2025-10-08
Saudi Arabia’s Major Projects in ‘Uneven’ Progress: Moody’s
Saudi Arabia is making “uneven” progress on its most ambitious infrastructure projects due to challenges including engineering constraints, a shortfall in private investment and lower oil prices, according to Moody’s Investors Service.
While the Gulf kingdom is still expected to implement the economic transformation plan, known as Vision 2030, fiscal trade-offs indicate the government will continue to post budget shortfalls in years to come, Moody’s analysts including Ashraf Madani wrote in a note on Tuesday.
Several parts of Neom — the large-scale development project that’s at the heart of the program — are facing delivery delays and construction challenges, Bloomberg News has reported. That includes Trojena, slated to include a sprawling ski resort in the desert.
While the Gulf kingdom is still expected to implement the economic transformation plan, known as Vision 2030, fiscal trade-offs indicate the government will continue to post budget shortfalls in years to come, Moody’s analysts including Ashraf Madani wrote in a note on Tuesday.
Several parts of Neom — the large-scale development project that’s at the heart of the program — are facing delivery delays and construction challenges, Bloomberg News has reported. That includes Trojena, slated to include a sprawling ski resort in the desert.
Saudi Arabia has asked consulting firms to carry out a strategic review of The Line, a futuristic city that’s part of Neom, to assess its feasibility, Bloomberg reported in July.
“Engineering difficulties have impeded progress on the construction of Neom city in particular, because of the project’s scale and complexity,” Moody’s said. “Project funding is also hampered by less buoyant oil prices and still restrained oil production.”
The government has more than doubled its budget-deficit projection for the year and estimates the fiscal gap to continue until at least 2028, according to preliminary figures. Still, the outlook for revenue is seen steadily improving in coming years while expenditure is forecast to drop in 2026 before picking up thereafter.
For the oil-rich kingdom, dependence on oil revenue is still largely unchanged from 2016, when Vision 2030 was announced, and has even deepened by some measures.
Its fiscal breakeven oil price now stands at $94 a barrel, Bloomberg Economics estimates, higher than a decade ago. The figure jumps to $111 a barrel if domestic investment by the sovereign wealth fund, the Public Investment Fund, is included. Brent traded at about $65 on Tuesday.
Aside from lower crude prices, down 12% since the start of the year, a lag in foreign-direct investments and limited financing by the private sector are seen hindering the progress of the projects.
“Financing for Vision 2030 investments, including the ambitious giga-projects, is dominated by PIF and its affiliated Saudi companies,” Moody’s analysts wrote. “A growing role for the private sector will be essential to complete many projects.”
“Engineering difficulties have impeded progress on the construction of Neom city in particular, because of the project’s scale and complexity,” Moody’s said. “Project funding is also hampered by less buoyant oil prices and still restrained oil production.”
The government has more than doubled its budget-deficit projection for the year and estimates the fiscal gap to continue until at least 2028, according to preliminary figures. Still, the outlook for revenue is seen steadily improving in coming years while expenditure is forecast to drop in 2026 before picking up thereafter.
For the oil-rich kingdom, dependence on oil revenue is still largely unchanged from 2016, when Vision 2030 was announced, and has even deepened by some measures.
Its fiscal breakeven oil price now stands at $94 a barrel, Bloomberg Economics estimates, higher than a decade ago. The figure jumps to $111 a barrel if domestic investment by the sovereign wealth fund, the Public Investment Fund, is included. Brent traded at about $65 on Tuesday.
Aside from lower crude prices, down 12% since the start of the year, a lag in foreign-direct investments and limited financing by the private sector are seen hindering the progress of the projects.
“Financing for Vision 2030 investments, including the ambitious giga-projects, is dominated by PIF and its affiliated Saudi companies,” Moody’s analysts wrote. “A growing role for the private sector will be essential to complete many projects.”
Source: GULF TIMES