Vision and progress on display as Saudi Arabia celebrates its 93rd National Day

The Kingdom is moving toward a sustainable future and is already at the top of one major global league table as it embraces Vision 2030 reforms and keeps its central role in oil markets

The progress made in diversifying the Saudi economy is evident from one number: 32%. Incredibly, Vision 2030 has taken non-oil revenue to a third of national income in 2022. Al Majalla explains.

Vision and progress on display as Saudi Arabia celebrates its 93rd National Day

Faisal Faeq

last update on 23 Sep 2023

The world has been no stranger to economic crisis in recent years, with major nations grappling with high inflation, rising interest rates and faltering confidence.

In Saudi Arabia, careful navigation through these turbulent times has helped it climb to the top of major international rankings, helped by a historic commitment to reform and modernisation.

These clear and measurable achievements resonate across the country as citizens celebrate its 93rd National Day, held on 23 September, to commemorate the renaming of the Kingdom.

This year, the country can justifiably claim to be a beacon of progress. As the shockwaves caused by the Covid-19 pandemic rippled through the global economy, the Kingdom’s Vision 2030 policies helped show how careful but ambitious change – centred on diversifying sources of income – could provide shelter from the storm and stable growth.

At a challenging time for the global economic system, Saudi Arabia's Vision 2023 has proved resilient. Using measurable indicators, it continued to improve governance, transparency, policy development, and procedures. It closed loopholes that could be exploited for corruption and restructured some government entities.

It helped Saudi Arabia top one of the most-watched rankings among world governments and financiers: the International Monetary Fund’s economic growth league table.

And the Kingdom went on to play a key role in the G20 summit.

Saudi Arabia's Crown Prince and Prime Minister Mohammed bin Salman, India's Prime Minister Narendra Modi, US President Joe Biden and European Commission President Ursula von der Leyen attend a session as part of the G20 summit.

As the shockwaves caused by the Covid-19 pandemic rippled through the global economy, the Kingdom's Vision 2030 policies helped show how careful but ambitious change – centred on diversifying sources of income – could provide shelter from the storm and stable growth.

Forward-looking treatment

Reforms have been broad, deep and complex. But their achievements can be summarised simply: Saudi Arabia has found an effective treatment for its "oil addiction".

That term was coined by His Highness the Crown Prince and Prime Minister Mohammed bin Salman in April 2016, revealing his determination to ensure the country could thrive with a diversified economy.

He continued: "Saudi Vision 2030 will proceed regardless of whether oil prices rise or fall" and "if oil stops in 2020, we will be able to survive."

They were words of foresight.

Global oil demand dropped sharply as the pandemic gripped the global economy, causing oil prices to turn negative for the first time in history.

Covid-19 was a global challenge and one of great consequence everywhere. As the world rose to it, Saudi Arabia turned the crisis into an opportunity and showed people at home and abroad how the determination to end its "oil addiction" was serious.

The fluctuations in the oil prices revealed the importance of this effort and showed the credibility of His Highness the Crown Prince's words. The progress made then shows how Vision 2030 has worked, even in such exceptional circumstances.

International attention

The policies have garnered so much global attention that the announcement of Saudi Arabia's annual budget became international news.

Transparency was built into the reforms, meaning their impact can be clearly seen within the budget. The levels of spending and sources of revenues are on show, from traditional ones to those at the cutting edge of modernisation.

As its ambitions became a reality, the Kingdom's reliance on oil revenue began to ease. Before the reforms, the key determinant of setting Saudi spending levels was the estimate of oil prices. The fluctuations around Covid would have wreaked havoc on the budget.

Vision 2030 prevented that.

At the same time, the Kingdom has been able to invest in the major projects that will help it keep moving away from oil dependence, helping reinforce the long-term nature of the reforms.

As the world rose to the challenges posed by Covid-19, Saudi Arabia turned the crisis into an opportunity and showed people at home and abroad how the determination to end its "oil addiction" was serious.

Sustainable future and steadfast stability

In parallel, Saudi Arabia remains the world's route out of energy crises.

Nations everywhere recognise the Kingdom's importance in acting as the guarantor of stability in oil markets, which remain essential to global energy needs as the Kingdom and the world move toward a future fuelled by sustainable energy.

