Saudi reform tweaks won't affect key economic policies: sources

RIYADH/KHOBAR, Saudi Arabia (Reuters) - Saudi Arabia is revising parts of an economic development plan released a year ago but key policies, including fiscal reforms and a massive privatization program, won’t be affected by the review, sources familiar with the matter told Reuters.

The Kingdom Tower stands in the night above the Saudi capital Riyadh November 16, 2007. REUTERS/Ali Jarekji

In June 2016, the government published a National Transformation Programme (NTP) that included hundreds of steps to modernize the economy and society, from speeding up handling of court cases to improving pilgrims’ satisfaction, developing e-commerce rules and encouraging Saudis to play more sports.

It is looking increasingly unlikely that some of the targets can be hit by their 2020 deadline, however, partly because they were complex and ambitious, and partly because inefficient ministries have had trouble implementing steps.

Officials and consultants are therefore drawing up a streamlined version of the plan known as NTP 2.0, the sources said, speaking anonymously as the government has not yet published it. Government officials did not respond to requests for comment.

“The leadership is annoyed at some ministries for their lack of compliance and wants a reboot,” said one consultant. Another source said some targets were being eased while data errors in the original document were being cleaned up.

A draft of NTP 2.0 is to be completed by the end of October, according to an official document seen by Reuters.

Ten ministries are to be involved in the revised plan, the document shows, down from 18 in the original. The new version boils the plan down to 36 objectives such as increasing the participation of women in the workforce, improving access to health care and developing a digital economy.

The NTP is part of a much broader reform initiative known as Vision 2030. The big economic policy decisions designed to stabilize Saudi state finances in an era of cheap oil, and diversify the economy beyond oil exports, aren’t part of the NTP, the document showed.

Riyadh has embarked on tough spending cuts and tax rises designed to cut its budget deficit, which hit a record $98 billion in 2015, to zero by 2020.

It is also launching a privatization program that it says will raise over $200 billion, including the sale of a stake in national oil giant Saudi Aramco, and planning to develop industries such as shipbuilding and entertainment with the backing of state funds.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, said that while sluggish economic growth and low oil prices were hindering some of Saudi Arabia’s economic reforms, the revision of the NTP did not indicate momentum for reform was slowing.

“From our understanding, much of the potential changes are likely aimed at providing greater definition, framework and structure to the NTP. This is rather than any wholesale changes or diluting the original reform plan.”

Writing by Andrew Torchia; Editing by Hugh Lawson