Saudi to scale back reform plan

Saudi Arabia is reportedly redrafting its reform plan amid concerns some of the objectives are having a negative impact on the economy.

The Financial Times cited an internal document as confirming the redraft after several goals of last year’s National Transformation Plan (NTP) were deemed overly ambitious.

The amended plan, described as NTP 2.0, changes existing initiatives and adds new ones, according to the publication.

“The timeline of the NTP will continue to 2020, but the plan requires implementation of objectives for 2025 and 2030,” one line on the document reads.

The original NTP envisioned privatising state assets, creating 1.2 million private sector jobs and reducing unemployment from 11.6 per cent to 9 per cent by 2020.

Read: Saudi to triple non-oil revenue under National Transformation Plan

It is now understood that the privatisation plan and initiatives to provide affordable housing and reform the financial sector will be run separately from the NTP by state ministries.

Instead, NTP 2.0 will focus on 12 vision realisation programme to deliver the goals of Crown Prince Mohammed Bin Salman.

However, this is not expected to impact the 2018 listing of state oil giant Saudi Aramco, which was confirmed before the plan was announced.

Read: Saudi Arabia favours New York for Aramco listing despite risks

“There is a recognition that too many of these targets were too aggressive and maybe having too much impact on the economy,” a government adviser told the publication.

Another consultant told the FT the redrafting was inevitable given the “unwieldy state bureaucracy’s struggle to meet targets than are little more than three years away”.

However, there were also concerns the revision could confuse or put off investors amid signs of a wider economic slowdown.

The IMF lowered its 2017 growth forecast for the Saudi economy to “close to zero” in July and others have speculated the kingdom could enter recession this year after posting its first GDP decline since 2009 in the first quarter.

Read: IMF lowers Saudi growth forecast to “close to zero”

Read: IIF forecasts Saudi economy will contract this year

Among the chief concerns at present are the rising unemployment rate among Saudis, which recently reached 12.3 per cent, the unpredictable oil price and uncertainty as to how the reforms will affect the economy.

The full details of the revised plan will not be known until the end of October when officials are scheduled to present a final draft, according to the publication.