Saudi Arabia Says Economic Revamp Momentum Intact as Plans Shift

(Bloomberg) -- Saudi Arabia signaled little concern over having to delay or adjust some of the biggest projects conceived as part of its economic transformation plan, with a top official saying momentum is “moving very steadfastly” as the kingdom presses ahead with its multi-trillion dollar program.

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“We’re focusing on accelerating diversification,” Faisal Al-Ibrahim, the Saudi economy and planning minister, said Monday in an interview with Bloomberg Television on the sidelines of a special meeting of the World Economic Forum in Riyadh.

“We get feedback from the market, from investors,” Alibrahim said. “We will do whatever is best for these projects but also whatever is good for the economy.”

The economic makeover, known as Vision 2030, has been hitting some snags eight years after being unveiled by Crown Prince Mohammed bin Salman with the goal of pivoting the nation away from oil dependency.

The government has recently scaled back its medium-term goals for projects such as The Line, a pair of mirror-clad skyscrapers designed to ultimately cover a 170-kilometer stretch of desert along the coast. Officials now anticipate the development would house 300,000 people by the end of the decade, Bloomberg News reported this month, instead of the 1.5 million residents as initially estimated.

Read: Saudis Scale Back Ambition for $1.5 Trillion Desert Project Neom

“The kingdom will deliver all of these unprecedented projects,” Al-Ibrahim said. “We are seeing more investor interest in them, they will be delivering their intended scale and we will prioritize as things go.”

Last year, the kingdom’s Finance Minister Mohammed Al Jadaan said some major projects included in Vision 2030 will be delayed past their initial delivery date while others get prioritized, citing a longer period needed to build factories and sufficient human resources.

The world’s biggest oil exporter is currently focusing on initiatives including the development of human capital, enabling greater participation of women in the workforce as well as building strong institutions “that help us engage with the challenges,” according to Al-Ibrahim.

Read More: Saudi Arabia Says for First Time Some 2030 Plans Get Delayed

In 2023, Saudi Arabia’s economy had one of its steepest contractions of the past two decades after reducing oil output to support crude prices, according to estimates from the International Monetary Fund. The kingdom’s budget has swung into deficit after its first surplus in years, mainly due to lower energy prices and production and its spending commitments.

Still, growth in the non-oil sector — the engine of job creation — is expected to accelerate between 4% and 5% this year, Al-Ibrahim said.

“This is real economic change that is yielding results,” he said. “At the end of 2023, our non-oil activities represented 50% of total real gross domestic product for the first time ever, so this means that this transformation is working.”

--With assistance from Gaia Lamperti and Sarah Halls.

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