Several international companies, working on Saudi Arabia’s $500bn Neom megacity, have withdrawn from the project. In a similar move, Saudi companies started withdrawing from the megacity project.
Sources familiar with the matter affirmed that the Red Sea Global (RSG), wholly owned by the Public Investment Fund (PIF) of Saudi Arabia which directed by Crown Prince Mohammed bin Salman, will be sold after suffering heavy losses. The RSG is considered the cornerstone of MBS’s Vision 2030, the sources added.
It seems that the PIF is heading to collect billions of dollars as part of its plan to expand investments in MBS’s Vision 2030, which was described by leading experts as an “unenforceable illusion.”
This came as the PIF Saudi Arabia’s sovereign wealth fund is pushing ahead with plans to reduce its stakes in some of the kingdom’s biggest companies and raise billions of dollars for new investments.
People familiar with the matter affirmed that the PIF has recently been holding informal talks with investment banks about paring its holdings in several state-backed firms that trade on the local stock exchange.
The PIF is also considering plans to potentially list more state-owned assets, the sources added.
PIF has investments across a range of industries from Saudi Electricity and utility Acwa Power to bourse operator Saudi Tadawul Group.
It owns majority stakes in the $53 billion commodities firm Saudi Arabian Mining and the $54 billion carrier Saudi Telecom, as well as holdings in lenders including Saudi National Bank, Riyad Bank and Alinma.
According to the sources, the PIF hasn’t finalized the details of particular sales and may wait until next year before executing the transactions.
MBS is racing with time to use the Saudi surplus budget to finance his imaginary Vision 2030 plan.
Saudi Arabia is planning to achieve an estimated billion increase in the budget for the current year 2022, exceeding 90 billion riyals ($24 billion) after years of fiscal deficit (2015-2021).
The provisional revenue collection figures for the Fiscal Year 2021-22 showed tax revenue increased from 63.9 billion riyals in the first quarter of 2021, to 72.7 billion riyals in the first quarter of 2022.
This rise was intended to be temporary after the drop in oil prices from mid-2014 to early 2016. However, the Value Added Tax (VAT) rate increased from 5% to 15% following the Covid outbreak in 2020. The new 15 % VAT has been continuing despite the increase in oil prices.
The government of Saudi Arabia projected that about 223 billion Saudi Arabian Riyal of its revenue for 2022 was generated from taxation on goods and services. This pushed MBS to use the surplus budget in implementing Vision 2030 plan instead of reducing taxation.
