The Saudi Economy Minister has rejected recent reports that the massive $1.5 trillion NEOM project, a futuristic desert development on the Red Sea coast, is scaling back some of its plans.
“All projects are moving forward at full steam,” Faisal Al-Ibrahim told CNBC's Dan Murphy on Monday at the special meeting of the World Economic Forum in Riyadh.
“We set out to do something unprecedented and we are doing something unprecedented and we will deliver something unprecedented.”
In early April, reports emerged in Western media that The Line, a planned, glass-walled city supposed to stretch 105 miles across the desert by 2030, would be only 1.5 miles long by then — a decrease of 98.6 percent. %. . Citing anonymous sources familiar with the matter, Bloomberg's initial report 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 scaling back of plans, at least in the medium term, comes amid concerns about financing for NEOM, which is part of the kingdom's broader Vision 2030 initiative to diversify its economy away from oil. Saudi Arabia's sovereign wealth fund, the Public Investment Fund, has not yet approved NEOM's 2024 budget, according to a Bloomberg report.
Al-Ibrahim stressed that the projects will be delivered according to plan, but on the condition that decisions are taken to achieve “optimal economic impact.”
“We see feedback from the market, we see more interest from investors and we will always prioritize where we can improve to achieve optimal economic impact,” he said.
“Today, the economy in the Kingdom is growing faster, but we do not want to overheat this economy. We do not want to deliver these projects at the expense of importing a lot, which is against our interest. We will continue to deliver these projects as quickly as possible.” In a way that meets these priorities, accomplishes these projects, and has the optimal health impact on our economy and… healthy non-oil growth in it.”
NEOM's political map of the $500 billion mega-city project in Saudi Arabia along the Red Sea coast. Location of the smart and tourist city with an independent judicial system. English labeling. Vector.
Peterhermesphorian | iStock | Getty Images
However, the minister stressed that “for NEOM projects, the intended size continues as planned. There is no change in size.”
“It is a long-term project with a modular design,” he said. “The rest of the mega projects are there to be delivered to achieve specific impact in specific sectors.”
In response to a question about what kind of message the timeline and changes in size 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 developments within NEOM are witnessing increasing interest from investors.
“Keep in mind that these sectors did not exist in the past. They are being built from scratch. They require some investment and full intervention from the government and the sovereign wealth fund,” he said.
“And we are seeing increasing interest from investors in all of these projects. These projects will be delivered at scale and in a way that prioritizes the needs of the projects, the returns of these projects and the economic impact. It's like minimizing any leakage, minimizing any overheating risk as well.”
