Saudi Arabia Budget Will Make Investors Miss Vision 2030 - Bloomberg

Saudi Arabia Budget Will Make Investors Miss Vision 2030 - Bloomberg:

Saudi Arabia seems already to have forgotten Vision 2030, the ambitious reform plan it announced amid great fanfare just two years ago. The kingdom’s expansionary new budget suggests that the government lacks the resolve and the discipline to wean the country from its dependence on oil, shrink state handouts, and develop a viable private sector.

Next year’s budget, announced Tuesday, calls for nearly $300 billion in spending, the largest outlay in the kingdom’s history, despite weak oil prices and falling production. It projects a deficit of 4.2 percent of gross domestic product, but that gap may widen, given that the revenue forecast depends on improbably high prices. The government also announced it will extend for another year its annual handouts to citizens — exactly the kind of extravagance that Vision 2030 meant to eliminate.

The new spending will wipe out any gains from the few reforms that have been put in place, such as a 5 percent value-added tax. And it will deepen doubts among investors, local and foreign alike.