Saudi Arabia’s economy minister dismissed recent reports that the kingdom’s $1.5 trillion NEOM project, a futuristic desert development on the Red Sea coast, is curtailing some of his plans.
“All projects are going full steam ahead,” Faisal Al Ibrahim told CNBC’s Dan Murphy on Monday at the World Economic Forum’s special session in Riyadh.
“We set out to do something unprecedented and we’re doing something unprecedented, and we’re going to deliver something unprecedented.”
In early April, reports emerged in Western media that The Line project, a planned glass-walled city meant to stretch 105 miles across the desert by 2030, would be just 1.5 miles long by then – 98.6% reduction. . Citing anonymous sources with knowledge of the matter, Mr original report by Bloomberg he said the Saudi government’s original plan to have 1.5 million people living on The Line by 2030 has been reduced to 300,000.
The alleged reduction in plans, at least in the medium term, comes amid concerns about the finances of NEOM, which is part of the kingdom’s wider Vision 2030 initiative to diversify its economy away from oil. Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, has yet to approve NEOM’s 2024 budget, according to the Bloomberg report.
Al Ibrahim stressed that the projects will be delivered according to plan, but with the caveat that decisions are made for “optimal economic impact”.
“We are seeing feedback from the market, we are seeing more interest from investors and we will always prioritize where we can optimize for optimal financial impact,” he said.
“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 introducing too much against our interests. We will continue to deliver these projects in a way that meets those priorities , implements these projects and has the optimal healthy impact for our economy and the … healthy non-oil growth within it.”
NEOM political map of Saudi Arabia’s $500 billion megacities project along the Red Sea coast. Location of smart and tourist city with autonomous judicial system. English labeling. Vector.
Peterhermesfurian | Istock | Getty Images
However, the minister emphasized that “for NEOM, the projects, the projected scale continues as planned. There is no change in scale.”
“It’s a long-term project that has a modular design,” he said. “The rest of the big projects are there to be delivered for specific impact in specific areas.”
Asked what kind of message the reported schedule and scale changes will send to private investors, Al Ibrahim said that decisions will be made to suit the needs and returns of the projects and that all NEOM developments are seeing increasing investment interest.
“Keep in mind that these sectors did not exist before. They are being built from scratch. They require some investment and participation from the government and the sovereign wealth fund,” he said.
“And we’re seeing increased investor interest in all of these projects. These projects will be delivered at their scale and in a way that in terms of priorities fits the needs of the projects, the returns on those projects and the economic impact. It’s like you minimize any leakage, minimize the risks of overheating.”