As Saudi Arabia prepares to tap international debt markets, potential investors will soon be scrutinising details of the kingdom’s blueprint for a post-oil era. They may find the plan’s viability hinges on the very thing it’s been designed to ignore: crude prices.
Saudi authorities are set to unveil the so-called National Transformation Program this month, and have a target to balance the budget by 2020 – after posting a shortfall of about 15% of economic output last year. Deputy Crown Prince Mohammed bin Salman has said cutting subsidies and other measures will add $100bn of non-oil revenue.
Below are three potential scenarios for Saudi’s fiscal outlook in 2020.

Scenario 1: Plan delivers
If subsidy cuts, value-added taxation and a green card-type programme for foreign workers deliver an additional $20bn of new revenue each year, Saudi Arabia could balance its budget by 2020, according to EFG-Hermes economist Mohamed Abu Basha.
That scenario assumes a 7% annual spending growth and a gradual rise in Brent crude prices to $65 a barrel by 2020. If oil prices rise faster, the government will also balance its budget sooner, Abu Basha said in an e-mail.

Scenario 2: Partial success
The government’s goal to boost non-oil revenue to 20% of economic output from 6% by 2020 is “unrealistic,” according to Garbis Iradian, chief economist for the Middle East and North Africa at the Institute of International Finance (IIF). An increase to 15% is more likely, while oil prices may only be about $52 a barrel in 2020, the IIF predicts.
If a 13% spending cut this year is followed by modest 3% increases from 2017, Saudi Arabia’s budget deficit would narrow to 2.5% of economic output by 2020 - - or about $21bn, IIF says. Public debt would also rise sharply as the government borrows to finance the shortfall, from 6% of economic output last year to 31% by 2020, or $262bn.
Scenario 3: Plan pushed aside
If Saudi Arabia does nothing to reform, even an oil rebound to $71 a barrel won’t achieve a balanced budget, according to a hypothetical model from Jadwa Investment. In this “no action” scenario, the budget deficit would be about $57bn in 2020, or 6.4% of economic output. Public debt would rise to more than a third of economic output.
“Despite the recovery in oil prices, our model showed a rapid depletion to the kingdom’s fiscal buffers,” Jadwa said in a report in May. “This vision, with its emphasis on untapped opportunities, core capabilities, and need for economic prosperity comes at a critical juncture for the kingdom.”