Jadwa Investment’s recently released economic analysis on Saudi Arabia’s ‘Vision 2030’ finds that Saudi Arabia’s new plan to move toward sustainability may help it avoid a looming fiscal crisis.
Calling the plan “major and ambitious,” the Riyadh-based Jadwa looks at what might hypothetically happen if Saudi Arabia were to do nothing about the harsh fiscal realities facing the Kingdom’s economy, which is still reliant on the energy sector for growth and continued prosperity.
“We ran our hypothetical “no action” scenario to identify the sustainability of the Kingdom’s fiscal buffers in a situation where the status quo would be maintained up until 2030. The scenario assumes that Brent oil price will recover gradually to $102 per barrel (pb) by 2030. Current spending and non-oil revenues will continue with the same growth trajectory it did over the past ten years, while there will be cuts in capital spending,” Jadwa wrote.
“Despite the recovery in oil prices, our model showed a rapid depletion to the Kingdom’s fiscal buffers.”
Jadwa’s full analysis is available here.
