Alwaght- The much-hyped economic reforms attributed to the Saudi Crown Prince Mohammad bin Salman may not progress according to plan due to a range of “unprecedented” issues – most importantly a lack of adequate national and international investments.
A report by Forbes highlighted recent indications that wealthy Saudis were unwilling to invest domestically as a sign that showed Prince Salman’s Vision 2030 economic reforms program could sooner or later hit troubled waters.
The report notes that wealthy Saudis and private businesses are concerned that the regime is monitoring their financial transactions and are taking steps to prevent these people from moving assets out of the country. Wealthy Saudis—princes and businessmen alike—must be taking precautions in case the economic or political fortunes of the country turn for the worse. This is not unprecedented in Saudi Arabia, but the trend indicates that there may be an entire class of powerful Saudis questioning the future, or at least preparing for a worst-case scenario.
Government investment can make Saudi economic numbers look good on paper, but it is a risky strategy. When oil prices fall so does government spending (meaning government spending does not lead to diversification).
This also sends a troubling signal to foreign investors and foreign businesses considering opportunities in the kingdom. If Saudis are trying to move their money out of the country—and if the government is concerned enough to prevent them from doing so—foreign investors or companies looking to open businesses in Saudi Arabia will hesitate. Without assurances that the rule of law is respected in Saudi Arabia, foreign businesses will consider Saudi Arabia too risky to enter. Capital flight from Saudi citizens is a key indicator.
Meanwhile, it's now over three years since the start of the Saudi-led war on Yemen. The war is estimated to have cost the Saudis upwards of $100 billion, eroded the international image of the kingdom and failed to achieve its objectives of ousting the popular Ansarullah movement and restoring to power fugitive ex-president Abdu Rabuh Mansour Hadi, a Riyadh puppet. The high war costs have had damaging influence on the struggling Saudi economy and thus impacted negatively on the kingdom's economic reforms.
