Saudi Minister: Some 2030 Projects to Be Delayed
Saudi Arabia has delayed past 2030 some of the projects launched as part of its economic transformation plan, shifting the timeline for meeting the goals of the multi-trillion dollar program.
The government, which is forecasting budget deficits every year out to 2026, has decided on the extension to build capacity and avert huge inflationary pressures and supply bottlenecks, Finance Minister Mohammed Al Jadaan said Thursday. He didn’t specify which projects would be affected.
A longer period is needed to “build factories, build even sufficient human resources,” Al Jadaan said in Riyadh. “The delay or rather the extension of some projects will serve the economy.”
After determining how much borrowing the government decided was acceptable, it then went back to review the timeline of some projects, Al Jadaan told reporters on Wednesday.
Dubbed Vision 2030, Crown Prince Mohammed Bin Salman’s wide-ranging initiative unveiled in 2016 aims to diversify the oil-dependent economy and attract foreign investment. The government has long touted the progress being made in areas ranging from tourism and manufacturing to digitalisation and integrating women into the labor market.
Following the first budget surplus in nearly a decade last year, the kingdom rewrote its medium-term fiscal plans and shifted to forecasting deficits for years to come as it accelerates spending.
Shifting the Timeline
“There are strategies that have been postponed and there are strategies that will be financed after 2030,” Al Jadaan said.
Al Jadaan warned that delivering on the plans “in a short span of time” would threaten to stoke inflation and put pressure on Saudi Arabia to import more from abroad to marshal the resources needed.
Expanded, Rationalised
“Certain projects can be expanded for three years “- so it’s 2033 “- some will be expanded to 2035, some will be expanded even beyond that and some will be rationalised,” Al Jadaan said.
Saudi Arabia has projected oil and non-oil revenues out to 2030, along with how much spending will be required to execute on plans it’s announced, Al Jadaan said. “So we identified the gap and looked at how we are going to fill the gap and the gap is mainly filled by debt,” he said.
Figures unveiled by the Finance Ministry this week showed it expects public debt to reach almost 26 per cent of economic output by end-2024 – a comparably low level by global standards but an increase of more than a percentage point from this year.
Getting to a threshold above debt levels envisaged by the government can be dangerous, Al Jadaan said on Thursday. Authorities are looking for funding from abroad to avoid crowding out the private sector or competing with Saudi consumers and smaller companies for access to financing, he said.
The Saudi government is also reviewing spending plans and looking for ways to trim budgets where necessary. This year alone, it’s saved around 225 billion riyals ($60 billion) that was re-used to implement projects, programs and other strategies, according to Al Jadaan.
“Optimising spending is not only about reducing spending,” he said. “It’s about the best way to use resources in order to achieve optimal returns.”
