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Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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Saudi Finance Minister: “I Wouldn't Care If The Oil Price Is Zero"

Saudi Oil

The Saudi Deputy Crown Prince Mohammed bin Salman unveiled the nation’s ambitious “Vision 2030” in an interview with Al-Arabiya in April. The roadmap lays out a wide variety of economic reforms that will transition Saudi Arabia away from oil and into a broader array of investments.

While Saudi Arabia’s economy is currently suffering from an 18-month decline in oil prices and soaring unemployment rates, they are planning for a future in which they won’t have to worry about the price of oil at all. Speaking of the plans outlined in Vision 2030, Saudi finance minister Mohammed Al Jadaan told CNN, "We will not really care much whether the price is 40, 45, 50, 55 at that time because we have gone significantly out of our way to be independent of the oil price...We are planning to totally [end] that dependency that we have been living for the last 40, 50 years. Hopefully by 2030, I wouldn't care if the oil price is zero."

Vision 2030 proposes an economic restructuring that would in theory add 6 million non-oil jobs by 2030 and generate $100 billion per year in additional non-oil revenue by 2020 by reducing subsidies for gasoline, electricity and water and introducing a new value-added tax as well as initiatives to foster more non-oil industries like mining and military hardware. They have also suggested grandiose ideas to create the world’s biggest IPO for Aramco (the world’s biggest oil company) and to establish the world’s biggest sovereign-wealth fund worth over $2 trillion to invest in a wide variety of assets. Related: Kuwait: Deeper Cuts Are On The Table

These proposals, groundbreaking in their extent, are especially radical in a country relying on oil for 90 percent of its GDP. Whether these ambitious goals are realistic for Saudi Arabia, whose national deficit is expected to reach 13.5 percent of GDP this year after over a year of decreasing oil prices, remains to be seen.

The 30-year-old Prince bin Salman also announced that he believed the plan could be realized even sooner, eliminating Saudi Arabia’s oil dependency by 2020, in a statement that the Economist referred to as “manic optimism among the youthful new policy-setters of the royal court.”

While the Vision 2030 roadmap is full of general policy suggestions and enterprising statements of intent, it lacks clear directives and detailed strategies. Saudi policy-makers have been promising logistics for months, but have yet to release anything of the sort.

For decades, any efforts to wean the Saudi economy off of oil has been met with opposition ranging from disinterest to disdain. If Vision 2030 is to have any success, it will rely upon bin Salman’s ability to mobilize Saudi youth and instill a desire to work within new fields. As the youngest defense secretary in the world with a youthful outlook and a strong presence in social media, bin Salman may just have the sway it takes to realize this endeavor.

Diversifying Saudi Arabia’s economy could also be the answer to the nation’s growing youth unemployment. Timothy Callen, the assistant director for the Middle East and Central Asia department at the IMF, says that reducing unemployment among young Saudis will be one of the economy’s biggest challenges this year, with the rate already at 12 percent for nationals and 33.5 percent for youth and climbing steadily in conjunction with more and more young people entering employment age. Related: OPEC Optimism Lifts Oil Prices To One-Month High

Saudi authorities have said that they hope the reforms proposed in Vision 2030 will decrease unemployment just 7 percent, with the amount of women in the workforce increasing from just 22 percent to 30 percent stemming from increased education and employment opportunities. The Al-Bayan Center for Planning & Studies has criticized the modesty of these goals in comparison to the brash ambition of Vision 2030 as a whole, arguing that “the hesitancy to establish the requisite social and political reforms that will inevitably support economic reform questions Saudi Arabia’s ability to diversify the economy and attract necessary foreign investment.”

By 2030, the same year that bin Salman claims that Saudi Arabia will have broken up with oil, some experts predict that youth unemployment will increase to over 42 percent as the population continues to boom. These are two vastly different foresights for Saudi Arabia, but one thing is certain: the country will need more than just a vision to secure a brighter future.

By Haley Zaremba for Oilprice.com

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  • Lee James on May 23 2017 said:
    Change happens with a compelling vision.

    I think the Saudis have noted all the downsides of their reliance on a one-horse economy that is based on crude oil sales. They themselves are migrating to renewable solar PV energy. They are looking into hi tech and a home-grown defense industry. The Saudis are preparing its citizenry for a more dynamic and less state-dependent life.

    I hope they can successfully make this transition. Other one-horse countries need to do the same!
  • Kr55 on May 23 2017 said:
    The easiest thing in the world is to throw money at a problem and hope it all works out. In practice though, a government trying to create an economy from scratch, picking winners and losers, rarely ever works out. Would bet the Saudi's are still depending on oil for 70% of their GDP by 2030.
  • TM on May 24 2017 said:
    Pure wishful thinking. Any smart person knows that it is not possible for a petrostate (or any other state whose economy is commodity-based) to evolve in 12 years from a situation where virtually all the revenue comes from a commodity to a diversified economy. There isn't one single example of such a fast change in world's history. I hope this statement is just part of a (clumsy) strategy to project an image of self-trust, and not KSA true perception, because if the latter is the case, they are living in a fantasy world. And that's not good for their future.
  • Trevor on May 24 2017 said:
    I was working in Saudi Arabia in the early 1970s when oil money was flooding in. There was much talk of investing in the future so that they would not need to rely on oil income. It didn't happen.
  • Dan on May 24 2017 said:
    Yep, Houston, we have confirmation....the Saudis are running out of oil.
  • alan ford on May 24 2017 said:
    Yeah sure. The only problem is that working for oil and gas companies is paying big bucks. I would like to see a young Arab working in a factory makings parts for solar panels for a minimum wage.
  • jc on May 25 2017 said:
    It is one thing for Saudis to talk about belt tightening - implementing it is another matter. King Salman implemented austerity measures in Oct 2016 only to remove them recently due to "improvements in the oil price" ???!!! The real problems will begin when expatriates start to leave Saudi.
  • Andrew O'Neill on May 28 2017 said:
    Hi tech industries need people who can think for themselves and critically analyse things. Theocratic monarchies aren't known for inculcating the sort of culture that produces those people.
  • Zeus on June 28 2017 said:
    I've lived, worked in Saudi through 3 era's:
    Boom1(??) - '82-'89
    Boom2(????) - '98 - '08
    Boom3(????) - '15...
    Several things are consistent:
    1. The house of Saud gets paid first. Billions.
    2. The house of Saud controls everything, 1st using religion, then money.
    3. There is no critical thinking in the citizenry(see #2 above).
    4. Saudi's don't know how to work, nor create quality outcomes.
    5. Patriarchy is a good thing, and a contemporary economic curse.
    6. Oil, "the devil's excrement", enables dependency, and blind corruption.
    7. Saudi citizens have a high moral fiber (see #2 above).
    8. Education, if done properly, will be their saving grace.
    ...the story continues

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