Put on your seatbelts, here we goJune 23, 2015 9:00
Saudi’s insignificant economic reshuffle…or is it?
Saudi Arabia’s slight reshuffle of the OPEC cabinet may not send shockwaves in the oil ministry but it is may accelerate reform and market liberalisation
December 14, 2011 4:27 by Reuters
A change of personnel in two of Saudi Arabia’s top economic posts suggests the kingdom may be preparing to invigorate its on-again, off-again economic reform programme.
A surprise decree by King Abdullah on Tuesday shifted Muhammad al-Jasser from the top position at the central bank to head the Economy and Planning Ministry, which oversees economic development. He was replaced by Fahd al-Mubarak, formerly head of investment bank Morgan Stanley Saudi Arabia.
As with many moves in Saudi Arabia’s opaque government, there was no clear explanation for the change. Analysts do not see it as an effort to alter the conduct of monetary policy or the conservative way in which the central bank manages the country’s vast oil wealth; the bank has over $500 billion of net foreign assets, much of it in the form of US Treasuries and overseas bank deposits.
Instead, some analysts see the switch as a move to accelerate economic reforms in key areas such as capital markets, industrial policy and domestic energy prices.
“The question is what role the Economy and Planning Ministry will play given that it does not have day-to-day functions. They may want to take a lead role in terms of policy direction and reforms. Certainly, his appointment indicates a vote of confidence by the king,” said Khan Zahid, chief economist at Riyadh Capital.
Jasser is respected by Saudi bankers and economists and has previously spoken of the need to address long-term structural challenges facing the Saudi economy, but if he intends to tackle such thorny problems as the alarming rise in domestic oil consumption, he will need hefty political backing.
In recent years the Economy and Planning Ministry has been relatively toothless, drawing up five-year plans that often bear little resemblance to the eventual performance of the economy, analysts say. Its role overlaps with other ministries, risking administrative tussles over policy changes.
“One issue Jasser has talked about is the increasing domestic consumption of energy and the economic implications of that. He’s also talked a lot about sukuk (Islamic bond) markets and potential linkages between that and infrastructure,” said Jarmo Kotilaine, chief economist at National Commercial Bank in Jeddah.
“So he has a very broad economic vision and his new appointment will give him ample opportunity to develop and implement this vision.” (CONTINUED TO NEXT PAGE)
Pages: 1 2