Crown prince highlights key ways Saudi budget 2020 will contribute to Vision 2030

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Updated 11 December 2019

Crown prince highlights key ways Saudi budget 2020 will contribute to Vision 2030

  • The budget for the coming year reflects and reinforces the commitment to implement the reforms

RIYADH: After King Salman announced Saudi Arabia’s budget for 2020 on Monday, Crown Prince Mohammed bin Salman highlighted some of its key elements and their implications, along with his thoughts on the ongoing implementation of economic reforms in the Kingdom.

He said that the government’s economic transformation of the country is progressing steadily in accordance with Vision 2030. The budget for the coming year reflects and reinforces the commitment to implement the reforms, plans and programs designed to help achieve this, he noted, and sets specific goals in a number of areas to help create a vibrant society, a prosperous economy and an ambitious homeland.

The crown prince added that the government is working to improve the quality of life in the Kingdom by developing and diversifying the economy, improving job opportunities and enhancing government services in terms of financial and economic stability, which is the main pillar of sustainable economic growth.

He also pointed out that the economic and structural reforms implemented during the past three years are having positive effects on the country’s financial and economic performance. The Kingdom has recently achieved remarkable increases in real GDP growth rates in the non-oil sector, and the government has encouraged the private sector play an important role in the economy, the positive results of which include significant growth in the business sector, the crown prince added. The government has also implemented a number major projects in vital sectors and launched activities that will help to achieve economic growth goals and create job opportunities, he said.

Crown Prince Mohammed stressed the importance of engaging with the private sector as a major and vital partner for the development of the Kingdom. He also noted the continuing program of reforms by the government designed to develop the business sector and create an attractive environment for investors to contribute to economic growth. This has helped to greatly boost the Kingdom’s ranking on international indexes that measure competitiveness and ease of doing business, he added.

“We aim to create an attractive investment environment that contributes to directing the national economy toward broad prospects of diversification, growth and prosperity,” the crown prince said. “The government will continue to move forward with implementing the stages of economic transformation and will progress with diversifying the economy’s productive base while maintaining financial sustainability and providing wider opportunities for a better future for the current and future generations.”

He stated that the government has a clear vision, fixed goals and explicit plans, and is working on implementing them while maintaining financial and economic stability as an essential pillar of sustainable economic growth.

“Financial and economic results and indicators confirm that we are progressing positively,” he said. “We constantly review and update the policies, procedures and programs implemented to ensure their effectiveness and to rectify their course whenever the need arises, in order to achieve the goals of the Kingdom’s Vision 2030, taking into account the global financial and economic conditions and what is in the interest of our homeland and citizens.”

The 2020 Saudi budget has been prepared in light of a global economic atmosphere characterized by challenges, risks and protectionist policies, said Crown Prince Mohammed, which require flexibility in the management of public finances and strengthening the ability of the economy to face the challenges and risks.

“We aim, through this budget, to benefit from the programs that were achieved and rely on them to maintain a balance between economic growth and the sustainable financial stability that guarantees this growth,” he said.

The crown prince noted that financial-control policies and the development of public financial management and its efficiency have contributed to the continued reduction of the budget deficit. This is expected to fall to about 4.7 percent of GDP in 2019, compared with 5.9 percent in 2018 and 9.3 percent in 2017. This confirms the success of ongoing efforts to ensure financial sustainability, and progress in implementing projects to improve the private sector, he added.

He also confirmed that the 2020 budget continues to support programs that contribute to achieving Vision 2030. This includes the financing of major projects, helping to develop medium, small and micro enterprises, and supporting entrepreneurs. These are some of the most important engines for economic growth, which will help to diversify the economy and open up new fields for investment and employment, he added

The budget includes reviews of some of these programs and schedules to ensure they reach their goals, Crown Prince Mohammed said, and the continued development and modernization of government infrastructure and services. He also stressed the government’s focus on improving the efficiency and quality of spending, to make the best use of state resources to achieve the highest possible social and economic income.

He highlighted the recent launch of oil company Saudi Aramco as a major step forward for the Kingdom, and his support for enhancing the role and participation of the private sector in the nation’s economy. He noted that opportunities for the private sector will continue to increase, enhancing its role in the growth and diversification of the economy and in creating job opportunities in the medium and long terms.

The crown prince also pointed out the part played by the Public Investment Fund and the National Development Fund in achieving Vision 2030, as the local and external investment mechanisms and the growth arm of the local economy, which are also contributing to the diversification of the economy and income sources. These are among the most important strategic goals of Vision 2030, he said.
 

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Saudi Arabia a ‘pioneer’ in energy transformation, minister tells Davos

Updated 23 January 2020

Saudi Arabia a ‘pioneer’ in energy transformation, minister tells Davos

  • Prince Abdulaziz says Kingdom has a duty to play its part in the energy transformation away from fossil fuels
  • He pledges that Saudi Arabia’s entire power sector will change to gas and renewable energy by 2030

DAVOS: Saudi Energy Minister Prince Abdulaziz bin Salman mounted a strong defense of the Kingdom’s record on climate change and clean energy production at a special event during the annual meeting of the World Economic Forum in Davos.

