Saudi plans economic overhaul with $3.2 trillion investment

Riyadh announced new investments worth $3.2 trillion for the national economy by 2030
Riyadh announced new investments worth $3.2 trillion for the national economy by 2030 FAYEZ NURELDINE AFP
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Riyadh (AFP)

Saudi Arabia on Tuesday announced plans to pump fresh investments worth $3.2 trillion into the national economy by 2030, as the top crude exporter accelerates economic diversification efforts.

The announcement by de facto ruler Crown Prince Mohammed bin Salman underscores a push to jumpstart the domestic economy as the OPEC kingpin battles high youth unemployment and a coronavirus-triggered downturn.

"The total investment injected... into the national economy is expected to reach 12 trillion riyals ($3.2 trillion) by 2030," Prince Mohammed said in a speech carried by state television.

That amount includes three trillion riyals from the Public Investment Fund (PIF), the kingdom's sovereign wealth fund.

Twenty-four of the kingdom's biggest companies, including energy giant Aramco and petrochemical firm SABIC, will contribute five trillion riyals over the next decade, the crown prince told reporters later at a virtual briefing.

He said the companies, many of them listed, had agreed to lower their dividends and redirect the money into the domestic economy in exchange for incentives such as subsidies.

The remaining four trillion riyals will come from a new "national investment strategy", which will soon be announced, the prince said.

The initiative will help boost economic growth, create hundreds of thousands of new jobs and strengthen the private sector, Prince Mohammed added.

The programme is part of a mammoth 27 trillion-riyal ($7 trillion) investment plan over the next decade, which will include huge government spending to spur the domestic economy, the prince said.

The announcement comes after the crown prince said in January that the PIF would invest $40 billion annually in the domestic economy over the next five years.

The kingdom is pushing to boost job creation and revive businesses decimated by the pandemic.

Joblessness in Saudi Arabia touched 14.9 percent in the third quarter of 2020, dipping slightly from an all-time high of 15.4 percent in the previous quarter, according to official data.

Last year, the twin shocks of the pandemic and a drop in oil prices prompted the petro-state to triple its value-added tax and suspend a monthly allowance to civil servants to rein in a ballooning budget deficit.

Saudi Arabia, the biggest Arab economy, has been struggling to attract foreign investment, a key pillar of the crown prince's "Vision 2030" economic diversification plan to boost non-oil revenue.