reform efforts kicked into gear this week with announcements that public salaries are to be slashed and generous perks like long paid holidays are to be curtailed. This is the new Saudi Arabia that aims at increased productivity and a slimmed down fiscal policy. Most governments would anticipate some resistance to moves to reduce spending and streamline public sector employment in numbers and efficiency, in line with private sector productivity. For Saudi Arabia, the policy is both a shock, and among many citizens, a relief.
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Journalist Khaled Almaeena Evaluates the Saudi National Transformation Program

August 11, 2016

Khaled Almaeena, a leading Saudi journalist and former editor-in-chief of the Saudi Gazette, joined AGSIW for a closed roundtable discussion on the Saudi National Transformation Program 2020 and Vision 2030. Following the roundtable, AGSIW Senior Resident Scholar Hussein Ibish sat down with Almaeena to discuss Saudi Arabia’s reform initiatives and their social implications.
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Saudi Students Welcome Vision 2030

By Mark C. Thompson
July 18, 2016

Since Saudi Deputy Crown Prince Mohammed bin Salman (MbS) unveiled Vision 2030 in April a great deal of analysis has focused on the potential impact of the plan at the national level. Saudi youth are a natural constituency for the MbS-led transformation program, and not surprisingly, there have been concerted efforts to reach out to them. But how has Vision 2030 been interpreted by young educated male Saudis, many of whom are struggling to enter the labor market at a time of economic uncertainty? Saudi male undergraduate students at the prestigious King Fahd University of Petroleum and Minerals (KFUPM) – principally majoring in engineering and finance – had an opportunity to voice their opinions about Vision 2030 as part of a globalization course term project. What follows are some of their thoughts.
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A man works on construction of the Kingdom Tower in Jeddah, Saudi Arabia. (AP Photo/Hasan Jamali)

This Time We Mean It: Staying the Course on Economic Reforms

By Karen E. Young
June 7, 2016

Saudi Arabia released its long awaited National Transformation Program on June 6. Among the reforms planned to roll out in just under four years, by 2020, are cuts to government subsidies and salaries, and a reliance on the private sector to fund new initiatives (particularly in non-oil tradable sectors) and create jobs. Analysts at Abu Dhabi Commercial Bank estimate that the fiscal consolidation measures amount to close to SAR 400 billion (around $100 billion) over five years, equivalent to approximately 2.5 to 3 percent of gross domestic product per year.
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Mideast Saud Arabia EconomyNew Saudi Energy Ministry Seen as Key to Economic Reform

By Diane Munro
May 13, 2016

The restructuring of Saudi Arabia’s petroleum ministry into a new powerful Ministry of Energy, Industry and Mineral Resources (MEIMR), announced as part of a larger government reorganization on May 7, is a central pillar of the new Vision 2030 unveiled at the end of April by Deputy Crown Prince Mohammed bin Salman (MbS). The latest announcement also included a reordering of other ministries focused on the economy and finance, such as the new Commerce and Investment Ministry and a new head of the Saudi Arabian Monetary Agency.
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Mideast Saudi Binladin LayoffsSaudis Respond to Vision 2030

May 13, 2016

On April 25, the Saudi government presented to the public Saudi Arabia’s Vision 2030, a sweeping plan for moving the kingdom beyond oil dependence. This National Transformation Program involves dramatic changes including the privatization of a small portion of the Saudi national oil company ARAMCO; the expansion of the resources and role of the Saudi Public Investment Fund; and the development of the country’s ports, cultural resources, and tourist sites to take advantage of its strategic position at the center of the Arab and Islamic world. AGSIW spoke with a cross section of Saudi thinkers and opinion leaders to elicit their reaction to Saudi Vision 2030 and its presentation in an Al Arabiya interview with Deputy Crown Prince Mohammed bin Salman (MbS).
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Khalid A. Al FalihSaudi’s Summer of Anticipation

By Karen E. Young
May 10, 2016

It’s going to be a long, hot summer, full of anticipation. As the frenzy of ministry reshuffles announced on May 7 in Saudi Arabia surprised both domestic and international markets, there is a cautious attitude of “wait and see” prevailing in the private sector. Each week seems to bring new announcements in the Western media of Deputy Crown Prince Mohammed bin Salman’s plans to transform the Saudi economy. This weekend, it was the announcement of new ministers and a rearrangement of ministries, including that Khalid al-Falih will replace veteran oil minister Ali al-Naimi. Falih is chairman of Aramco and previously served as CEO of the company.
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Mideast Saudi Earth HourYouth Appeal of Saudi Vision 2030

By Kristin Smith Diwan
May 6, 2016

On April 25, Saudi Arabia’s young deputy crown prince, defense minister, and head of the Council of Economic and Developmental Affairs, Mohammed bin Salman (MbS), boldly outlined for a Saudi domestic audience Saudi Vision 2030, the government’s plans for a future without oil. In doing so, he laid down the markers for a new Saudi Arabia, and made an appeal to the next generation to take up the challenge and get to work.
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Mohammed bin SalmanUnderstanding Vision 2030: Anticipating Economic Change in Saudi Arabia

By Karen E. Young
April 28, 2016

Were there surprises in the Vision 2030 announcement?

No, in fact, there was very little new information in the announcement of the Vision 2030 plan on April 25, which is in line with previous comments by Deputy Crown Prince Mohammed bin Salman (MbS) in his interviews with Bloomberg and The Economist over the last few months. This was a strategy release, not a financial document or blueprint for implementation in any exact terms. In fact, the use of media to relay the plans in a conversational style is an important departure in the Saudi tradition of governance. MbS has proved adept at creating anticipation of his announcements, especially with his recent television interview on Al Arabiya in which he defended the plan in nationalistic terms, as a reclaiming of Saudi Arabia’s independence and strength in the era before oil.
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