Saudi Arabia said on Saturday that fiscal reforms under its Vision 2030 program are on track and plans to sell a 5 percent stake in Saudi Aramco are “well underway,” despite some adjustments being made to the National Transformation Program (NTP).
“It has always been known and planned that fulfilment of Vision 2030 requires, over time, flexibility and agility by the government and the teams leading implementation of the program plans,” the Kingdom’s Ministry of Culture and Information said in a statement.
“It is important to adjust and adapt to unexpected situations, and to use new circumstances in ways that reinforce and strengthen underlying strategic objectives. Such flexibility should not undermine the stability and predictability needed to allow the private sector to plan its new investments and expansions,” the ministry added.
The statement comes in response to reports that the Kingdom was looking to redraft its reform plans and roll out a new version of the NTP.
The revised version, NTP 2.0, aims to “improve efficiency and effectiveness of delivery across institutions,” the ministry said.
The plan will now focus on 36 strategic objectives by allocating them to various NTP’s portfolios. Ten ministries will be involved in NTP 2.0, down from 18 earlier, and they will have more autonomy.
Meanwhile, the government’s privatization plan, underpinned by the initial public offering (IPO) of a 5 percent stake in Saudi Aramco, remains on track.
“The IPO process is well underway and Saudi Aramco remains focused on ensuring that all IPO-related requirements are completed on time,” the ministry noted.
Saudi Arabia announced a host of fiscal reforms last year under the Vision 2030 and NTP 2020 initiatives, in a bid to cut spending and revive economic growth after oil prices crashed in mid-2014. The reforms included austerity measures, such as cutting the salaries and allowances of ministers and Shura Council members.
Despite ongoing adjustments to reform plans, Riyadh remains committed to achieving Vision 2030 targets and the program has seen many successes so far, the ministry said.
These include a faster than anticipated reduction in the budget deficit, energy price reform and the introduction of excise tax earlier this year.
“Significant improvements also have been made in spending efficiencies and the allocation of SAR 200 billion of support to strategic private sector organizations,” the statement said.
The government has also set aside billions of riyals for water and sewage infrastructure projects this year and over the next couple of years, in addition to significant increases budgeted to support small and medium enterprises (SMEs).
In addition, there has been greater transparency with the introduction of quarterly budget reports, and more timely payment on government contracts, indicating further progress.
“It should not therefore be a surprise to participants and observers of Vision 2030 that the government is now planning to further strengthen and build on the ways it delivers the vision targets,” said a spokesperson for the Ministry of Culture & Information.
There will be further periodic adjustments to the vision’s implementation programs over coming years, the spokesperson added.
Some analysts, however, noted that the revision of the reform plans may be a sign of growing opposition, particularly in response to unpopular austerity measures.
“Vested interests within the business elite and the civil service always meant that it would be difficult to implement Vision 2030 in full,” Jason Tuvey, Middle East economist at London-based Capital Economics, said in a note.
Moreover, there is a risk that reforms are likely to be watered down even further, he added.
“Vision 2030 already fell short in a number of key areas, in particular when it comes to overhauling the education system and closing the wage gap between Saudi nationals and migrant workers. Shifting the responsibility reforms towards ministries will reduce the chances of policies actually being implemented,” Tuvey said.
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