Saudi Arabia’s latest economic plan comes with a big risk as the plan might help boost investment, while on the other hand it could also hit the government’s finances.
Crown Prince Mohammed bin Salman wants the kingdom’s biggest companies — including oil giant Saudi Aramco and chemical maker Sabic — to reduce their dividends, most of which are paid to the state, and spend the money locally.
The idea is that their expenditure on new infrastructure and technology will be big enough to accelerate the country’s growth and cause a jobs boom.
The de facto leader’s strategy amounts to a “sacrificing of current profits for future investments,” Karen Young, resident scholar at the American Enterprise Institute in Washington, said in an opinion piece.