Saudi Arabia has insisted all Neom megaprojects will continue as planned, despite rumours the kingdom would need to cut back its futuristic desert city development due to budgetary concerns.
A scaled back mega-territory?
Part of Saudi Arabia’s Vision 2030 initiative to pivot its economy away from oil, until now the project has been funded by Saudi Arabia’s sovereign wealth fund, or Public Investment Fund. But with budget approval in question and the Saudi government seeking to issue bonds in April, questions have been raised over whether the supposedly carbon-free Red Sea mega-territory would ever fully come to fruition.
In particular, one of the flagship elements of the $1.5 trillion project, the so-called “The Line” – a 170-km-long glass-walled belt of skyscrapers – was reported by Bloomberg to have been scaled back from a proposed capacity of 1.5 million residents, to under 300,000 people by 2030, with completed building work at less than 2% (1.5 miles or 2.4 km) of its intended extent (105 miles or 168km).
Full steam ahead
But, speaking to CNBC at the World Economic Forum’s special meeting in Riyadh, Saudi Arabia’s economy minister Faisal Al Ibrahim maintained that there has been no change in ambition. “All projects are moving full steam ahead,” he said, adding, “We set out to do something unprecedented and we’re doing something unprecedented, and we will deliver something that’s unprecedented.”
Hinting that there may well be some adjustment to the timescales and priorities, Al Ibrahim was at pains to emphasise “the intended scale is continuing as planned. There is no change in scale,” however it should be noted “it is a long-term project that’s modular in design,” he said. “The rest of the mega projects are there to be delivered for specific impact in specific sectors.”
Increased investor interest
Amid “increased investor interest on all of these projects” according to Al Ibrahim, investment would be a key part of how the project would progress, with “optimal economic impact” being the prime driver. He went on to explain, “We see feedback from the market, we see more interest from the investors and we’ll always prioritize to where we can optimize for optimal economic impact”.
“Today the economy in the kingdom is growing faster, but we don’t want to overheat it. We don’t want to deliver these projects at the cost of importing too much against our own interest. We will continue delivering these projects in a manner that meets these priorities, delivers these projects and has the optimal healthy impact for our economy and the healthy non-oil growth within it.”
