Saudi Arabia Finance Minister Mohammed Al Jadaan on Sunday said the kingdom would adapt to current economic and geopolitical challenges and “downscale” or “accelerate” some of the projects being carried out under its Vision 2030 programme.
Asked whether Saudi Arabia had to “mark-to-market” its expectations regarding the goals of the 14-year long programme, Mr Al Jadaan said: “Absolutely, yes.”
The kingdom could increase its gross domestic product growth rate by boosting oil production but such an expansion would not be “quality growth, but quantity growth,” the minister said during a panel session at a special meeting of the World Economic Forum in Riyadh.
Saudi Arabia, the Arab world’s largest economy, launched the 2030 vision programme in 2016 to diversify its economy away from oil, support private-sector growth, improve female workforce participation and reduce the unemployment rate among citizens.
Saudi Arabia has also announced a number of ambitious new projects to support its plans, including the Neom and Red Sea projects.
The government wanted to house 1.5 million people in The Line, a 170km linear smart city being built in Neom, Tabuk province in the kingdom.
However, Bloomberg reported last week that the number of residents in the project is expected to drop to fewer than 300,000 by 2030, and officials estimate that only 1.5 miles (2.4 kilometers) of the project will be completed by then. It was reported. Neom did not respond to requests for comment.
On Friday, the Saudi Press Agency reported that of his 1,064 initiatives introduced under this vision, 87 percent have been completed or are on track.
“We are not satisfied, but we are very happy with what we have achieved,” Al Jadaan said.
“Many of our goals have been achieved, and obviously there are challenges. That’s why I said we have no ego. We are willing to change, adapt and extend parts of the project. We will scale back some projects and accelerate others.”
The minister’s comments mean Saudi Aramco will be increasing its production capacity from the current 12 million barrels per day to 13 million barrels per day. It comes several months after the company abandoned plans to increase the number.
Analysts said at the time that Aramco’s decision may have been influenced by rising costs of developing new projects, ample spare capacity and a weak outlook for crude oil demand due to increased adoption of renewable energy and electric vehicles.
“This year we have seen Saudi Arabia reassess its upstream capabilities…This is not because Saudi Arabia is not investing in upstream; it makes commercial sense to scale back its plans. That’s why,” Amena Bakr, senior Middle East research analyst at Energy Intelligence, told UAE Breaking News on the sidelines of the event.
“Rethinking and optimizing strategies is the key to success. Balancing the achievement of Vision 2030 goals with budgetary constraints is important.”
Mr. Al Jadaan also said that should not be forced to choose sides between China and the United States or their allies, he said. .
“We should avoid forcing them to choose between two countries or two groups of countries,” he said.
“I think it would be very difficult to go to Africa and say, “Listen, if you want us to help you, stop negotiating with China, or if you want us to help you, stop negotiating with the G7.”
“That is not a clear choice for them because they need all the help we can [give], whether it is from the South or the North.”
Deepening divergence
Meanwhile, Kristalina Georgieva, managing director of the International Monetary Fund, said the divergence in economic growth is “deepening”.
“In advanced economies, the US is doing well but the eurozone is not. Within the emerging market economies … India, Indonesia and Malaysia … are doing well. China came a bit above expectations in its first quarter but then we have a number of countries that are facing significant difficulties,” she said at the same panel.
“What has happened over the last years is countries used all the ammunition they had because of Covid, the war in Ukraine [and] then the cost-of-living crisis, but more shocks will come and rebuilding fiscal buffers is a priority.”
Global debt hit a record $307 trillion in the third quarter of last year, with a big increase across the board in mature markets such as the US, UK and Japan as well as emerging markets, including China and India, according to the Institute of International Finance.
This year, a series of elections and persistent geopolitical tensions have raised worries about heightened government borrowing and fiscal restraint, in countries such as India, South Africa, Pakistan and the US.
Speaking about the need for greater co-operation between wealthy and developing countries, Ms Georgieva said poorer countries have to play their part by introducing economic reforms.
“They need to collect taxes, they need to fight corruption [and] they need to improve the quality of spending,” she said.
“They need to demonstrate they are committed to their own people and the response must be that they get a huge deal of international support in debt restructuring.”
Higher interest rates have made it difficult for countries to rebuild their capital buffers, while negatively impacting growth prospects around the world, the IMF chief said.
He also said that rising interest rates in the United States could lead to a stronger dollar, which could devalue the currencies of many other countries and make it harder to fight domestic inflation.
“In our view, the path to lower interest rates remains open and we still expect interest rates to eventually move toward lower levels in the United States as we move into 2025,” Georgieva said.
“However, just because interest rates begin to decline does not mean they will fall to pre-pandemic levels, so our country needs a strong fiscal foundation and good government.”