Yahoo Finance Saudi Arabia Plans 'Thatcherite Revolution'
Saudi Arabia is mulling the sale of shares in Aramco, believed to be the world's most valuable company, as part of plans to repair its finances and open up its economy.
The announcement was made by the country's deputy crown prince as Saudi's secretive, state-owned oil firm grapples with the effects of oil prices nearing 12-year lows .
Mohammed bin Salman told The Economist: "That is something that is being reviewed, and we believe a decision will be made over the next few months."
The Saudi economy has taken a battering from the oil price decline and the finance ministry announced last month it was to review its tax and spending regime after the country posted a record budget deficit of $98bn (£66bn) in its last financial year.
It (Other OTC: ITGL - news) was its second annual shortfall and it predicted a third for 2016 of $87bn (£58bn).
The ministry said then it could apply VAT to non-essential goods, raise charges on public services and raise the cost of heavily-subsidised power and fuel.
Mohammed bin Salman, who heads the kingdom's Supreme Council that oversees Aramco, went much further.
When asked if the country was planning a "Thatcherite revolution", he replied "Most certainly".
He told the magazine he was keen to privatise healthcare and education services and saw opportunities in other areas, such as defence and mining.
The prince, who is also defence minister in the Saudi government, believed non-oil revenues could reach $100bn over the next five years.
On the prospect of opening up Saudi Aramco, which officials told The Economist was worth "trillions" of dollars, he said: "Personally I’m enthusiastic about this step.
"I believe it is in the interest of the Saudi market, and it is in the interest of Aramco, and it is for the interest of more transparency, and to counter corruption, if any, that may be circling around Aramco."
Saudi Arabia's role in the oil market's slump should not be underestimated.
The strongest voice within the OPEC cartel's producers has refused to cut production in the face huge over-supply because of the challenge posed by US shale oil.
It fears losing market share.
Despite oil revenues plunging, Riyadh has maintained high spending and launched an expensive military intervention in Yemen, drawing on huge fiscal reserves it accumulated when prices were high.
It has also broken off diplomatic relations with Iran , which accused Saudi Arabia of seeking confrontation following its execution of a prominent Shia cleric.
The spat was seen as damaging the prospect of any agreement to cut oil production to shore up prices.
The record glut of oil is a consequence of OPEC's decision not to respond to weak demand in the global economy, as China and other key emerging markets slow down.
Russia has also been pumping at unprecedented levels to maximise revenues from the effects of western sanctions (Other OTC: UBGXF - news) .