On a panel titled, “The Future of Fossil Fuels,” with other energy industry leaders, the prince told delegates that Saudi Arabia was a “pioneer” in many areas of clean energy production and usage, and that it had taken big steps toward diversifying its energy mix.

“My job is to promote Saudi Arabia, of course, but on this issue I’m proud to do so, because we are doing it all,” he said, before outlining “clean energy” policies in detail.

“We have developed the idea of the circular carbon economy, and we are pioneers of carbon sequestration at Aramco, as well as measures on upstream and downstream efficiency. We have the lowest carbon cost in production and extraction.

“We have reduced domestic consumption and the energy intensity of our economy by many percentage points. We are converting cars to be more efficient, as well as other gadgets, to be more efficient than any in the world. And we manufacture them too,” he added.

Climate change and environmental concerns have dominated the opening two days of the Davos gathering, with fears expressed by corporate executives as well as environmental activists about what some have called an impending “catastrophe.”

Prince Abdulaziz, at his first Davos as energy minister, said that the Kingdom, as one of the world’s biggest oil producers and exporters, had a duty to play its part in the energy transformation away from fossil fuels, but had other responsibilities as well.

“We are involved in a transformative effort to combat climate change. But we will preserve our liquids (crude oil) because we owe it to the world to export our liquids. We are converting our power sector and its energy mix to a point where by 2030 I am confident we will become one of the top producers of solar energy and renewables.

“I am keen to deliver on this because I have a boss called (Crown) Prince Mohammed bin Salman who is all over me to ensure we become one of the top producers. I can make a pledge and a commitment that by 2030 we will see our entire power sector, with the exception of some remote areas, changing to gas and renewable energy,” he added.

He spoke of the embryonic nuclear industry in the Kingdom, where Saudi policymakers were seeking international partners for the peaceful use of nuclear power. “We’re also getting involved in nuclear, because we want to have all our options open.”

But he also warned about setting unrealistic targets for moving away from fossil fuels, with some environmental campaigners calling for an immediate reduction in fossil-fuel usage to cut carbon emissions and reverse climate-change trends.

“Honestly we have to be realistic. Some people say that in two years from now oil consumption would have to start coming down. Can anybody in this room say with a sensible mind how you come to that reality?” the minister said.

Also on the panel, moderated by Daniel Yergin, the eminent historian of the energy industry, were Maria Fernanda Suarez, energy minister of Columbia, Patrick Pouyanne, chairman and chief executive of French oil company Total, and Wan Zulkiflee Wan Ariffin, president and chief executive of Malaysian energy giant Pertronas.

All were united in their desire to make the global energy community more aware of and effective in dealing with climate change.

Suarez said: “Ending energy emissions is the most important challenge the energy industry can address.” The Colombian government is facing opposition over plans to develop its considerable shale oil reserves.

Colombia is also keen to move toward more gas production in place of oil, which was a transition echoed by Pouyanne and Ariffin, though there were challenges with production of liquefied natural gas against a background of rising supply and falling prices. “I think we will be oversupplied in the period 2024 to 2027 when lots of new gas projects will come on stream, so short term there will be weaker prices, but longer term there could be a step up in prices,” the Malaysian business leader said.

Pouyanne backed the Saudi view on the importance of balancing global energy demands with environmental needs. “The world needs more energy. We have a growing population and people want social and economic development. The challenge is how to produce more energy with less emissions,” he said.

Prince Abdulaziz said that it was important for more developed countries not to tell emerging economies how to conduct their energy affairs.

“This is not about promoting oil, or gas, or renewable, it is about promoting prosperity and sustainability. There is a lot of growth that needs to happen, in terms of wellbeing of the economies of Africa, Asia and elsewhere. These places need to move away from poverty toward a pattern of sustainable development and a level of industrialization. They don’t need to carry the burden of the previous industrialization. It is not fair; it is not equitable.

“I always hated the idea of top-to-bottom approaches. There is this element of condescension but (developed countries) are only attending to their own interests, and it does not address those economies at a different level of development and aspiration,” the prince added.

He said that Saudi Arabia would not be “intimidated” by activists telling it how to manage its energy policy. “We’re cool and calm in Saudi Arabia and attend to our own agenda. I have always to advise people to avoid being manipulated and intimidated.”

On the question of oil prices, he refused to be drawn into making a forecast, but hinted that the “dark, pessimistic time” was lifting after the attacks on Saudi Aramco oil facilities last September.

“Since when have we seen a market where an entire country’s oil production has virtually come to a halt, and we see prices come down? It only happened because when we have Opec+,” he said, in reference to the agreement between oil exporters led by Saudi Arabia and Russia to limit crude output.

He noted that on the supply side, Libyan worries, Middle East tensions and American shale oil output would dominate oil market thinking in 2020.