Saudi Arabia’s ambitious NEOM project is facing major challenges, according to a report by US business magazine Bloomberg. Originally estimated at $500 billion, the project has now ballooned to three times that amount within just a year of construction commencing. As a result, the majority of the funds for the project come from Saudi sovereign wealth funds, specifically the Public Investment Fund, which has seen its cash reserves plummet to around $15 billion – the lowest level since the start of the pandemic in 2020.
One of the main reasons for this decision is the escalating cost of the project. The royal family has decided to drastically scale back their plans for NEOM, with only 2.4 kilometers of “The Line” set to be built by 2030, accommodating a maximum of 300,000 people. These figures are considered optimistic estimates by a high-ranking employee.
The delay in the NEOM project raises doubts about Saudi Arabia’s ability to impress the world with major events like the 2029 Asian Winter Games, which was supposed to be hosted by NEOM. While some parts of the project are still moving forward, such as the completion of Sindalah in the Red Sea, it remains uncertain what will happen to NEOM in future as Saudi Arabia faces economic challenges and resource depletion. Despite these challenges, Crown Prince Mohammed bin Salman remains committed to achieving his Vision 2030 program goals and diversifying Saudi Arabia’s economy away from oil and gas.