The composition of the new cabinet will provide the clearest indicator of the health of the reform process championed by Crown Prince Abdullah. For many, there is frustration at the slow progress on key pieces of legislation such as the capital markets or insurance laws, combined with a loss of momentum on strategic initiatives such as the gas initiative.

Outside the government, there are few more important - or vocal - supporters of liberalisation and deregulation than Prince Alwaleed bin Talal bin Abdulaziz al-Saud, the chairman of Kingdom Holding Company. 'Over the last two-three years the government has acknowledged the illnesses and weaknesses of the economy, and we applaud them for that,' says Prince Alwaleed. 'But if it doesn't take the proper medicine the process will have been academic, fruitless. Recently, too much valium has been taken rather than medicine. But if you take too much valium you can get addicted.'

It is against this backdrop that the proposed cabinet reshuffle has assumed a symbolic as well as a practical significance: the mood in Riyadh is that a change of personnel could reinvigorate a stalling reform process.

'Much is hoped from the coming cabinet reshuffle. I hope it is a radical change, but I expect it won't be as dramatic as it should be,' says Prince Alwaleed. 'My interest lies in economics, so I want to see a strong team in the ministries of economy, finance, trade and planning. Saudi Arabia needs people who think and move as the rest of the world is thinking and moving.'

On the eve of the reshuffle, speculation over which portfolios would change hands has grown intense, with some analysts suggesting up to a dozen of the 30 cabinet posts. And there is reason to believe that some of the key positions could be under review. Among those cited is the Petroleum & Mineral Resources portfolio held by the experienced Ali Naimi since 1995. 'There are people here who are looking on the reshuffle as a litmus test of the reform programme,' says a senior banker in Riyadh. 'Perhaps the best example is Naimi and the gas initiative: if he is still the oil minister in mid-May, things look bleak for the negotiations, given his pro [Saudi] Aramco position. But if he is replaced, there could be some unexpected fast movement.'

There is no benefit in a governmental blood transfusion for its own sake: the objective is renewed energy for reform. 'In Saudi Arabia we are trying to reform, but so far the results have been mixed. There are many obstacles, some within the administration and some bureaucratic obstacles,' says Alwaleed. 'The reform process is not advancing at the speed expected by the government. The transition from the old era in Saudi Arabia to the new era is going slowly. It is one step forward and one step back - not two steps back, but one. I'm aggressive: maybe I'm too fast in wanting the pace of reform I want. Or maybe they are too slow. Some of the blame has been put on 11 September 2001, on the Iraq war, on a number of things. But life goes on, it doesn't stop, and neither should the reform process.'

The focus of the programme has been on bringing down barriers to trade, stimulating the private sector and the non-oil economy and facing up to the country's complex demographic challenge.

'A key factor will be whether Saudi Arabia accedes to the WTO [World Trade Organisation] or not,' says Alwaleed. 'The application process to the WTO is on hold. There is a moratorium; negotiations have come to a halt. I've been telling government officials: 'Use WTO engagement to pass some social changes that have to be made, otherwise it will be very difficult: use the WTO umbrella.' We in Saudi Arabia have to be part of the global system. The consensus in the business community is for this and is in favour of reform. But there are hiccups and the good ideas are not filtering swiftly through.'

One of the main ambitions underpinning the proposed economic reforms is to make Saudi Arabia more attractive to foreign direct investment (FDI). 'There is no solution but liberalisation. We need to attract outside capital, we need a competitive economy,' says the prince.

The Saudi Arabian General Investment Authority has made considerable progress in its attempts to streamline the investment process for foreign companies. But FDI is not flowing freely (see chart). The view in local investment banking circles is that one of the major barriers lies in concerns foreign companies have over exiting investments. The long-delayed capital markets law (CML) is expected to offer some sort of solution. It is also expected to encourage a reduction in the outflow of private capital to international markets, by creating a well-regulated domestic market which will be attractive to investors as well as corporates seeking finance.

'The delays in the CML are part of my frustration. We need capital markets and a stock market. There is plenty of money in the system, as was demonstrated with the Saudi Telecom IPO [initial public offering]: there was a very strong reception to this,' says Alwaleed. 'The market makers are watching. If there is an open environment with good investment opportunities, then people will repatriate their money. This will be the main anchor of privatisation and liberalisation.'

Other legislative areas are also in urgent need of reform. 'We have the negative list: but it is getting longer not shorter. And the tax laws need review,' says Prince Alwaleed. 'How can we lower corporate tax from 40 per cent to 30 per cent and say that we are winning. We are still losing with tax at 30 per cent. We are competing with everyone for investment, with Eastern Europe and Latin America. Everyone else is liberalising and so must we. It is increasingly competitive.'

The proposed cabinet reshuffle may be viewed as a litmus test for the future of economic reforms, but the interpretation of new appointments will be a complex and subjective process. Clearer is the fact that the prize is considerable. Successful economic liberalisation and deregulation could release the full potential of what is already the regional economic powerhouse.