His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince, Deputy Prime Minister and Minister of Defense thanked the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud for the contents of his speech before the Shura Council, affirming that the Kingdom was able, in a short and rapid period, to achieve unprecedented accomplishments in the contemporary history of the Kingdom in less than 4 years.
HRH the Crown Prince said, “The Kingdom of Saudi Arabia is one of the largest and most important economies in the world and we are striving hard to double the size and diversification of the economy. To pursue this, our government considers the non-oil GDP as the main indicator of success for our economic plans, because the gross domestic product is naturally affected by the fluctuations of the quantities of oil production, and the government is not the major driver behind it.”
HRH further said “In 2016, the value of the non-oil GDP was estimated at 1.8 trillion riyals, and we in the Kingdom began developing plans to double that at a fast pace. The result was accelerated growth in the past three years by 1.3% in 2017, 2.2% in 2018, 3.3% in 2019, and more than 4% in the 4th quarter of 2019, despite some economic challenges.
HRH also affirmed, “Yet, despite the COVID-19 pandemic, we, relative to our counterparts in the G20, are considered one of the 10 best countries in dealing with the economic repercussions of the Coronavirus pandemic in the G20.
We are more optimistic that the pace of growth will accelerate with the ending of the coronavirus pandemic and the return to full normalcy, to become one of the fastest G20 nations to witness growth in non-oil GDP in the upcoming years.”
HRH the Crown Prince also indicated that the Kingdom has made the unemployment file one of its priorities, adding that, “Increasing employment rates is the top priority of the government since work has begun according to Vision 2030 to reform the labor market and make available more jobs for male and female citizens as Vision 2030 has set an unemployment rate of 7% in 2030 as one of its goals.”
HRH added, “In 2018, the unemployment rate reached approximately 13%. And due to an increase in the efficiency of government agencies, the investments of the Public Investment Fund, and other government programs and initiatives, we have seen the unemployment rate go down successively to 11.8% at the beginning of 2020.
By the end of 2020, we will be one of the lowest impacted G20 countries by the coronavirus pandemic, citing the increase of the unemployment rate in some G20 countries to 15% and 20% and more. We believe that the programs and policies set by the government will enable us to achieve an unemployment rate of 7% before 2030.”
HRH the Crown Prince pointed out that women represent 64% of the total unemployment rate, stressing that “our next goal will be to improve the citizen’s income.”
His Royal Highness Prince Mohammed bin Salman also pointed to the Kingdom’s efforts to enhance non-oil revenues and their impact on the economy and said, “We have expanded the government’s direct and indirect spending since 2005.
To keep pace with this, and to maintain the expansion in spending, the government, following Vision 2030, has undertaken a wide restructuring process for a large number of sectors that enhance the state’s non-oil revenues, and not make them subject to fluctuations of oil prices which may limit our ability to plan and set or achieve any targets.”
HRH added, “In light of what was announced last year for the 2020 budget projections, we were talking about expected revenues for the state, which were previously estimated at 833 billion riyals, of which 513 billion riyals were oil revenues.
After the collapse of oil prices this year, oil revenues decreased to approximately 410 billion riyals.
These revenues alone are insufficient to cover even the salaries bill estimated at 504 billion riyals in this year’s budget, not to mention the difficulty of financing other items which include capital spending by 173 billion riyals and social security benefits by 69 billion riyals as well as operation and maintenance bill estimated at 140 billion riyals and others, which means an economic recession and millions of jobs lost.”
His Royal Highness the Crown Prince said, “If we didn’t increase non-oil revenues to about 360 billion riyals this year, and if we remained at 2015 levels of revenues estimated at approximately 100 billion riyals, we would have had to reduce the salaries of employees in the public sector by more than 30%, cancel allowances and bonuses completely, fully stop capital spending, and we wouldn’t have had the ability to properly operate and maintain state assets and we even would have stopped supporting expenditures’ item.”
HRH further said, “As painful as it was to cancel the cost of living allowance, we have succeeded in preserving citizens’ salaries and most of the allowances and bonuses, and continued with capital spending, amounting to 137 billion riyals, and increased spending on operation and maintenance, and bearing the high costs of healthcare due to the COVID-19 pandemic, which amounted to 188 billion riyals with full commitment to the social benefits expenditure, subsidies, and financing support.
All of this makes us remember the importance that our nation is not to be affected by any volatility in any sector whatsoever, and that diversification of revenues is important and vital to the state’s sustainability, and we are seriously working on that through the investments of the Public Investment Fund and supporting new sectors such as tourism, sports, industry, agriculture, transportation, space, mining, etc., in addition to working with the private sector.”
