Saudi Arabia to Adjusts Vision 2030 Plan, Scaling Back Some Projects

Saudi Arabia's Finance Minister Mohammed Al Jadaan announced at the World Economic Forum meeting in Riyadh that the kingdom will modify its Vision 2030 economic diversification plan, scaling back some projects and accelerating others.

The government is focusing on accelerating diversification and will do what is best for the projects and the economy, Al Jadaan said.

Some major projects under Vision 2030, like The Line, a $1.5 trillion desert development, have had their medium-term objectives reduced. The kingdom aims to deliver all the unique projects, with more investor interest, and will prioritize as things progress. "We are focusing on accelerating diversification and will do what is best for the projects and the economy," Al Jadaan stated.

Despite some delays and adjustments to the Vision 2030 plan, the non-oil sector in Saudi Arabia is expected to grow 4-5% in 2023, representing 50% of the country's GDP for the first time. This indicates the economic transformation is working, according to the finance minister.

Why this matters: Saudi Arabia's Vision 2030 plan is a critical initiative to diversify the kingdom's economy away from oil dependence. The adjustments to the plan reflect the challenges and realities faced in implementing such an ambitious transformation.

Saudi Arabia's $500 billion giga-project Neom has secured new funding of $2.7 billion from nine Saudi-listed banks to support short-term financing requirements for projects like Trojena, The Line, and Oxagon. However, the pullback in Neom's plans has resulted in at least one contractor dismissing some workers, and it is now estimated that fewer than 300,000 people will live in The Line city by 2030, down from a previous estimate of 1.5 million.

Al Jadaan acknowledged that Saudi Arabia needs to "mark to market" its expectations for the 14-year Vision 2030 program. The government has already completed or is on track with 87% of the 1,064 initiatives under the plan. However, the minister states economic momentum and plans will change, adjust, or extend some projects, and downscale or accelerate others as needed to ensure the quality of future economic growth and address the challenges the kingdom faces.

Key Takeaways

• Saudi Arabia will modify its Vision 2030 plan, scaling back some projects, and accelerating others.
• Non-oil sector in Saudi Arabia is expected to grow 4-5% in 2023, reaching 50% of GDP.
• Neom secures $2.7 billion in new funding but plans scaled back with fewer residents expected.
• Saudi Arabia acknowledges the need to "mark to market" expectations for 14-year Vision 2030 program.