Saudi Arabia continues looking for ways to considerably reduce its dependence from petroleum as soon as possible. The country’s government has recently approved the plan of economic reforms, developed mostly for solving the abovementioned task. According to this plan, the level of “black gold” recovery in the country has to be frozen at the same level till 2020.
The journalists have found out that during the next several years the world’s largest exporter of petroleum will keep the volume of recovery at 12.5 million barrels per day. This will considerably help the kingdom to reduce its dependence from sale of energy resources. Local television claims that on Monday, June 06, the Cabinet of Ministers has adopted the new economic program. Now points of the plan are to be gradually implemented.
Along with freezing of oil recovery, Saudi Arabia brings into force new rules for civilians. Namely, subsidies for water and electricity are cut down by 200 billion riyals till 2020. Refining capacity of Riyadh will increase to 3.3 million barrels per day by 2020. At the end of last year this value used to amount to 3.1 million barrels.
This conclusion was included in annual report of the well-known national oil company Saudi Aramco. The corresponding data was officially published only last month. Particular attention in the adopted program should be given to the point, according to which by 2020 Saudi Arabia will be able to produce 4 percent of its energy from existing renewable sources.
The “Market Leader” reminds that deputy crown prince Mohammad bin Salman is one of main initiators of principal economic reforms. At the beginning of this year he has announced the decision on the issue, which was made several days ago. His main argument is a strategically important goal of reducing the Kingdom’s dependence from sale of petroleum. These actions look absolutely correct and logical at the time of global oversupply of “black gold” and extremely low prices.
In the framework of the adopted program, closer to the end of 2018 Saudi Arabia will be able to sell shares of Saudi Aramco. Together all these actions will be able to considerably reduce the country’s current budget deficit. It will at least have to drop to 13.5 percent of GDP. Judging by the latest statistical data, budget deficit of Saudi Arabia currently amounts to 16.3 percent of GDP, which can by no means be considered normal. This fact is also admitted by International Monetary Fund.