While that journey goes on, smooth-running energy markets remain crucial to everyone. Even the damaging attacks on Saudi production facilities in recent years have not prevented the Kingdom from ensuring the balance in the oil market. Events like that used to cause significant disruption in the past, but they no longer jeopardise market stability.

Reliable supply

Saudi Arabia is not only the largest oil exporter, but also the most reliable.

Its clear commitment to supplying its customers has provided confidence in the market, another crucial factor for stability, especially when global oil demand grows. The Kingdom's commitment to meeting global demand should not be taken for granted. When oil is tight, Saudi Arabia is always there to fill the gap.

An employee near a pipe carrying CO2 to the pipe line at the Hawiyah Natural Gas Liquids Recovery Plant, operated by Saudi Aramco.

Even when prices fell significantly during the pandemic, Saudi upstream development projects carried on, unlike in other oil-exporting nations.

When the market has oversupply, the Kingdom makes major sacrifices. It bore the heaviest burden of OPEC+ production reduction since the beginning of 2017, accounting for 41% of the total cuts. That came even as typical production ran at 31% of the OPEC total.

Saudi Arabia led the OPEC+ alliance to agree on a historic production cut of around 10 million barrels per day during the pandemic, despite its production reaching its peak at 12.3 million barrels per day at that time.

During the pandemic, Saudi Arabia led the OPEC+ alliance to agree on a historic production cut of around 10 million barrels per day during the pandemic, despite its production reaching its peak at 12.3 million barrels per day at that time.

Aramco IPO success

The initial public offering (IPO) of shares in Saudi Aramco may not have been well-received in a hostile foreign press. Still, the arrival of the national oil company on the publicly traded stock market was undeniably a historic moment.

And it came at a good time, thanks to the foresight of the Custodian of the Two Holy Mosques King Salman bin Abdulaziz and Crown Prince Mohammed bin Salman. Aramco's market value reached $2tn.

The sale of a small portion of Aramco helped the company secure its future, moving it out of its isolation, as promised by the Crown Prince.

The changes are helping revitalise this giant, bringing it into mainstream corporate practice with disclosed financial statements, and professional administrative leadership with an independent board of directors and a shareholders' meeting to oversee a crucial national asset.

Non-oil revenue boost

The progress made in diversifying the Saudi economy is evident from one number: 32%. That is the proportion of the Kingdom's revenue from non-oil sources. Vision 2030 has taken non-oil revenue to almost a third of national income in 2022.

It helped the Kingdom become crowned by the International Monetary Fund as the fastest-growing economy in the G20 club of the world's major nations.

The move to the top of the world economy's most-watched league table comes as the Vision 2030 reforms cut oil dependence. While the IMF opens a Riyadh office, Saudi is sticking with some subsidies.

This ascent to the top of one of the most influential global economic league tables owes a lot to the Vision 2030 reforms. As well as this international acclaim, the policies drive important development at home.

The progress made in diversifying the Saudi economy is evident from one number: 32%. Incredibly, Vision 2030 has taken non-oil revenue to almost a third of national income in 2022.

The national reach of the reform touches all regions of the Kingdom, not least medium-sized cities and provinces, as the economy grows. Consequently, Saudi Arabia is witnessing a migration out of major cities and into medium-sized cities, helping boost social, economic, and industrial development.

This helps Saudi citizens become the primary beneficiaries of rising prosperity, growth, and development, even as the wider global economy faces challenges.

Projects such as NEOM – the new city being developed on the shores of the Red Sea – launched by the Crown Prince, highlight the ambition and long-term nature of the reforms and the local impact of such significant endeavours.

And they can continue at pace even when oil prices are relatively low, as the growth in non-oil income helps provide the necessary financial firepower on the global scale of influential nations.

A young population and a clear goal

The Saudi population is young: 63% of citizens are under 30. This is a major positive for the Kingdom, but it also emphasises the importance of moves to a sustainable future and the crucial nature of development decisions.

Future job opportunities in knowledge-based sectors, fully diversified geographically, will be vital. As the Kingdom prepares for the post-oil era, it lays the foundations for tourism, entertainment and sports to play a bigger role.

Vision 2030 is a roadmap to a future fit for this young generation to thrive, in a new and exciting economy, brightened and developed by empowered entrepreneurs, enhanced public and private investment and an environment ideal for innovation.

And there is a clear goal: by the time Saudi Arabia celebrates its National Day in 2030, it will be in the top 10 countries for global competitiveness.

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