A newspaper said,Financial TimesThe British newspaper said that talk about the need for caution in spending is escalating in Saudi Arabia, about 8 years after the launch of Vision 2030, which included investment projects worth hundreds of billions of dollars.
The newspaper stated that there are several factors that push Saudi Arabia to take such a step, the most prominent of which is the decline in the Kingdom’s revenues as a result of the decline in oil prices.
The newspaper quotes a source familiar with the work of the Public Investment Fund in Saudi Arabia as saying that the Fund, which has committed to spending no less than $40 billion annually in the Kingdom, is under pressure from the Saudi government to show that there are returns on its activities.
The source adds that there is confidence that Vision 2030 is moving in the right direction, but there is also a need for caution and control of spending.
The Public Investment Fund controls assets worth $925 billion, making it slightly smaller than the Abu Dhabi Investment Authority, the largest sovereign fund in the region.
This fund is the main tool used by Crown Prince Mohammed bin Salman to implement his economic agenda, which aims to reduce the dependence of the Saudi economy on oil revenues.
An executive director at a consulting firm that has dealings with the Saudi government says that many projects are not going according to schedule or budget.
The newspaper indicates that the consulting companies that have flocked to the Kingdom over the past decade are among those most affected by the reduction in spending.
Almost every government ministry or state entity must employ armies of consultants to prepare strategies aimed at achieving the goals of so-called “vision realization programs,” according to the newspaper.
Another executive at a consulting company confirms that “everyone is tightening their belt,” adding that, for example, the NEOM project’s spending on consultants has decreased by 20 to 30 percent over the past six months.
Speaking to the newspaper, a senior Saudi official acknowledged that the government is constantly evaluating its priorities, because “the global and regional political and economic environment is evolving rapidly.”
Another Saudi executive believes that “the road could be a little bumpy, but this will not affect much.”
He continues that those responsible for Vision 2030 can arrange priorities and postpone some projects, “and this takes some time.”
Last month, Saudi Arabia announced that it expects to record a deficit in its budget for the year 2025 at about 2.3 percent of the gross domestic product, with it continuing at larger rates until 2027, which reflects the rise in expenditures and the decline in oil revenues.
Saudi Arabia’s production currently stands at approximately nine million barrels per day, less than its production capacity of 12 million barrels per day.
Crown Prince Mohammed bin Salman’s “Vision 2030” initiative, which was first unveiled in 2016, aims to diversify the oil-dependent economy and attract foreign investment.
Saudi Arabia is currently investing hundreds of billions in various sectors, starting with “NEOM”, the new futuristic city on the Red Sea coast, all the way to tourist resorts and entertainment events, including football, as it attracted a number of stars of this sport with expensive contracts in the summer of 2023.
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