The Saudi Crown Prince continues to insist on pursuing his goals despite opposition from the government and warnings against wasting billions of dollars on projects that no one else supports or believes in, despite the Kingdom of Saudi Arabia’s ongoing financial crises, which Bin Salman is attempting to dispel despite the country’s high debt levels and budget deficit.
According to a Wall Street Journal report, the Saudi government raised over $54 billion this year to fund the Crown Prince’s ambitious projects that have been shelved for more than eight years. This amounts to 5% of the country’s GDP, which it received after the Kingdom’s debts ballooned and it was forced to sell its shares in the Aramco oil company.
The Kingdom’s government, according to analysts, believes that once it receives this amount, it will be able to overcome the challenges and effects of the projects that Bin Salman insists on carrying out. However, the reality is that it has faced and will continue to face difficult financial decisions due to the high cost of Vision 2030 projects, which have increased to the tune of over a trillion US dollars in order to transition from an oil-dependent monoculture to a diversified economy. Until now, the Kingdom has not worked on productive projects claiming that it has started the process of transformation towards economic diversification, as its projects are primarily focused on entertainment and sports in all of their forms. However, these are variable forms of entertainment due to the actual conditions of the region.
It is important to note that the Crown Prince wants to draw tourists with entertainment initiatives during a period when over 1,300 people perished from heat-related illnesses. This negatively impacted Saudi Arabia’s reputation as a travel destination worldwide.
According to the newspaper report, Saudi Arabia has announced that some Vision 2030 projects will be lowered because of the financial crisis the Kingdom is currently experiencing, the high cost of these projects, and the fact that despite significant promotional spending, no money has yet been received by the Kingdom from them.
Tim Kallen, a visiting fellow at the Arab Gulf States Research Institute in Washington, stated: The Saudi government’s strategy is predicated on the expectation that oil prices will increase in the future, but this expectation is dangerous given the tensions that the world, particularly this region, occasionally experiences.
According to Mohammed Al-Jadaan, the Saudi Finance Minister, in an interview with CNBC, the country’s deficit has reached 2% of GDP. The minister views this as a good deficit, considering it to be an acceptable level thus far that would support the growth, plans, and initiatives created by the Saudi Crown Prince.
Al-Jadaan said that the Saudi government was hoping to raise between forty and fifty billion dollars by selling more Aramco shares, but this month decided to raise 11.2 billion dollars after the bankers toured the market. In reality, it is very difficult to find foreign investors willing to purchase stocks worth tens of billions of dollars, and many investment funds from Western countries do not currently operate in Saudi markets. Economists saw this as a representation of the Kingdom’s spiraling reality brought about by Crown Prince Mohammed Bin Salman’s policies.
