It's officially time for Saudi Arabia to move away from oil profits.
Earlier today, the kingdom's Deputy Crown Prince Mohammad bin Salman Al-Saud unveiled his long-term economic plan, entitled "Saudi Vision 2030," for the oil-addicted nation. His proposal, which he outlined in a pre-recorded interview with Saudi-owned Al-Arabiya News Channel, revealed his intentions to shift the country's focus away from reliance on crude oil profits and more toward investment-generated revenue.
You see, tumbling oil prices have shaken the security of the world's wealthiest nation. Last year, just over 70% of the country's revenue came from oil. Saudi Arabia is used to that percentage being more around 90%. This drop in profits spawned a $98 billion budget deficit to boot.
So something's gotta give. And bin Salman knows that.
He also told Al-Arabiya News that his "Vision 2030" plan would ensure that Saudi Arabia could not only survive, but thrive without oil.
Here's a look at the reforms the young prince has in mind...
Saudi Arabia's New, "Oil-Independent" Economic Plan
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Among the reforms announced in bin Salman's interview were:
- Shares worth less than 5% of Aramco, the kingdom's oil company valued at $2.5 trillion, will be sold. BBC noted earlier today that even just selling 1% of Aramco would create the biggest initial public offering (IPO) in history.
- Some of the proceeds from this share-selling will go towards a sovereign wealth fund worth an estimated $2 trillion. (Sovereign wealth funds are government-owned sums of money derived from a nation's reserves and set aside specifically for investments.)
- The creation of a new visa system will allow expatriate Muslims and Arabs to work long term in Saudi Arabia. Over the past few years, the Saudi government has been deporting foreigners in an effort to tackle the country's own unemployment problem. This led to what's been called the "Saudi Expulsion Crisis" that's resulted in the forced removal of millions of expats, chiefly Yemenis, from the country.
- Further steps toward economic diversification, including investments in mineral mining and expanding military production. Saudi Arabia was the world's third-largest arms buyer in 2015, with purchases topping $87 billion, reported USA Today this morning.
- A push to include more Saudi women in the workforce. As of 2014, only 18.6% of Saudi women participate, according to the International Labor Organization.
The prince's reform proposal is not the first redesign of Saudi Arabia's economy, Reuters reported this morning. Previous reform attempts in recent decades have yielded weak results. Mohammad bin Salman Al-Saud's plan might be the boldest since the kingdom was founded in 1932.
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