Saudi Arabia Adjusts Vision 2030 Projects for Prudent Economic Management
Saudi Arabia has chosen to delay several projects outlined in its Vision 2030 economic reform plan, marking the first acknowledgment of adjustments to meet the program’s goals. Finance Minister Mohammed Al Jadaan revealed the decision to extend deadlines, citing the need to manage inflationary pressures and address supply bottlenecks. The reassessment of project schedules was prompted by considerations of borrowing limits and a comprehensive review of economic, social, and quality-of-life factors over the last 18 months. Some projects are being expedited, while others, including undisclosed primary initiatives, are granted a longer execution timeline.
The ambitious Vision 2030 program, introduced in 2016 by Crown Prince Mohammed Bin Salman, seeks to diversify Saudi Arabia’s oil-dependent economy and attract foreign investment. However, the economic reality of the country, heavily reliant on energy for government revenue, has led to forecasted deficits as spending accelerates, despite a budget surplus last year. The move to adjust the timeline for certain projects, viewed as a strategic decision by MBS, balances the imperative for on-the-ground improvements with fiscal prudence. The Kingdom’s ability to manage inflation and resource challenges is prioritized over the short-term rush to fulfill promises.
Meanwhile, Finance Minister Al Jadaan underscores the importance of a careful approach to deliver on Vision 2030, warning against hasty actions that could trigger inflation and necessitate increased imports. The extension of project timelines is rationalized as a means to create factories and essential human resources while benefiting the overall economy. Specific projects are earmarked for extension to 2033, 2035, or rationalization, with a committee, led by Crown Prince Mohammed Bin Salman, overseeing project timetable reviews. The government anticipates covering the deficit primarily through debt, with public debt expected to reach around 26% of GDP by the end of 2024. Seeking foreign finance is emphasized to avoid crowding out the private sector and competing with Saudi consumers and smaller businesses for financing. The government’s focus on spending optimization extends beyond cost-cutting to strategic resource utilization for maximum returns on investment.