Bloomberg: Saudi Arabia sacrifices profits for future investments

 The American "Bloomberg" agency said that the Saudi government tends to sacrifice its current profits, and calls on large local companies to boost their investments locally by spending on projects and innovation, enough to accelerate the growth of the economy and cause a boom in employment.

On Tuesday, the local newspaper, Al-Madina, quoted the agency in a lengthy report on the future of the Saudi economy, that Crown Prince Mohammed bin Salman wants major companies, including Aramco and Sabic Chemical Industries, to reduce their profits, most of which are paid. For the state, and spend the money locally.

"The strategy amounts to sacrificing current profits for future investments to boost the post-oil economy, especially after the Corona crisis," said Karen Young, a resident researcher at the American Enterprise Institute in Washington.

In this context, the Public Investment Fund is preparing to pump 150 billion riyals annually (40 billion dollars) into local projects, until 2025.

Aramco said that it can maintain its dividend, which was the largest in the world last year, at $ 75 billion, helped by a nearly 30% rise in Brent crude as more countries exit from closures.

It is expected that the wages and pensions of state employees will reach 491 billion riyals (130 billion dollars) this year, which represents about half of the total spending of 990 billion riyals (264 billion dollars).

Nevertheless, if oil prices remain above $ 60, the kingdom may be able to cover salaries from crude oil sales alone, according to Ziad Daoud, chief emerging market economist at Bloomberg.

The agency pointed out that the Kingdom managed to raise non-oil revenues from 166 billion riyals (44 billion dollars) in 2015 to 358 billion riyals (95 billion dollars) in 2020, and the next stage requires an increase in productivity and export operations.

Saudi Arabia seeks to diversify its economy away from oil within the framework of the 2030 vision for economic reform, after crude prices retreated from mid-2014 levels, and then the repercussions of the Corona pandemic.