Saudi Arabia is redrafting its main reform plan just over a year after its much-hyped launch, stripping out some areas earmarked for change and extending the timeline of other targets.
The move suggests that Riyadh may have realised that some of the objectives in its National Transformation Plan were over ambitious. The government has been reworking the NTP, centrepiece of Crown Prince Mohammed bin Salman’s efforts to overhaul the oil-dependent economy, since July.
An internal document seen by the Financial Times says the amended plan, dubbed NTP 2.0, will “change existing initiatives and add new ones”.
“The timeline of the NTP will continue to 2020, but the plan requires implementation of objectives for 2025 and 2030,” it says.
Reforms that had been under the NTP have shifted to other programmes as the government seeks to develop a more manageable agenda.
Core elements of the original plan included privatising state assets, creating 1.2m private sector jobs and reducing unemployment from 11.6 per cent to 9 per cent by 2020.
The partial privatisation of Saudi Aramco, the state oil company, sits outside the NTP, but is critical to Prince Mohammed’s overall plans. No suggestion is made that the NTP’s redrafting will affect the initial public offering of 5 per cent of Aramco, planned for next year.
But the broader privatisation programme, as well as other initiatives such as providing more affordable housing and reforming the financial sector, will be run outside of the NTP by different ministries.
NTP 2.0 will be one of 12 so-called “vision realisation programmes” that are tasked with delivering Prince Mohammed’s goals.
“There is a recognition that too many of these targets were too aggressive and maybe having too much impact on the economy,” said a government adviser.
The original NTP was launched in June 2016 and was overseen by Prince Mohammed’s council for economic and development affairs.
A consultant working with the Saudi government said the redrafting process was inevitable given the unwieldy state bureaucracy’s struggle to meet targets that are little more than three years away.
But advisers are worried that the revision could create confusion for investors, who are already nervous about an economic slowdown, and foment political intrigue in the royal family with Prince Mohammed having replaced his cousin as heir apparent in June.
Bankers have also been concerned that the reform efforts have focused too heavily on revenue-raising measures, such as tax increases and subsidy cuts, rather than initiatives to boost growth.
The International Monetary Fund forecasts that the kingdom’s economic growth will be just 0.1 per cent this year, down from 1.7 per cent in 2016.
“Flexibility is great, but changing the goalposts isn’t a healthy habit,” said another government adviser.
The revamped NTP will focus on reforms to the government bureaucracy, such as improving the productivity of civil servants and boosting transparency. Its goals will also include increasing female participation in the workforce and supporting small and medium-sized companies.
The full details of the changes will not be known until the end of October when officials are scheduled to present a final draft, according to the document.
Share This Post
