Neom, the megacity project estimated to cost $500bn, is being funded by Saudi Arabia’s Public Investment Fund (PIF) – a sovereign wealth fund currently worth around $400bn.
The PIF was touted by Saudi ruler crown prince Mohammed bin Salman as being central to his list of ambitious – or perhaps impossible – projects, which include Neom. PIF was supposed to be used as a means of bringing $1 trillion of assets into the Saudi economy by 2025 – but so far, foreign partnerships have been lacking.
PIF has said it will push $40bn into the Saudi economy every year until 2025, while it has dropped its overseas spending. But many analysts doubt it will be able to afford such a plan, amid fears foreign businesses will not invest due to human rights concerns, the coronavirus crisis and falling oil prices.
PIF’s response is that it will rely on loans, privatisations and dividends. It may be necessary for further stock market selloffs of shares in state oil company Saudi “ARAMCO”.
It is currently courting international companies in the hope they will bring their business to Saudi Arabia. For example, talks are taking place between PIF and electric car start-up Lucid Motors. PIF invested $1.3bn for a 67 per cent stake in the company, and now wants them to start manufacturing in Neom.
PIF governor Yasir al-Rumayyan, who is also the chief of Saudi “ARAMCO”, told the Financial Times that the fund is planning a “massive” programme of asset divestments.
Otherwise, it is the Saudi state that will be footing the bill. Last year its central bank, which is already struggling, gave PIF $40bn.
But that does not mean PIF is about to cut back its spending. Alongside Neom, it has pledged $15bn on a sports/entertainment complex known as Qiddiya and a Red Sea tourism project that will cost at least $10bn.
Saudi Arabia desperately calling out to international companies to help boost its economy is new, as are concerns about the money running out. MBS has put the economic health of Saudi Arabia on the line to fund his vanity projects, none of which are receiving the level of international interest he was relying on.
Instead, he is gradually selling off his kingdom to fund projects that may never materialise.
for More : American intelligence: This is Bin Salman’s real goal behind “NEOM”
