He Neom megaprojectit has been the closest to the construction of the great pyramids that Middle East has lived. The project intended Undoil to Saudi Arabia of its dependence on fossil fuels that have supported the country during the last decades, to make it an attractive destination for investments and High purchasing power tourism.
According to published Reutersthe Public Investment Fund of Saudi Arabia (PIF for the acronym in English of PUBLIC INVESTMENT FUND), which promotes these initiatives, announced a reduction of 8,000 million dollars in its budget for Neom.
An 8,000 million ax. The PIF has opted for Recalibrate your investmentsprioritizing more realistic objectives and extending the deadlines for execution to relieve financial burden on the sovereign fund of the country.
The very high costs of projects and complicated geoeconomic situation has forced Saudi Arabia to make an important financial adjustment that Question viability of some of the Pharaonic projects that had been planned in different parts of the country.
Neom touched, but not sunk. According The published data by him Financial Timesthis cut implies a reduction of approximately 12.4% of the total value of the five key megaprojects that formed the Vision 2030 plan, with Neom as one of the most affected.
The declared value of these projects went from 241,000 million riyales in 2023 to 211,000 million in 2024. That depreciation in the value is equivalent to about 8,000 million dollars, which is an important cut in investments.
Oil price plays against it. The budget adjustment responds mainly to the Petroleum price drop and the accumulation of significant cost overruns in these megaprojects. CNBC He pointed outThat the value of the projects has been reduced due to delays, cost overruns in their execution and changes in the geopolitical situation of the area that have pushed down the profitability of the PIF.
Mónica Malik, Chief Economist of the Abu Dhabi Commercial Bank, pointed to Reuters that “the recalibration is also important to contain the bad allocation of resources and the cost pressures of the projects”, prioritizing investments For those projects that are already committed to the organization of world events such as the football stadium that will house The Line on its roof on the occasion of the 2034 Soccer World Cup.
1,000 stroke jobs. Financial difficulties had already forced to review the scope and rhythm of development in the past. For example, in The Line HE They reduced expectations Initials 170 km long from the project, 2.7 km by 2030.
In this new scissors, they will be affectedthousands of employees. Many of them have already been fired to reduce costs, while more than 1,000 workers will be relocated to the most priority projects, which will slow or put in technical break to Other projects for lack of personnel and financial resources.
Reality was not as spectacular as Renders. In addition to Neom, other linked projects have shown less promising results than expected. Trojena, the ski resort that will house the 2029 Asian Games and the 2030 Winter Olympic Games, faces considerable challenges Due to the climatic conditions and the limitations of its infrastructure, generating doubts about their ability to meet the initial expectations.
Another example of little interest that are provoking the infrastructure that has already ended Saudi Arabia is Sindalah, The tourist island Within the Neom Plan, showing that in addition to offering some Renders Futurists Of your projects, it is also necessary that the result be good enough to attract investors.
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Image | Neom
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