Finally, Economic Reform in Saudi Arabia

13 February 2016

By Salman Aldosary

The Saudi Arabian budget for this year does not resemble the budgets of previous years since the first one in 1934 which amounted to $3.7 million. The surprise does not lie in the deficit which was high but at the same time lower than expected ($98 billion), and nor does it lie in spending which was higher than expected ($224 billion). The real surprise is the boldness of the government and its long overdue knocking on a door that was delayed because of political, social and other reasons related to the structure of the state by establishing a complete programme of work to reform the Saudi economy and repair its structure so that it does not continue to depend on oil revenues only, as was prevalent throughout the previous decades, but rather transforms it into a strong and real economy based on solid foundations with multiple sources of income that increases employment opportunities and strengthens the partnership between the private and public sector.

The Saudi step to correct the path of the bloated economy necessitates the gradual transformation into an economy that depends on ''the development of services, increasing the efficiency of public spending, achieving efficiency in the use of resources whilst taking into account the negative effects on citizens, in addition to competition in the business environment and efficiency''. According to what the Saudi monarch King Salman Abdulaziz said, the step to gradually lift energy subsidies may be the most important step in the next government programme as it is unreasonable for the government to give tens of billions of riyals to more than 8 million foreign workers in addition to tens of billions of riyals to citizens who are not eligible for this support. As for those who will be negatively affected by the removal of subsidies, this is where the role of the government comes in to make sure that the removal of subsidies will not affect them hugely and to compensate them in order to avoid future financial difficulty as well ensuring that subsidies are received by those citizens who are eligible to them.

Salman Aldosary is the editor-in-chief of Asharq Al-Awsat newspaper. 

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