Saudi Arabia plans to abandon oil dependency

Gulf countries lost nearly $1 trillion on a sharp fall in oil prices.

26.Apr.16 11:40 AM
By Svetlana Siuhina
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Saudi Arabia plans to abandon oil dependency

Saudi crown Prince Muhammad bin Salman al-Saud unveiled a plan to rid the country from oil dependence by 2020. The document, without objection was adopted by the Cabinet of Ministers and immediately signed by king Salman.

Not without increasing tax rates, reduce subsidies, but unpopular measures are necessary, says 30-year-old Prince.

The main item of the plan will be the creation of a sovereign investment Fund, the amount which will be $2 trillion. The Fund's assets will include large state-owned enterprises, including the world's largest oil company Saudi Aramco. In the near future it is planned to hold an IPO, but a sale only 5% of the shares, the remaining money will come from Public Investment Fund. The Fund will invest in foreign assets and at the request of Prince Muhammad, it would have to "10 % of global investment."

Recall that the sharp drop in oil prices will come to a budget deficit in Saudi Arabia to 2016, it is projected at 13% of GDP.

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