Saudi Arabia in talks to sell 1% stake in Aramco: MBS | Business and economic news

Saudi Arabia is in talks to sell 1% of state-owned oil company Saudi Aramco to a leading global energy company, according to Crown Prince Mohammed bin Salman (MBS).

He said in televised remarks on Tuesday that Aramco, the world’s largest oil company listed on the Saudi stock exchange at the end of 2019, could sell more shares to international investors within a year or two.

“Discussions are currently underway for the acquisition of a 1% stake by a leading global energy company in an important deal that would boost Aramco sales in … a big country,” he said without giving more details.

“There are talks with other companies for different issues, and part of Aramco’s shares could be transferred to the (Saudi) Public Investment Fund (PIF) and a part listed … to the Saudi stock exchange,” he said in an interview broadcast by Saudi TV marking the fifth anniversary of Vision 2030, the country’s initiative to diversify its economy away from oil.

Diversification plan

Aramco’s initial public offering in 2019 was seen as a pillar of the economic diversification program aimed at attracting foreign investment.

Aramco raised $ 25.6 billion during the IPO and subsequently sold more shares under a so-called “greenshoe option” to bring the total to $ 29.4 billion .

The proceeds of this offering were transferred to PIF, Prince Mohammed’s vehicle of choice for transforming the Saudi economy.

The crown prince is increasingly relying on Aramco, the world’s largest oil exporter, to help finance his plan to transform the economy.

Vision 2030 has faced hurdles in recent years, with investors scared by the kingdom’s domestic political repression and the murder of Saudi critic Jamal Khashoggi in 2018, followed by the COVID-19 pandemic last year.

Saudi Arabia’s economy shrank the most in more than 30 years last year due to measures to control the spread of the coronavirus [File: Ahmed Yosri/Reuters]

Last year, the kingdom saw its economy contract the most in more than 30 years, according to estimates by the International Monetary Fund. But the outlook has improved since then. The country’s budget deficit is expected to be 4 percent of gross domestic product by the end of this year, less than the 12 percent gap last year.

MBS said the decision to increase the value-added tax rate to 15 percent last year will be temporary, lasting up to five years, with the government’s ultimate goal of have between 5 and 10 percent.

The kingdom does not intend to introduce an income tax, he added.

The crown prince said the country’s unemployment rate will fall below 11% this year as the kingdom’s economy goes through a V-shaped recovery.

“Unemployment will fall to less than 11% this year, then it will reach around 10%, then 7% in 2030,” he said in an interview with the Rotana Khalejia television channel.

Unemployment among Saudi nationals fell to 12.6% at the end of last year, after peaking at 14.9% in the quarter ending in September.

Foreign relations

MBS also touched on the delicate ties with the United States, where President Joe Biden’s administration has said it wants to recalibrate a relationship that was at the heart of former President Donald Trump’s Middle East strategy.

“There will never be a 100% agreement between two countries,” MBS said. “Between the different administrations of the White House, the margin of divergence could increase or decrease but we agree with the Biden administration” about 90% of the time, he added.

Asked about the kingdom’s regional rival Iran, the crown prince softened his tone from previous statements, saying Saudi Arabia was working to resolve differences with its neighbor.

“Ultimately Iran is a neighboring country,” he said, adding that the kingdom wanted Iran to prosper but disagreed with its nuclear program and support for regional militias.

“Today we are working with our partners in the region to find solutions to these problems and we hope to overcome them and have a good positive relationship with them,” he said.

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