The Saudi monarchs have decided to scale back their ambitious NEOM project, according to a report by US business magazine Bloomberg. Originally estimated at $500 billion, the project is now projected to cost three times that amount within just a year of construction commencing. This financial strain is due to budget negotiations for 2024 and the fact that the majority of funds for the NEOM project come from Saudi sovereign wealth funds, specifically the Public Investment Fund, which has seen its cash reserves plummet to around $15 billion – the lowest level since the start of the pandemic in 2020.
One of the main reasons for this decision is the escalating cost of the project. The royal family has slowed down construction significantly, prompting delays in other projects like luxury tourism destination Sindalah in the Red Sea. While some parts of the project are still moving forward, including Sindalah’s completion, the overall future of NEOM remains uncertain as Saudi Arabia faces economic challenges and resource depletion.
The scaling back of NEOM has already had concrete consequences, with an international construction company withdrawing thousands of workers from the site. However, despite this setback, Crown Prince Mohammed bin Salman is still leading Vision 2030 program aimed at diversifying Saudi Arabia’s economy away from oil and gas. The delay in NEOM may tarnish his reputation but it also raises doubts about Saudi Arabia’s ability to impress
