Neom secures $2.7bn as minister admits ‘adjustments’

World Economic Forum/Ciaran McCrickard

• 9 Saudi banks behind credit line
• Finance minister speaks of ‘challenges’
• Boost to construction workers

Saudi Arabia’s $500 billion giga-project Neom has secured new funding as the kingdom’s officials admit some of its Vision 2030 projects may have to be scaled back.

The SAR10 billion ($2.7 billion) revolving credit facility, obtained from nine Saudi-listed banks, will support short-term financing requirements for projects such as Trojena, The Line, and Oxagon, Neom said in a statement.

“This new credit facility is a natural fit within Neom’s wider strategy for funding,” Neom CEO Nadhmi Al-Nasr said.

Lead arrangers for the facility include Saudi National Bank, Riyad Bank, and Saudi Awwal Bank. 

The other participants were Al Rajhi Bank, Alinma Bank, Arab National Bank, Bank Albilad, The Saudi Investment Bank, and Bank AlJazira.

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The announcement comes after the hosting of representatives from 52 global, regional and local financial institutions by Neom.

Banking officials were shown the progress achieved so far in key Neom projects, including a site visit to The Line, the 170km futuristic city. It was revealed last month that only a short stretch of The Line will be completed by 2030.

The pullback has resulted in at least one contractor dismissing some workers it employs on the site, Bloomberg reported, citing informed sources. Fewer than 300,000 people will live in the city by 2030, down from a previous estimate of 1.5 million. 

• Saudi Arabia strives to counter giga-project doubts

• Neom increases workforce to get vision over the line

• Neom and Jeddah offer appeal to expat buyers

Saudi Arabia’s finance minister said on Sunday that the kingdom would adjust its Vision 2030 plan to transform its economy as needed, scaling back some projects and accelerating others.

Mohammed Al Jadaan, speaking in Riyadh at the World Economic Forum’s special meeting on global collaboration, growth and energy for development, said: ”There are challenges… we don’t have ego, we will change course, we will adjust, we will extend some of the projects, we will downscale some of the projects, we will accelerate some of the projects.” 

Lack of FDI

Earlier this month, James Swanston, a Middle East and North Africa economist at Capital Economics, said in a research note that Saudi Arabia has yet to be able to raise foreign direct investment towards its Vision 2030 goals, prompting a turn to the state Public Investment Fund to prop up investment spending. 

“Unless the government makes major strides to improve the local business environment and entice greater FDI, this is likely to continue. Even if oil prices fall back from current levels, the government and PIF will probably issue debt to finance spending,” he said.

Neom

The kingdom’s officials put on a big show at an international real estate event in Cannes in March. This month Neom kicked off the China leg of its global tour, meeting 500 business leaders and officials in Beijing and Shanghai.

Neom said this month that the number of people employed in construction activities will increase from more than 140,000 to more than 200,000 in 2025.

Last week, the Saudi government said in its annual report on Vision 2030 that one third of 1,064 planned projects have been completed so far.