Saudi Arabia in need of funds to complete construction due to excessive costs

Building The Line, Saudi Arabia's sprawling, dystopian city, is going to cost money. A lot of money. Construction costs for Neom, the region of Saudi Arabia's massive projects, are estimated at between $500 and 1.5 trillion dollars. A sum that represents a veritable fortune, even for a country as rich in oil as Saudi Arabia – to the point where the kingdom would be looking for money to finish its projects, according to Bloomberg.

In an article published on April 17, 2024Bloomberg indicates that the kingdom would intend to broadcast for the first time “ bonds in riyals later this year, as it seeks other sources of financing » for Neom.

Saudi Arabia needs financing

The Bloomberg source, who wished to remain anonymous, indicates that several banks are participating in this issue, including HSBC and the Saudi National Bank. The country would put on sale “ Islamic bonds, or sukuk », according to Bloomberg, which would be issued in riyal, the official currency of the kingdom. The sale of these bonds could raise up to $1.3 billion. The sale would take place from the second half of this year. »

This proposed sale comes at a time when the Public Investment Fund, the kingdom's sovereign wealth fund, also wants to accelerate its own bond sales. According to Bloomberg, the PIF would even consider using loans or selling its shares in certain companies it controls, in order to have enough liquidity. Loans worth 13 billion riyals ($3.5 billion) have already been granted by several Saudi banks.

Until then, it was the PIF which had financed the construction of The Line and Neom. In recent years, numerous projects, all more fanciful, have been announced: Oxagon, a port and a floating city; Trojena, a ski resort set to host the 2029 Asian Winter Games; Aquellum, a connected underground city, and multiple oversized hotel projects are to be built in the region before 2030.

That the Country Fund is increasing initiatives to find money quickly is not a good sign for the construction of all these projects. Above all, the news comes as Neom faces more and more difficulties. At the beginning of April, Bloomberg also revealed that plans for the development of The Line had been scaled back. While the city was expected to be completed in 2030 and accommodate 1.5 million residents, plans now call for The Line to have only 300,000 residents, and only 2.4 km will be fully completed, of the 170 km long that it will be. the city must reach.