With the first days of his appearance on the political scene, Crown Prince Mohamed ben Salman launched his vision 2030, which he said is an ambitious plan, however, Saudi Arabia is going through an economic crisis due to the sterile policies that run state institutions, which are not subject to feasibility studies, but are subject to the opinion of the inexperienced young man, which made specialists in economics and development describe the vision as highly risky.
The Crown Prince’s economic plan is based on reducing the profits paid by major companies to the general budget of the Kingdom in exchange for directing these companies, led by the oil giant Aramco and SABIC, a part of their profits towards contributing to infrastructure projects and other projects that can provide job opportunities for young people, provided that The Public Investment Fund is the destination that supervises this new economic plan.
Due to the budget deficit, which reached 12% of GDP last year, as a result of the decline in dividend payments to Saudi companies; the Sovereign Wealth Fund, which is currently worth $400 billion decreased to $320 billion, maybe authorized to compensate for this stagnation. The Fund will also manage the three main projects of Vision 2030: Neom City =$500 billion, the Entertainment City, and the Red Sea Tourism Project, which means squandering the Fund’s money unless there are quick alternatives to pump new money into it, which is not feasible now.
It is worth noting that Sovereign Wealth Funds have incurred significant losses due to the repercussions of the Corona epidemic, as the shares of the majority of major companies have fallen, and according to a Reuters report in late March of last year, Gulf sovereign funds lost more than 300 billion dollars by the end of the year.
One of the risks of Vision 2030 is that it may harm government funds, according to a report by Bloomberg, as the crown prince wants the largest companies in the kingdom, especially the giant oil company Saudi Aramco and the chemical industry company SABIC, to cut their profits, most of which are paid to the state, and spend this money at the local level.
Karen Young, a resident scholar at the American Project Institute for Public Policy Research in Washington, said that the strategy of the de facto ruler of Saudi Arabia amounts to “sacrificing current profits in favor of future investments, and this is related to the radical transformation of building the post-oil era, but in the short term, this will lead to government exhaustion of its resources.
