Saudi Arabia has been the center of attention thanks to its dystopic architectural projects that the country has launched with the aim of diversifying its economy and becoming a Luxury Tourist Destination.
However, after a streak of economic fluctuations that have reduced the yields of the Saudi Financing Fund, the entire project wobbles. The reason: the Low oil price and estimates of Let it be maintained So for a time.
The fall in the price of oil. One of the reasons that promoted the Vision 2030 Project From Saudi Arabia, it was precisely to disconnect the country from its strong dependence on gas and oil deposits, origin of its current prosperity. However, the current geopolitical context and the unstoppable boom of the Sustainable energies They have made the price of oil, a vital resource for the Saudi economy, has experienced a considerable drop in recent months.
Such and As you collect he Financial Timesin March 2025, the price of barrel in international markets was around 70 dollars, far from the more than $ 100 that were reached in 2022. Despite the production cuts implemented by the Organization of Petroleum Exporting Countries (OPEP+), the recovery of black gold prices has been slow and insufficient.
No oil there is no financing. This decrease in income directly affects the country’s budget, estimating a spending cut by more than 3.7% per year by 2025. Saudi authorities had projected much higher income to finance their ambitious plans, so a significant deficit in public accounts that puts at risk that puts at risk has been generated The financing of your megaprojects star.
“A more pronounced and sustained drop in the price of oil would require a deeper reduction in government spending to contain the magnitude of the deficit and accumulation of government debt. There will probably be also an additional adjustment and recalibration in the investment plans out of budget,” explained Monica Malik, chief economist of the ABU Dhabi Commercial Bank to Financial Times.
According to published Bloomberg, the Saudi Arabia government had budgeted an expense of 342,000 million dollars by 2025, of which it estimated to recover about 315,000 million dollars for oil revenues. That would leave a deficit of about 27,000 million, which is aggravated by the reduction of income of an oil that does not rebound.
There was already a first cut. It is not the first time that the pharaonic architectural projects of Neom is trimmed. A year ago, the expectations of building a 170 km long building, It was lowered 2.7 km by 2030 and the construction of The desalination plant that was going to guarantee drinking water for the new city.
Unlike the current situation, those cuts were motivated by the poor financial performance of the Public Saudi Investment Fund, such and As I counted The Wall Street Journaland for some maneuvers of “creative accounting” by the managers of the work with the objective of justify the cost overheads.
The Saudi crossroads. With a whole catate of half -building works and an investment forward trying to attract as many investments possible to cover the growing expenses. Of that Fugging forward The commitments arise to make Saudi Arabia at the headquarters of the Asian Winter Games in 2029, followed by the 2030 Expo in Riad and the Football World Cup in 2034.
These commitments will require that the Government further cuts the investments destined for Great tourist projectsto focus on the construction of 10 futuristic stadiumsa skiing station with an artificial lake of fresh water and artificial snow. All this, remember, in a desert climate.
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