Saudi Arabia's Crown Prince Mohammed bin Salman/Bloomberg
Crown Prince Mohammed bin Salman has embarked on the biggest overhaul of the Saudi economy in its modern history to steer the world’s biggest oil exporter from its near-total dependence on crude.
Wednesday 15, May 2019
(Bloomberg) --Saudi Arabia’s SAR 200 billion ($53 billion) lifeline to its non-oil economy may be in place for longer than planned as the Kingdom supports industries struggling to cope with reforms that pushed up costs and dampened demand.
Naif Al-Rasheed, the Managing Director of the Private Sector Stimulus Office, said that the programme is earmarking SAR 36 billion to boost private-sector growth this year, on top of the SAR 40 billion already spent.
The financing could continue beyond the original planned end date of 2021, according to Al-Rasheed, who’s in charge of allocating the money and monitoring its effectiveness.
“The office has a long-term mandate to continuously support the private sector through economic cycles,” Al-Rasheed said.
As the Kingdom’s economic makeover proved disruptive, the stimulus package is aiming to help promote exports, invest in new technologies and reimburse small businesses for an expatriate employment tax.
The office has already funded a capital increase for the Saudi Industrial Development Fund and mortgage financing.
Al-Rasheed said the Stimulus Office, set up in 2017, is focusing on companies in the real estate, hospitality as well as health care and education sectors.
Additionally, some of the spending will counter the impact of reforms, including higher energy costs and a levy on expatriates that was intended to encourage firms to hire more Saudis.
The office expects to spend SAR 22 billion next year as well as SAR 25 billion in 2021 and it’s also looking for ways to allocate the remainder of about SAR 77 billion riyals it has in its budget, added Al-Rasheed.
The spending planned by 2021 is expected to contribute more than SAR 150 billion to the economy and create more than 86,000 jobs.