Saudi Arabia overhauling 'ambitious' 2016 reform plan with broader targets

Saudi Arabia overhauling 'ambitious' 2016 reform plan with broader targets
Saudi Arabia is redoing an "ambitious" reform plan for its government and economy by 2020, after its launch last year overlapped with other initiatives to tackle the oil price slump.
3 min read
08 September, 2017
Saudi Arabia has gone back to the drawing board over its reform plan [Getty]
Saudi Arabia has gone back to the drawing board over its reform plan for its government and economy by 2020 just over a year after its launch, extending the timeline of some targets and removing others entirely.

The new version of the 2016 National Transformation Programme will be "more focused" and have "clear governance," according to an official document seen by Bloomberg referring to the programme as NTP 2.0.

The programme had aimed to use a number of measures to wean the country off oil by 2020. These included privatising state assets, creating 1.2 million private sector jobs and reducing unemployment from 11.6 percent to 9 percent.

Yet, according to insiders, the delays announced on Thursday highlight the ambitious nature of the task.

"There is a recognition that too many of these targets were too aggressive and maybe having too much impact on the economy," a government adviser told the Financial Times.

The revamp of the plan won't change key fiscal or energy-related targets, but is necessary to match with Crown Prince Mohammad bin Salman's broader Saudi Vision 2030, according to the document.

"This is probably a natural development in the sense that the NTP and the Vision were not developed in complete coordination," said Graham Griffiths, a senior analyst for Control Risks in Dubai.

"There is a bit of cause for concern in the fact that they rushed this out in the first place, and now they're having to redo it."

The original NTP was designed to overhaul the Saudi bureaucracy as the world's largest oil exporter grappled with low crude prices, and set targets for each ministry to achieve by 2020.

But it was overshadowed by the crown prince's Vision 2030, a broader blueprint for life after oil that calls for selling shares in state oil company Saudi Aramco and creating the world's largest sovereign wealth fund. Neither is affected by the NTP redraft.

While Vision 2030 was announced first in April 2016, NTP had already been in development and was first mentioned in local media the previous December – well before any public discussion of the prince's grand plan. That ultimately meant that the NTP had to be linked to Vision 2030 "in reverse," according to the document.

The NTP later became one of 12 programs within Vision 2030 and as a result, many of the government agencies that were originally part of the programme are no longer directly involved, including the energy, finance and housing ministries.

Many of the programme's original targets have also been farmed out to other initiatives. 

The revamped NTP will still run to 2020, but its implementation will also involve developing targets for 2025 and 2030, the document said.

Goals for the program include improving public sector productivity, boosting women's participation in the workforce and developing tourism. The first NTP also had targets for many of the areas, including boosting the participation rate of women in the labour force to 28 percent. It's unclear if they will be changed.

The danger is that the government could get "caught in this cycle of constantly redrafting these strategy documents," said Griffiths at Control Risks. "You get involved in this kind of constant theoretical redrafting ... and you never get around to doing actual concrete work."

The NTP document outlines a 16-week schedule to develop the programme; a final report is due to be delivered to the government by the end of October.