Saudi Arabia has confirmed that the NEOM megaprojects will proceed as initially planned, despite previous reports suggesting a potential scaling back of the futuristic desert development.
What Happened: The Kingdom’s economy minister, Faisal Al Ibrahim, dismissed earlier reports of a reduction in the scope of the $1.5 trillion NEOM project. “All projects are moving full steam ahead,” Al Ibrahim stated at the World Economic Forum’s special meeting in Riyadh, according to CNBC.
He addressed concerns over the project’s financials, which is part of the broader Vision 2030 initiative to diversify the Saudi economy away from oil. The Public Investment Fund, Saudi Arabia’s sovereign wealth fund, is yet to approve NEOM’s 2024 budget.
Al Ibrahim assured that the projects would be delivered according to plan, with decisions being made for “optimal economic impact.”
He emphasized that “for NEOM, the projects, the intended scale is continuing as planned. There is no change in scale.”
When asked about the message these changes would send to private investors, Al Ibrahim said that decisions would be made to suit the needs and returns of the projects, and that all the developments within NEOM are seeing growing investor interest.
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Why It Matters: The NEOM project is a key component of Saudi Arabia’s Vision 2030 initiative, aimed at diversifying the country’s economy away from oil.
The project is a futuristic city being built from scratch and is expected to be a global hub of technological and sustainability excellence, attracting global talents and billions of investments. The confirmation of the project’s continuity is a significant development for the country’s economic transformation.
Earlier this year, the Saudi Arabian Public Investment Fund (PIF) was considering increasing bond sales and IPOs to finance the ambitious economic transformation project spearheaded by Crown Prince Mohammed bin Salman (MBS). The fund’s cash reserves had dwindled to $15 billion, the lowest since 2020, and it was under pressure to secure funding for its multi-billion dollar spending commitments.
Despite the economic transformation, Saudi Aramco CEO Amin Nasser cautioned that the global energy transition is faltering and urged policymakers to adopt a more realistic approach to the future of oil and gas. He pointed out that the demand for fossil fuels is anticipated to continue growing.
As the Saudi Public Investment Fund (PIF) marches towards an impressive $1 trillion by 2025, it solidifies its position as a major player in global investments, particularly in transformative tech. PIF, guided by Crown Prince MBS, is the 5th largest Sovereign Wealth Fund in the world, with $926 billion in assets.
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