HOUSE_OVERSIGHT_016111.txt

The Saudi National Transformation Plan aims to diversify the economy away from oil but faces challenges in meeting ambitious targets and maintaining macro stability. The USD peg is likely to hold, but energy policy may need to become less aggressive to support FX policies. Large and regular sovereign Eurobond issuance is expected to weigh on regional bond spreads if risk appetite does not hold up or fiscal balance slips. The NTP suggestion that production capacity is maintained until 2020 reinforces the expectation of medium-term oil market tightness, but achieving a gas production target that could displace domestic crude demand and boost export capacity may be challenging.