HRH praised the Vision’s programs related to the basic service sectors, saying, “Vision 2030 addressed all sectors in the economy, yet I would like to set an example in the housing sector.
For decades, the housing sector in the Kingdom of Saudi Arabia has faced challenges due to the absence of planning and weak governance of government work as the main reason, as the government was working with mechanisms more appropriate to the sixties, seventies, and eighties of the last century.
Since that time, neither the government nor its bureaucracy has ever been restructured, which made it difficult to achieve anything despite available resources and capabilities.
These challenges have accumulated until homeownership became one of the most prominent social problems in the Kingdom of Saudi Arabia and one of the main concerns for Saudi citizens over the past two decades.
When starting to prepare a comprehensive program to reform the economy, we made a clear commitment in Vision 2030 that we will seek to raise the percentage of citizens’ ownership of housing by 5% within 4 years, and the percentage was then approximately 47%, which means reaching 52% in 2020, a good percentage according to international standards. However, today we have reached 60%, exceeding the target by 8%.”
His Royal Highness the Crown Prince affirmed, “I do not doubt that we will surpass the 2030 target of 62% in 2025, which means that we will exceed the target in 2030. We will be one of the most advanced countries in the world in terms of homeownership.
Not to mention that during the past twenty years, the citizen’s waiting list for homeownership was approximately 15 years, and today eligibility has become immediate.
This is an example of one sector that was one of the most complicated issues in the Kingdom, yet it turned into an unprecedented success story with innovative solutions, lower costs, and better services, and contributed to the creation of nearly 40,000 direct jobs and more than 115 billion riyals in the GDP.
HRH also talked about the achievements that have been made in the digital sector and said “The Kingdom of Saudi Arabia has achieved the first place in the digital competitiveness at the level of the G20 countries in the past three years, and has jumped 40 ranks in the digital infrastructure index for communications and information technology.
We have invested more than 55 billion riyals in the digital infrastructure of the Kingdom, which increased the average internet speed until we became the first country with 5th generation speed, and also became among the top ten countries in the world in mobile internet speed, after we were not on the list of the top 100 countries.
We tripled the number of homes connected to the optical fiber network from 1 million homes to 3.5 million. This unique global digital transformation enabled us to continue work for more than 94% of government agencies and the private sector during the pandemic, in addition to raising the rate of localization of jobs in this sector to 50%.
His Royal Highness the Crown Prince emphasized the contribution of the Public Investment Fund to the development of the economy, saying, “The Public Investment Fund has become one of the major drivers of growth for the Saudi economy.
We were able to double the volume of the Public Investment Fund from 560 billion riyals to more than approximately 1.3 trillion riyals, with a steady pace towards achieving the goal of Vision 2030 that the fund’s assets exceed 7 trillion riyals. Not only that, since the fund was established, the rate of return (RoR) on investment did not exceed 2% in the best case.
Today, the Public Investment Fund does not achieve less than 7%. We have investments whose returns exceeded 70%, and others exceeded 140%. This is an exceptional change that provides the state with sustainable income that has never been available in the past.
Without the process of reforming the Public Investment Fund, which was carried out under directives of the Custodian of the Two Holy Mosques to reconstitute its board of directors and assign me to chair it for its great importance in the present and future of the Kingdom’s economy, in addition to setting policies to pump huge investments into the Kingdom of Saudi Arabia over the past years, we would have lost more than half of the non-oil growth, along with the absence of a large number of jobs that have been created and the collapse of demand for many services, products, and materials as well as the bankruptcy of a large number of companies, especially in light of low oil prices.”
His Royal Highness added, “We can imagine the Saudi economy without the fund’s investments, as the fund’s local investments amounted to 78 billion riyals in 2017, then 79 billion riyals in 2018 and 58 billion riyals in 2019.
We are targeting 96 billion in 2020 with a total of 311 billion riyals during the past four years which contributed to the creation of more than 190,000 jobs, noting that the fund’s domestic investment in developing sectors did not exceed 3 billion riyals annually before 2017.
In 2021 and 2022, the fund will pump about 150 billion annually into the Saudi economy with an annual increase until 2030. This liquidity will be provided through monetization and recycling of the Fund’s investments to enter into new opportunities, create a local economic cycle that enables the emergence of new sectors and contribute to providing new revenues for the state.”