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The positives keep emerging from within Saudi Arabia on the economic side, much in line with the Vision 2030 and the National Transformation Plan (NTP) 2020. The NTP, designed to implement elements of the vision, focuses on transforming the economy by opening it up to investors and reducing dependency on oil.
In recent days, a royal decree was issued by King Salman ordering the establishment of a new National Development Fund; the fund is meant to serve as an umbrella entity for existing social, industrial and agricultural funds. The fund will be linked directly to the Prime Minister, in effect the King.
The objectives include raising the efficiency of the prevailing funds in order to meet the key pillars of Vision 2030, thus making maximum use of consolidating the diverse schemes. These encompass Saudi Fund for Development, Real Estate Development Fund, Saudi Industrial Development Fund, and Agricultural Development Fund, some with a positive track record.
Astonishingly, the kingdom continues to show capability of raising money in international markets. In September, Saudi Arabia made the second dollar bond sale in 2017 by raising a notable $12.5 billion (Dh45.9 billion). The bonds were sold in three tranches, $3 billion of long five-year, $5 billion in 10-year tranche and $4.5 billion in a 30-year offering, therefore meeting the diverse interest of investors.
In April, the country secured $9 billion from the sale of Islamic bonds. The moves are aimed at bridging a $53 billion deficit in fiscal year 2017.
Whats more, the kingdom succeeded in raising a record $17.5 billion in 2016 on its return to international capital markets. The sale was met with exceptional demand from investors, including institutional, collectively offering $67 billion, thereby allowing for cheaper funding cost and a higher amount of borrowing.
Moscow visit
In another development with far reaching socio-political and socioeconomic connections, King Salman recently become the first Saudi monarch to visit Moscow. Among other things, the visit could help achieve some vital economic goals, notably coordinating policies in the area of oil.
According to the 2017 edition of the BP Statistical Review of World Energy, Russia is the third largest oil producer in the world after Saudi Arabia and the US. The report points out to Russia accounts for 12.2 per cent of global oil output in 2012 versus 13.4 per cent for each of Saudi Arabia and the US. With 5 per cent of global share, Iran is fourth largest oil producer.
The improvement in oil prices — partly via a coordinated Saudi-Russian approach — is vital for the intended — but delayed — initial public offering of Aramco. The plan now calls for the IPO to be released in 2018, but a delay to 2019 cannot be ruled out. The IPO is poised to be the largest ever, and must be introduced in the right environment, including on oil prices.
Fortunately, there is growing international recognition of the economic reforms in the kingdom. The 2017-18 Global Competitiveness Index, published by the World Economic Forum, gives high marks for the economy. The index considers it to be the 30th most competitive in the world and the third best among Arab countries after the UAE and Qatar. The result puts the kingdom ahead of EU-member states like the Czech Republic and Spain, Portugal and Italy.
Saudi authorities are making good on the promise of opening up the conservative kingdom on a vital social aspect — the issuance of a royal decree granting women the right to drive.
Saudi Arabia is making slow — yet steady — progress in implementing vision 2030.
The writer is a Member of Parliament in Bahrain.
In recent days, a royal decree was issued by King Salman ordering the establishment of a new National Development Fund; the fund is meant to serve as an umbrella entity for existing social, industrial and agricultural funds. The fund will be linked directly to the Prime Minister, in effect the King.
The objectives include raising the efficiency of the prevailing funds in order to meet the key pillars of Vision 2030, thus making maximum use of consolidating the diverse schemes. These encompass Saudi Fund for Development, Real Estate Development Fund, Saudi Industrial Development Fund, and Agricultural Development Fund, some with a positive track record.
Astonishingly, the kingdom continues to show capability of raising money in international markets. In September, Saudi Arabia made the second dollar bond sale in 2017 by raising a notable $12.5 billion (Dh45.9 billion). The bonds were sold in three tranches, $3 billion of long five-year, $5 billion in 10-year tranche and $4.5 billion in a 30-year offering, therefore meeting the diverse interest of investors.
In April, the country secured $9 billion from the sale of Islamic bonds. The moves are aimed at bridging a $53 billion deficit in fiscal year 2017.
Whats more, the kingdom succeeded in raising a record $17.5 billion in 2016 on its return to international capital markets. The sale was met with exceptional demand from investors, including institutional, collectively offering $67 billion, thereby allowing for cheaper funding cost and a higher amount of borrowing.
Moscow visit
In another development with far reaching socio-political and socioeconomic connections, King Salman recently become the first Saudi monarch to visit Moscow. Among other things, the visit could help achieve some vital economic goals, notably coordinating policies in the area of oil.
According to the 2017 edition of the BP Statistical Review of World Energy, Russia is the third largest oil producer in the world after Saudi Arabia and the US. The report points out to Russia accounts for 12.2 per cent of global oil output in 2012 versus 13.4 per cent for each of Saudi Arabia and the US. With 5 per cent of global share, Iran is fourth largest oil producer.
The improvement in oil prices — partly via a coordinated Saudi-Russian approach — is vital for the intended — but delayed — initial public offering of Aramco. The plan now calls for the IPO to be released in 2018, but a delay to 2019 cannot be ruled out. The IPO is poised to be the largest ever, and must be introduced in the right environment, including on oil prices.
Fortunately, there is growing international recognition of the economic reforms in the kingdom. The 2017-18 Global Competitiveness Index, published by the World Economic Forum, gives high marks for the economy. The index considers it to be the 30th most competitive in the world and the third best among Arab countries after the UAE and Qatar. The result puts the kingdom ahead of EU-member states like the Czech Republic and Spain, Portugal and Italy.
Saudi authorities are making good on the promise of opening up the conservative kingdom on a vital social aspect — the issuance of a royal decree granting women the right to drive.
Saudi Arabia is making slow — yet steady — progress in implementing vision 2030.
The writer is a Member of Parliament in Bahrain.
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