Saudi Arabia is reworking its National Transformation Plan (NTP), aimed at boosting the private sector and reducing the Gulf state’s reliance on oil revenues, just one year after its high-profile launch.
The plan was a flagship announcement of policies championed by Crown Prince Mohammed bin Salman (pictured below) to overhaul the oil-dependent kingdom’s economy and to develop the role of the private sector, reducing what the Crown Prince called the state’s “dangerous addiction to oil”.
The new version of NTP is to be called NTP 2.0 and will be “more focused” and with “clear governance”, according to a document outlining the changes seen by Financial Times and the Bloomberg news organisation.
The redraft, says the document, will “change existing initiatives and add new ones”. It added “the timeline of the NTP will continue to 2020, but the plan requires implementation of objectives for 2025 and 2030”.
Saudi Arabia faces a challenge in reducing the level of contribution to the economy generated by oil revenues, with the Gulf state accounting for 22% of the world’s petroleum reserves.
The oil and gas sector accounts for about 50 per cent of gross domestic product, and about 85 per cent of export earnings, according to OPEC.
‘Re-think of Saudi Thatcherism’
The original NTP, as announced in June 2016, contained a raft of measures that commentators likened to “Saudi Thatcherism” after the UK prime minister, a noted free-marketeer and proponent of privatisation.
Measures outlined in the original NTP included privatisation of the postal service, the General Ports Authority, and half of the country’s railways and 70% of its ports.
It also stated that it wished to see greater involvement by the private sector in the health provision and treatment sectors, as well as education.
The original NTP stated that the aim was to create 1.2m private sector jobs and to reduce unemployment from 11.6% to 9% by 2020.
‘Growth way off target’
But now a government adviser says: “There is a recognition that too many of these targets were too aggressive and may be having too much impact on the economy.”
Where growth will come from is a matter of some debate, with the International Monetary Fund predicting 0.1% growth for 2017 compared to 1.7% in 2016.
“Flexibility is great, but changing the goalposts isn’t a healthy habit,” another government adviser told Financial Times.
