Saudi economic pain testing resolve on reforms

Dubai

SAUDI Arabia's drive to reduce the economy's reliance on oil has hit a snag: its reliance on oil.

More than a year after the kingdom's dominant leader, Crown Prince Mohammed bin Salman, unveiled a blueprint for the post-oil era, the drop in crude prices is making economists more sceptical about whether some of the plan's medium-term targets can be met. The reason: lower oil revenue deprives the government of money needed to balance its books by 2020 while trying to stimulate growth to ease the transition's burden on the population.

International Monetary Fund (IMF) data released on Friday underscored the challenge. The fund lowered its forecasts for Saudi economic growth this year to "close to zero". Analysts at Citigroup, EFG-Hermes and Standard Chartere…