Business

Saudi Arabia hopes to raise $ 55 billion through privatization


Saudi Arabia hopes to raise about $ 55 billion over the next four years as it plans to step up its newly privatized privatization program with the government seeking to boost revenues and narrow the budget deficit.

Finance Minister Mohamed al-Adana told the Financial Times that Riyadh had decided to pipeline 160 projects in 16 areas, including the sale of assets and public-private partnerships by 2025.

Riyadh aims to develop a private sector financing for health infrastructure, services management, such as urban transport networks, school buildings, airport services, water desalination, and wastewater treatment plants. The sale of the assets will include TV broadcast towers, government-owned hotels, regional cooling and desalination plants.

The program’s goal is that Crown Prince Mohammed bin Salman aims to overthrow the state-dominated, oil-loving economy and modernize the kingdom.

“It is no longer an election, but a demand of the central government that these services or utilities should not be built by another government,” said ada adan. “It simply came to our notice then [privatisation] the next stage. “

He said the goal was to raise revenue in Riyadh, which struggles with a budget deficit that reached $ 79 billion last year, equivalent to 12 percent of gross domestic product, to improve public services.

The minister hopes to secure $ 38 billion in asset sales and $ 16.5 billion in public-private partnerships.

Jadaan has set an ambitious target of 4.9 percent of GDP in 2021 as its fiscal deficit as the kingdom seeks to recover from last year’s double-digit coronary heart disease and falling oil prices.

The privatization program does not include entities owned by the Public Investment Fund, the Sovereign Wealth Fund, which under Prince Mohammed has become the dominant force in the economy, or the further sale of assets by the state oil company Saudi Aramco.

Last month, the Crown Prince said the kingdom was in talks to sell a 1 per cent stake in Saudi Aramco, which listed 1.7 per cent in 2019, to a global energy company.

Ada Adaan said any proceeds from any further sale of Aramko shares would go to the PIF, which heads Riyadh’s efforts to diversify the economy, not the treasury.

“There are two sales for Aramko. “They can raise money through pipelines like their own assets, to convert that money into new investments, that’s their job,” he said. “When it comes to Aramko shares, we will monetize them, recycle them and become more active in the economy by opening new segments through PIF.”

Saudi Arabia launched its privatization program three years ago by announcing the sale of sports clubs, flour mills and a water desalination plant. The process was slow, հինգ only five asset sales were completed – four milling companies և Saudi Arabia Medical Service Center.

The privatization law, which has been in place for several years, is due to take effect in July.

A Gulf analyst said there was some interest in privatization, but added that the program would mainly target local businesses, as foreign investors were still “cautious” about the kingdom, like Prince Muhammad’s “brand”. His leadership has been tainted by human rights abuses, including the 2018 assassination of dissident journalist Jam Amal Khashoggi.

The development of the private sector in a state-dominated economy ումը Creating jobs for young Saudis outside Saudi Arabia is one of Prince Mohammed’s main goals.

But five years after he launched his Vision 2030 program, there have been complaints from companies that PIF is crowded, while costs have risen as Riyadh cuts in energy և fuel subsidies, increased value added tax և more enforced quotas. on the employment of Saudis, who tend to be more expensive than foreign-dominated foreign workers.

“The private sector is crowded, it is still under control, they are concerned about raising taxes, but the government now realizes that they need to be included,” said John von Sfakianakis, a Gulf expert at the University of Cambridge. “The government wants to create a thinner state, on the one hand, reduce their obligations while using the PIF to implement all the megaprojects.”



Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button