Saudi Arabia proposes measures to overcome the dependence on the oil

Saudi Arabia began to shape prior to presenting the development of a long winded announcements plan whose goal is the release of its dependence on the oil as a source of income.

Slightly less than 5% of the giant Saudi Arabian Oil Co., also known as Saudi Aramco, will be sold to the individuals and transfer the remaining property to the Public Investment Fund (PIF), the sovereign fund whose current volume of assets are of SAR 600 billion (US $ 160 billion) that will be increased to up to more than SAR 7 billion (US $ 1.9 billion) and will become the central axis of the ambitious economic reforms that were revealed in the “Vision 2030” project, Salman Bin Mohammed prince, favorite son of king Salman Bin Abdulaziz.

Only the sale of only 5% would give the monarchy the amount of cash so considerable that this largely offset the losses by the selling at low prices caused by the country itself.

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This measure is based on the recognition that the dependence on oil has put aside the possibility of using other economic resources of the country.

So far, the confluence of the demand for higher social spending and defense, with the falling oil revenues could be faced with reservations, but it is more than obvious that is not an option persistent.

Prince Mohammed holds the most important since the founding of Saudi Arabia in the year 1932 with the economic reorganization measures which constitute a radical change for a country built on the oil money.

Property trading the bulk of the oil company to PIF boost the transparency about their finances, it also generates more independence in the decision making. The project involves the attraction of Saudi Arabia as the world center of culture, tourism and business, mounted in a more open platform of endogenous development, employment and consumption more capacity than the oil economic sustainability.The sale of subsidiaries of Saudi Aramco noncore is less designed for the benefit of the operation that the possibility of settling the private sector companies of very different orientation: financial center, financial services, universities and institutes, mining, defense equipment.

Prince Mohammed said that the nominee Vision 2030 plan had been designed with a price of US $ 30 per barrel.

The sale of Saudi Aramco is a key part of the plan that would restructure the economy and reduce the dependence on the oil kingdom, he said.This will help the increase transparency, he said.

The Aramco oil reserves are of about 260,000 million barrels representing the Exxon Mobil Corp tenfold.Its daily production of more than 10 million barrels above the national production of all United States of America oil added.

After the oil

After the announcement, King Abdelaziz Bin Salman asked his subjects to work together to ensure the success of the plan. The shares in the stock market rose immediately in Riyadh.Under the reign of Salman, who came to the throne in the early year 2015, the economic difficulties have added to the growing tension with Iran, its rival in the region;the threat of the Islamic State;the wars in Syria and Yemen;and the weakening of the ties built over of decades with the United States of America.

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As part of a preventive media strategy, Mohammed Bin Salman, second son of the king and the crown prince, gave the details of the economic reforms in a television interview recorded.The aim is to give the public a sense of dynamism and change in response to the oil prices: in the early year 2014, worth more than $ 100 a barrel contrast to the nearly $ 40 today.

Among the main consequences they have lived the inhabitants of the country are the economic reforms have been discussed before, but the urgency has increased since the record deficit of nearly 100,000 million in the last fiscal year.It soon feels the impact of the plans to increase the taxes on the tax revenues from the petroleum.The cut in the expenditure and the investment of the foreign capital is necessarily to be the main sources to keep the public finances under control.

Among the main measures as announced in the plan to 15 years, including the creation of a sovereign fund of Saudi investment of 2 billion dollars, as well as a set of strategic economic reforms such as the National Transformation Program.

In addition, the prince said that Saudi Arabia has a large mining assets that can be used to create jobs. The country has 6 percent of the world reserves of uranium, which is another wealth still untapped, he said. Saudi Arabia uses only 3 to 5 percent of the mineral resources such as the gold, silver and phosphate concluded.

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