The plan aims to increase non-oil revenue to 530bn riyals (£96.8bn, $141.3bn) by 2020 from 163.5bn riyals now, and cut public-sector wages and salaries to around 40% of the government’s budget from 45% currently. About two-thirds of Saudi workers are state-employed.
The plan also calls for the government to prepare and implement a new income tax on residents though it said there were no current plans to tax foreigners.
The details of the National Transformation Plan (NTP) were released in the early hours of Tuesday in Jeddah and form the major part of an ambitious “Vision 2030” agenda launched in April which is seeking to transform the economy away from its dependence on oil revenues.
The 112-page NTP document is a five-year roadmap that lays out targets to be met by each government ministry, and their cost.
In all the NTP will be implemented through 543 initiatives across 24 government bodies at a cost of 270bn riyals ($97bn) over the next five years, Minister of State Mohammed al-Sheikh told the press conference.
Credit quality target
Under the plan public debt is targeted to increase to 30% of economic output from 7.7% now, while the kingdom will seek to improve its credit rating by two notches to Aa2 from A1.
Moody’s Investors Service cut the kingdom’s sovereign rating last month for a second time this year, to A1 from Aa3, arguing that lower oil prices may cause a deterioration in the nation’s credit profile. The kingdom’s credit rating was also lowered by Fitch Ratings and S&P Global Ratings earlier in 2016.
Long list of goals
Among its long list of features, the NTP also calls for a cut in subsidies for energy and water; an increase in the number of Saudi women in the workforce to 28% from 23%; and for the privatisation of the Saudi post office and the Saline Water Conversion Corp.
The annual growth rate in real estate sector is set to increase to 7% from 4% by 2020, and the number of limited liability companies to rise to 104,000 from 50,000.
Private sector contributions to medical care spending are aimed to increase by 10% by 2020 with the number of licensed medical facilities to rise to 100% from 40%.
Tourism spending to rise to 174.8bn riyals from 104.8bn riyals, and taxes would be imposed on harmful products.