Exclusive: Mixed reactions to Saudi reform plan 2020

Economists and analysts were mixed in their reactions to Saudi Arabia’s National Transformation Plan (NTP) that outlines the kingdom’s strategy to triple non-oil revenues, while cutting down on public sector wages and subsidies.

While more details are awaited on the nitty-gritty of the program, many analysts believe the key challenge to its success would be in implementation.

Tim Fox, chief economist at Emirates NBD:

“The NTP 2020 is part of the wider Vision 2030 plan. Given that specific targets and benchmarks have been set, the program does entail measurable metrics. Implementation will be crucial to make it successful.”

“The program is part of the wider goal of transforming and diversifying the Saudi economy, and creating more sustainable job opportunities for Saudi Nationals.”

Sébastien Hénin, head of asset management at Abu Dhabi-based The National Investor:

“The NTP is in line with expectations, Prince Mohammed had promised the reform and he has delivered. He has set clear targets based on the economic fundamentals. He is going in the right direction.”

“I expect the implementation to be gradual and smooth. I don’t think there will be a negative impact on Saudi citizens. They understand the new paradigm in the oil market and realize they have to compromise by paying higher rates for their energy and water.”     

Nishit Lakhotia, head of research at Bahrain-based Securities & Investment Co.

“The National Transformation Program (NTP) as outlined so far is still at a high-level and doesn’t contain the granular details, particularly on how the tripling of non-oil sector revenues, job creation, private sector participation to the tune of SAR 300 billion etc., are to be achieved.”

“Hopefully, there will be more clarity on implementation in the coming days. As of now, it is tricky to accurately assess the key impact on each sector/company with only a superficial level assessment at best being possible.”

Anthony Hobeika, Chief Executive Officer, MENA Research Partners:

“From a structural perspective, under the National Transformation Program, KSA will be transiting from a government-run economy… to a modern, private sector-led economy that delinks with its historical dependency on hydrocarbons.”

“This strategic development will unlock hefty long-term productivity efficiencies in a large number of sectors as well as governmental services… When added to the potential of Saudi Arabia over the longer-run, the NTP, at implementation, is poised to transform the economic growth outlook of the country.”

“(However, the NTP) is expected to face a number of challenges in execution. Restructuring governmental institutions that employ millions of Saudis and spend trillions of riyals could face a number of bumps during the period of coverage.”

Jason Tuvey, Middle East economist, Capital Economics:

“Saudi Arabia’s National Transformation Plan represents a credible effort by the authorities to flesh out some of their policies as they look to overhaul the Kingdom’s economy over the coming years. In particular, the government provided more details on its plans to tighten fiscal policy, reinforcing our view that a devaluation of the riyal will only be used as a last resort.

“That said, implementation of structural reforms is likely to be difficult and we are still concerned that a shift in the country’s political dynamics could see the reform program come to a grinding halt.”

Write to Brinda Darasha at brinda.d@argaamplus.com and

Jerusha Sequeira at jerusha.s@argaamnews.com