Saudi Gazette report
RIYADH — Saudi Arabia is set to limit the impact of subsidy cuts on citizens as it prepares to implement an economic vision for the future, Deputy Crown Prince Muhammad Bin Salman, second deputy premier and minister of defense, told Bloomberg in an interview on Monday.
The proposed system being developed by the Saudi government would provide cash to low and middle income Saudis who rely on subsidies, according to Prince Muhammad.
“We don’t want to change the life of the average Saudi … We want to exert pressure on wealthy people, those who use resources extensively,” he said, speaking at a private farm in Diriyah.
Under the previous system, 70 percent of the subsidies benefited high income people, Bloomberg cited the Deputy Crown Prince as saying.
In the interview, the Deputy Crown Prince explained – using electricity prices as an example – how cash handouts can lead to reduced consumption.
“Let’s say the international price for electricity is 1,000 riyals and you only pay 50, we will give you the 1,000 riyals and increase the price of electricity … You will have two options: You either spend the 1,000 on electricity bills like you used to, or you can lower your electricity consumption and use it on something else.”
Deputy Crown Prince Muhammad also said that a recent water tariff was applied in an “unsatisfactory” way that will be rectified.
“Honestly speaking, what happened wasn’t in accordance with the plan that we’ve approved,” he said. “Now, we are working diligently on reforms within the Water Ministry so that things will be in accordance with the agreed plan,” he added.
Previously, Deputy Crown Prince Muhammad had told Bloomberg that Saudi Arabia will announce on April 25 a comprehensive plan in preparation for the Kingdom’s post-oil era.
The “Vision for the Kingdom of Saudi Arabia” will include developmental, economic, social and other programs.
A component of the plan will be the National Transformation Program (NTP), which will be launched a month or 45 days after this month’s announcement, the prince added.
Also, the Deputy Crown Prince previously said the Kingdom is set to dedicate a $2 trillion Public Investment Fund for a post-oil economy.
The fund plans to increase the proportion of foreign investments to 50 percent of the fund by 2020 from 5 percent now, according to Bloomberg.
As part of the new strategy, the prince had said Saudi Arabia will put 5 percent of oil firm Aramco’s shares in an initial public offering that could happen as early as next year. Aramco, Saudi’s state-owned oil giant, is the world’s largest company in terms of market capitalization. — With Al Arabiya
