RIYADH • The powerful young prince overseeing Saudi Arabia's economy has unveiled ambitious plans aimed at ending the kingdom's "addiction" to oil and transforming it into a global investment power.
Deputy Crown Prince Mohammed bin Salman said the world's top oil exporter expects state oil company Saudi Aramco to be valued at more than US$2 trillion (S$2.7 trillion) ahead of the sale of less than 5 per cent of it through an initial public offering.
He said Riyadh would raise its public investment fund capital to 7 trillion riyals (S$2.7 trillion) from 600 billion riyals. The plans include changes that would alter the social structure of the ultra-conservative Muslim kingdom by pushing for women to have a bigger economic role and by offering improved status to resident expatriates.
"We will not allow our country ever to be at the mercy of commodity price volatility or external markets," Prince Mohammed said on Monday, at his first news conference with global journalists. "We have developed a case of oil addiction in Saudi Arabia," he told al-Arabiya TV news channel earlier.
His "Vision 2030" envisages raising non-oil revenue to 600 billion riyals by 2020 and 1 trillion riyals by 2030 from 163.5 billion riyals last year. But the plan gives few details on how this would be implemented.
The 31-year-old prince gave assured answers to questions on the plan, and appeared to pitch his comments to appeal across the Saudi social spectrum, and in particular to young people, who face unemployment and an economic downturn despite their country's oil wealth.
Even before oil prices started to plunge in 2014, economists had regarded Riyadh's fiscal policy and economic structure as being unsustainable, but reduced income from energy sales has made reform more urgent.
The plan appeared to lift sentiment on the Saudi stock market, where shares jumped by 2.5 per cent in the heaviest trading for eight months, but it fell short of convincing sceptics that the kingdom can prosper in an era of cheap oil.
At the centre of the plan is the restructuring of its Public Investment Fund, which Prince Mohammed said would become a hub for Saudi investment abroad, partly by raising money through the partial privatisation of Aramco. Saudi Arabia would produce or assemble half of its defence equipment internally in order to create job opportunities, he said, and Riyadh would make foreign investment easier.
The government ran a deficit of 367 billion riyals or 15 per cent of gross domestic product last year, officials said, and this year's budget aims to cut that to 326 billion riyals.
His economic team has already announced efforts to curb wasteful state spending, to diversify revenue streams by introducing a sales tax and privatising state assets, and to reform the education sector.
But ambitious targets, such as raising the private sector share in the economy to 60 per cent from 40 per cent, reducing joblessness to 7.6 per cent from 11 per cent and growing non-oil income to 1 trillion riyals from 163 billion riyals were not explained further.
The focus was on economic restructuring to help reduce oil dependence. "I think by 2020, if oil stops we can survive," Prince Mohammed said. "We need it, we need it, but I think in 2020 we can live without oil."