The government intends to use its unexpected oil revenues this year to accelerate the diversification of its economy away from fossil fuels, according to the Saudi Minister of Economy and Planning.
The minister’s statements came during an interview that took place on the sidelines of the Davos conference in Switzerland, today that his country is in discussions with companies from all over the world to get them to transfer some of their operations to the country.
Saudi Arabia will be the fastest-growing G-20 economy this year after India, according to Bloomberg polls of analysts, as the price of oil has risen nearly 50% since the end of 2021 to $110 a barrel.
The kingdom posted a budget surplus of $15.3 billion in the first quarter of the year, as officials continued to control spending despite rising incomes from exports of crude oil and refined fuels.
The government expects a full-year surplus of $24 billion.
However, Saudi Arabia has increased domestic spending through the Public Investment Fund (sovereign fund), which has $600 billion in assets and is separate from the budget.
The Public Investment Fund invests billions of dollars in all activities and sectors, from tourist resorts to electric cars, in an attempt to play the role of the locomotive in the economic transformation.
The government hopes the private sector will grow to 65% of economic output by the end of the decade, up from about 51% today, under Crown Prince Mohammed bin Salman’s plan known as “Vision 2030.”
“The unexpected gains from the additional revenues that we will get from the rise in oil prices will be invested primarily to enhance financial flexibility, whether in terms of renewing reserves, paying off debts, or investing in unique transformational projects through our sovereign fund, which helps us accelerating diversification plans,” El-Ibrahim explained.