Saudi Arabia reported good progress on its plan to put an end to its oil dependency and will not be bothered if the commodity price drops to 40 USD per barrel in 2020.
“It will not matter for us if the price is 40, 45, 50 or 55 dollars then, because we will already be on the way to be independent of the price of oil”, said the Saudi Arabian Finance Minister, Mohammed Al-Jadaan. “We plan to completely end this dependency we have lived in the last 40-50 years. Hopefully, by 2030, we will not care if the price of oil is zero”, added he.
Saudi Arabia presented an ambitious plan to revive the economy last year after oil prices fell to 26 USD per barrel, causing a huge budget deficit. Since then, the economy in the kingdom has stabilized, as the regime has cut subsidies, introduced new taxes and accumulated debt to balance the budget.
“This happened when we were very worried about oil prices, other kinds of stress in the economy,” the minister said. “Now, seeing the plan go, maybe it’s time to inject more funding into the hands of the people”, said the Kingdom’s Finance Minister.
On Wednesday, the International Monetary Fund (IMF) said that Saudi Arabia could slow the pace of austerity to mitigate the effects on growth in the short term. The Riyadh regime expects a budget deficit of 7.7% of GDP in 2017 against 11.5% last year. The IMF estimates that the monarchy will need oil prices of 84 USD per barrel to balance the budget in 2017, while the estimates for the next year are 74 USD per barrel.