Saudi Finance Minister Mohammed Al-Jadaan said his country is already seeing the results of its sweeping reform program and would continue to diversify its economy and open its borders for investment.
Saudi Arabia’s economic transformation strategy, the much-vaunted Vision 2030, aims to increase investment, diversifying the kingdom’s economy away from a reliance on oil, and create private-sector jobs.
When asked by CNBC’s Hadley Gamble what concerns he had with the ambitious reform program, with analysts questioning the use of foreign reserves to cover a big budget deficit, he said: “Well, my concern is to ensure that we continue implementing on Vision 2030, and we are, and we are seeing results. We — despite all that you hear, here and there — we have the fifth-largest foreign [exchange] reserves in the world.”
“We have significant reserves. We have significant wealth, we have a significant economy that is growing. We are the largest economy in the region, and we are seeing the results of the reform taking place,” he said at an event in London Thursday.
The central bank’s foreign reserves rose in December for a third consecutive month, official data showed last month. This was seen as a sign that higher oil prices may be finally easing the pressure on the government’s finances.
However, it was the first time since mid-2014 that the reserves had risen for three straight months, according to Reuters, which peaked at $737 billion in August 2014.
Saudi Arabia’s economy shrank for the first time in nearly a decade in 2017 as headwinds batter its private sector. Businesses have struggled to deal with higher electricity and fuel prices and a 5 percent value-added tax, or VAT, introduced at the start of the year.
Unemployment, hovering just over 12 percent as of last summer, is at its highest level in a decade. And the kingdom’s budget for 2019 is its largest ever as the government increases spending to boost growth amid the lower oil prices.
However, Al-Jadaan said growth had turned positive by the end of last year and he was “looking for more growth in 2019.”
“We’re diversifying our economy significantly, we are opening our border to more investments from the world, and we’re opening a lot of local industries and tourism, entertainment industries — mining all of these are bringing a lot of jobs. There’s a time lag all the time when you engage in a significant reform. But … we are seeing the results actually happening as we speak,” he said.