January 21, 2003	Tuesday	Ziqa’ad 17, 1423

JEDDAH, Jan 20: Opec kingpin Saudi Arabia must have an annual growth rate of over 7.3 per cent for the next 25 years in order to catch up with developed nations, a top Harvard professor said here on Monday.

The kingdom, which sits on a quarter of proven world oil reserves, must also boost capital spending from 17 per cent annually at present to over 30 per cent, Richard Vietor of Harvard Business School told the Jeddah Economic Forum.

Vietor said Saudi Arabia had an average growth rate of 1.8 per cent during the 1990s while the rate of unemployment has exceeded 15 per cent.

If Saudi Arabia is going to catch up with developed countries, it needs to grow at a rate of 7.3 per cent annually for the next 25 years while the population growth stands at 3.2 per cent, Vietor said.

It’s a feasible growth rate but difficult at the same time, he added. Riyadh must also considerably cut huge spending.

The January 18-20 forum, in its fourth year, is being held under the theme Clobal Competitiveness: Thinking globally, acting locally.

Saudi Finance Minister Ibrahim al-Assaf conceded that economic growth rate is low.

The economic growth rate is low and we need to accelerate it and make it sustainable, said Assaf, looking to the private sector. Economic growth has severely fluctuated in the past decade because of swinging oil prices.

We need more growth but it should come from the private sector. This sector had an accumulated growth of 50 per cent in the 90s. This is where the government is focussing, he said.

Chief economist of the National Commercial Bank (NCB), the largest bank in the kingdom, said he does not believe the Saudi economy can boast a 7-8 per cent growth rate.

Given the current parameters with a state-run economy, where the government completely controls the oil sector and more than one-third of the stock market, we can not reach that target, Saeed al-Sheikh told AFP.

Saudi Arabia late last year opened up 20 vital sectors for privatization to both local and foreign investors. But it has not yet set detailed programmes and time-tables for the deregulation process. In December, the government sold 30 percent of the giant Saudi Telecom in the first major privatization in 20 years. The sell-off, which was 3.5 times oversubscribed, generated some four billion dollars.

The kingdom, with a current crude production of more than eight million barrels a day, generates more than 80 percent of its national income from oil.—AFP