Photographer: Waseem Obaidi/Bloomberg

Saudi Said to Mull Public-Private Partnerships to Reduce Costs

  • Government said to make decision on idea within weeks
  • Unit within economy ministry will help cut wasteful spending

Saudi Arabia may establish a unit in the Ministry of Economy and Planning focused on pulling together public-private partnerships that will help the government cut costs and improve efficiency, according to people familiar with the matter.

The division would aim to boost the role of the private sector in planning, financing and delivering projects and services for the government, the people said, asking not to be identified because the information is private. A decision on whether to move ahead is expected in the next few weeks, the people said. Officials from Riyadh held meetings with PPP specialists from the U.K. to discuss the idea and how best to implement the policy, the people said.

Saudi Arabia is undergoing its biggest-ever economic shakeup, led by Deputy Crown Prince Mohammed bin Salman, as it prepares for the post-oil era following the plunge in crude prices that started in 2014. One of the government’s biggest challenges will be navigating the worst economic slowdown since the global financial crisis as authorities cut spending to plug a budget deficit that reached about 15 percent of gross domestic product in 2015.

A spokesman for the Ministry of Economy and Planning didn’t respond to calls and an e-mail requesting comment.

Under the rule of King Abdullah bin Abdulaziz Al Saud, who died in 2015, the country was wasting as much as $100 billion a year because of inefficient spending, according to Minister of State Mohammed Al-Sheikh. The country has slowed payments to contractors and suppliers, started borrowing from local and international banks, and tapped the country’s foreign reserves to deal with runaway spending and lower income from oil’s slump.

Before it's here, it's on the Bloomberg Terminal.