The paradigm shift in Saudi economic policy

So, Saudi Arabia has announced its projected budget for 2015, setting a record for the largest budget in the Kingdom’s history. Following the announcement, Saudi Finance Minister Ibrahim Al-Assaf confirmed that Riyadh is committed to its policy of spending on development to guarantee basic needs and complete the major projects that have been planned or are already in the process of completion.
The Finance Ministry’s policy of expanding spending on development represents the foundation of Riyadh’s economic policy. However, this time, the Saudi budget was announced at a time of serious geopolitical turmoil. There are political and security issues in more than one regional country and this is resulting in economic consequences that no country can ignore. This is not to mention the huge slump in the price of oil—which represents the main source of revenue for the Kingdom and the backbone for the country’s entire economy.
At this point, it may be useful to talk from the heart. Even if this is akin to swimming against the tide, I believe that such talk is precisely what is needed at this juncture. Saudi Arabia today is well-placed to pursue a policy of controlled and prioritized spending, for this is a matter of general concern due to fast-changing global conditions. It is no secret that Saudi Arabia’s economic trajectory is one of development before anything else; to make available the best education, healthcare, transport facilities and other services for its people. So any talk on this point is unequivocal and cannot leave room for debate or doubt; it is just that current circumstances requires thinking outside the box. Controlled spending and consumption by the state has a direct, positive effect on its citizens, because they are essential qualities of any fair society that behaves in a prudent economic manner, away from the over-consumption and over-spending which led to large accumulated national debts and the subsequent negative effects of this.
What was acceptable before cannot be acceptable now, and there must be a widespread recognition of this among the general public. The situation in the world and the region necessitates such prudence, so there will be a number of projects which must be postponed, since right now they are no longer a priority. The same must go for tenders on some projects, and thought must be given to the cost here—and not merely the “price.” Government tenders rely on being “cheap,” though in the end the cheapest project sometimes turns out to be the costliest when one considers long-term factors such as maintenance and repairs. There have been many who have noticed this, and there are a number of government projects that were once considered cheap but have turned out to be bad value for money in the long run.
This new budget was also preceded by a number of cabinet changes. One hopes that these new faces will also bring about changes in other sensitive and crucial areas such as the electricity, water and planning sectors, in order to bring about a paradigm shift and a new vision that will lead to tangible diversification in the economy, visible in the country’s sources of income and its use of resources such as water and electricity (because current consumption rates are definitely not sustainable).
This paradigm shift in Saudi economic policy towards prioritized development spending will not necessarily be a popular one; it is a decision that is closer to the head than to the heart. Of course, everyone wants what is best for the country and we are all in the same boat, to be sure. But sometimes what needs to be said will not be to everyone’s taste.

The views expressed by the author do not necessarily represent or reflect the editorial policy of Arab Today.