Saudi Arabia’s economy minister has denied recent reports that the kingdom’s $1.5 trillion NEOM megaproject, a future desert development on the Red Sea coast, is scaling back some of its plans.
“All projects are moving forward at full speed,” Faisal Al-Ibrahim told CNBC’s Dan Murphy at the World Economic Forum’s special meeting in Riyadh on Monday.
“We set out to do something that has never been done before, we are doing something that has never been done before, and we are going to deliver something that has never been done before.”
In early April, Western media reported that The Line project, a planned glass-walled city expected to span 105 miles across the desert by 2030, would be only 1.5 miles long by then – a 98.6% reduction. Quoting people familiar with the matter, Initial report from Bloomberg It said that the Saudi government originally planned to have 1.5 million people living in The Line in 2030, but it was reduced to 300,000.
It comes amid reports that NEOM’s financial situation is worrying, at least in the medium term. According to Bloomberg, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, has not yet approved NEOM’s 2024 budget.
Al-Ibrahim stressed that the projects will be delivered as planned, but must meet the requirements of “optimal economic impact”.
“We’re seeing feedback from the market, we’re seeing more interest from investors, and we will always prioritize areas that can be optimized to achieve the best economic impact,” he said.
“Today, the Kingdom’s economy is growing faster, but we don’t want it to overheat. We don’t want to deliver these projects at the expense of importing too much to the detriment of our own interests. We will continue to deliver these projects in an appropriate manner. Meeting these priorities matters, deliver these projects and have the best possible health impact on our economy and… healthy non-oil growth.
NEOM political map of Saudi Arabia’s $500 billion megacity project on the Red Sea coast. Location of Smart Tourism City with Autonomous Judiciary System. English label. vector.
Peter Holmes Furian | Stocks | Getty Images
However, the minister stressed that “for NEOM, the projects are continuing as planned at the expected scale. There is no change in scale.”
“This is a long-term project using modular design,” he said. “The remaining large projects will have specific impacts in specific areas.”
Asked what message the reported changes in timelines and scale would send to private investors, Al Ibrahim said decisions would be made based on the needs and returns of the projects and that all developments within NEOM have attracted investment growing interest.
“Remember, these industries didn’t exist in the past. They were built from scratch. They need some investment and full support from governments and sovereign wealth funds,” he said.
“We are seeing increased investor interest in all of these projects. These projects will be delivered at their scale and in a way that priorities suit the project needs, project returns and economic impact. It’s like minimizing leakage, Also minimizes the risk of overheating.
About The Author
