The Kingdom of Saudi Arabia has entered a financially and politically reckless debt spiral as a result of Crown Prince Mohammed bin Salman’s (MBS) policies, which have caused the Vision 2030 projects he launched to be shelved, delayed, and falter. This came following his coup against the former Crown Prince of King Salman and his assumption of the position in June 2017.
Because the public still does not know the truth about the hidden details of the economic crises Saudi Arabia is about to face, perhaps MBS will profit from the lack of transparency in the Kingdom and the absence of a parliament that holds the government accountable for its corruption.
After all these years, the Saudi government’s efforts to find funding for the largest project in Vision 2030—NEOM City—are coming to light in the international media. MBS approved the project’s $500 million initial cost, but the Kingdom’s treasury is now unable to continue funding it and risking spending more money in vain.
The failure of the NEOM project did not end with the money that was wasted; rather, it increased the value of the Kingdom’s debts, whose money the government has been throwing in the desert for years, without any beneficial economic or societal benefit. Instead of bringing billions of dollars into the Kingdom, as MBS used to say, it became necessary to use the treasury to spend on it after the Saudi Investment Fund was unable to invest in support and financing.
International media outlets exposed the Saudi government’s attempt to borrow money, labelling MBS’s projects as absurd and worthless because they are extremely costly and a state’s treasury, no matter how big, cannot meet its financing needs. This is especially true given that, after eight years, the state has not received any revenue from the project, which consumed hundreds of billions of dollars from the oil surplus budget in order to improve citizen lives and implement infrastructure projects.
Devastating effects of MBS’s policies included high unemployment rates in the Kingdom, which went against the Saudi government’s propaganda, rising public debt, and lower per capita income than before MBS actually assumed power due to the King’s absence. Other effects included a decline in foreign capital and foreign investment in the Kingdom, fewer opportunities for domestic investment, and an increase in the rate at which the state deducted money from citizens’ paychecks through taxes and financial fines.
Saudi government institutions were not immune to MBS’s collapse either. Even though he was certain that his projects and vision would fail, he started removing significant financial shares from the ownership of large corporations. Examples of this include the National Bank, which is now part of Samba Bank, and the Saudi oil giant Aramco, which has started selling its shares whenever it experiences financial difficulties in local markets in order to justify taking money from Aramco in a somewhat legal manner. However, in the end, everyone is aware of the real story.
