National Transformation Plan: many promises, few details The National Transformation Plan (NTP) released by the Saudi government is a further step towards execution of Saudi Vision 2030 through a set of ambitious interim targets to achieve by 2020 by 24 government bodies. The NTP is a comprehensive program encompassing medium-term growth boosting initiatives and fiscal consolidation measures. The sequencing and details of the fiscal measures are however still left nebulous. Implementation of growth-boosting initiatives will require a challenging crowding in of private sector investment, particularly from domestic sources. The NTP is likely to introduce a number of one-off supply-side shocks to inflation through its fiscal or labor measures, which could negatively impact Real Effective Exchange Rate (REER) competitiveness. Discretionary consumption growth and real incomes are likely to remain under pressure. We find the diversification measures encouraging, although they appear too ambitious to be met within the time frame envisaged in the NTP, in our view. The focus on diversification could introduce medium- term incentives to adopt a more competitive exchange rate, while also detracting from the binding fiscal constraint under which the government has to operate. Energy policy is likely to be less aggressive and support oil prices. Fiscal targets are difficult to reach, but medium-term oil prices of at least US$50-65/bbl could support NTP progress. Table 4: Selected macro Key Performance Indicators (KPIs) under the National Transformation Plan Regional Global Government entity Key Performance Indicator (KPI) Unit Baseline 2020target b’mark — b’mark Ministry of Finance Total non-oil revenues SARbn 163.5 530 10.9 691.0 Budgeted salaries and wages SARbn 480 456 NIA N/A Salaries and wages as a percentage of the budget % 45 40 30 2 Approved projects according to criteria and timeline (% of total) % 0 40 30 78 Credit rating - Al Aa2 Aa2 Aaa Governmen