NEOM

Saudi Arabia’s Public Investment Fund (PIF) is shifting its strategy to make the kingdom a global investment hub, allocating 80% of its capital to domestic projects and scaling back foreign investments. This pivot includes reducing the scope of giga-projects like Neom and Trojena amid fiscal pressures and geopolitical challenges.

The IMF revised Saudi Arabia's 2024 GDP forecast down to 2% due to fiscal pressures, while the Public Investment Fund (PIF) is replacing foreign CEOs with local hires and scaling back high-profile projects like Neom. Saudi officials confirmed a strategic shift toward domestic spending and cost-cutting, including terminating long-term contracts for Neom, amid projected deficits exceeding $44 billion by 2026.

Saudi authorities face a $16 billion cost to cancel NEOM contracts over five years, exceeding initial construction expenses for the $1 trillion futuristic city project. The financial burden reflects broader budget deficits and strategic retrenchment amid economic reevaluation and shifting priorities.

Saudi Arabia's NEOM has delayed work on The Line, its ambitious 170-kilometer dual skyscraper project, until after 2030 as the sovereign wealth fund pivots toward more practical infrastructure investments like ports and data centers. The company has also scaled back its 2030 population target to 100,000 residents and postponed development of tourism destinations and a mountain resort, reflecting a broader shift toward pragmatic project management.

Saudi Arabia has ordered government entities and its sovereign wealth fund to freeze payments to consultancy firms, management consultants, and law firms until the end of June as it manages economic pressures from the Iran war. The freeze applies to both new contracts and existing work, though the Finance Ministry disputes claims of payment delays. This marks the end of a consulting boom that flourished under Vision 2030 over the past decade.