Saudi Arabia is plotting a transition to industries like information technology, health care, and tourism in a bid to convince international investors it can keep its economy afloat in an era of cheap oil.
“It’s going to switch from simple quantitative growth based on commodity exports to qualitative growth that is evenly distributed” across the economy, Saudi Aramco Chair Khalid al-Falih told a meeting at a luxury hotel in Riyadh.
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In their presentation to an estimated 2,400 participants, including representatives of companies like Lockheed Martin and Pepsico, “Saudi officials said they would reduce the kingdom’s dependence on oil and public sector employment,” Reuters reports. “Growth and job creation would shift to the private sector, with state spending helping to jump-start industries in the initial stage.”
The plan would include dividing Saudi Arabia’s national health system “into independent commercial companies,” Torchia and Paul write.
They added that the conversation unfolded “against a backdrop of low oil prices pressuring the kingdom’s currency and saddling it with an annual state budget deficit of almost US$100 billion,” the biggest challenge the Saudi regime has faced in a decade.
“The heavy presence of foreign business representatives suggested many saw opportunities in the Saudi strategy,” Reuters notes. “Although Riyadh is burning through its foreign assets to cover the budget gap, it still had $628 billion in November.”
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