Saudi Arabia has unveiled a new medium-term development plan which envisions SR1,444bn (US $384bn) in spending over the next five years, primarily on housing, health and education.
The kingdom’s ninth development plan was reviewed and approved at a cabinet meeting chaired by King Abdullah, who as chairman of the cabinet, is also the de facto prime minister.
Saudi minister of economy and planning Khalid Al Gosaibi said the plan, which runs from 2010 until 2014, was aimed at “combating poverty and spreading education and making housing, work and medical treatment available for everyone”.
Mr al-Gosaibi listed a series of targets including opening 117 hospitals and 750 primary health centres and adding school places for 5.3m pupils.
In December 2009, Saudi announced its biggest budget ever, forecasting revenue of SR470bn ($125.3bn) and expenditure of SR540bn in fiscal year 2010. In 2008, in the depths of the international financial crisis, the kingdom announced a $400bn investment plan over five years.
August 11, 2010
Analysis and Forecast: Decreasing Risk
The five-year plan is indeed very good on the outside and is in fact a vital step to addressing the rapidly growing proportion of Saudis living under the poverty line. There are no reliable records of this, but an indication is that unemployment is over 10 percent taking into account only the male population and likely to be significantly higher in reality. Over two-thirds of the local population is under 30 and there are serious concerns about the capability of the local population to undertake jobs.
The development plan is therefore a vital but highly ambitious one and implementing as well as its relationship to the state budget is questionable. It is unlikely the plan itself will resolve the serious challenges facing the local Saudi socio-economic realities, but it is a very important step in diversifying the economy and allowing locals, both male and female to participate. It also addresses the problem of providing adequate infrastructure for schools, but the wider problem remains of the appropriate curricula that could enable local Saudis to attend science and engineering educational institutions in the kingdom, such as KAUST, the region’s newest and leading science and technology research university. Therefore more needs to be done, but it is certainly a good and positive move towards stabilizing the country, if it is implemented appropriately.
The figure below shows an estimate of the current make-up of the Saudi GDP, the GCC’s most diversified economy. The plan will help diversify the economy further and open up the labour market for the local population: