The Mirage of NEOM and the Debt Behind the Crown Prince’s Vision

Imaginary scenes from the 'The Line' project in Saudi Arabia's NEOM, a bold futuristic vision that has not been realized in reality.

🔴**The Mirage of NEOM and the Debt Behind the Crown Prince’s Vision**

When Crown Prince Mohammed bin Salman announced NEOM — the Saudi desert transformed into a futuristic “city of the future” — it was meant to signal the dawn of a new Saudi Arabia: away from oil, steeply modernized, technologically advanced, and globally competitive. The kingdom’s “Vision 2030” blueprint was to pivot the country from petro-monarch to post-petro powerhouse. Instead, mounting evidence suggests what is playing out is a different story: massive spending, slowing returns, fiscal strain, delayed projects, and mounting regional distractions.

**Dreams cost money — and then more money**

NEOM was pitched at roughly US $500 billion but insiders and external analysts long considered that figure deeply conservative. According to one report, the overall value of Saudi real-estate and infrastructure projects tied to Vision 2030 already surpasses US $1 trillion. The independent investigation by the Financial Times concluded that NEOM’s flagship elements — in particular the “Line” linear-city concept — are now subject to major review, cost blow-outs, and scaled-back ambitions. These aren’t trivial revisions. For example: • Leadership of NEOM changed abruptly — the CEO of the project was replaced amid mounting criticism. • A “comprehensive review” of NEOM’s scope was launched, signalling that original assumptions were no longer credible under the original timetable. • Some external reports estimate Saudi public-sector debt and borrowing needs far higher than previously disclosed. For instance, the International Monetary Fund (IMF) projected Saudi gross government debt could hit ~44.5 % of GDP by 2029. • Saudi Arabia has turned heavily to international debt markets to finance the Vision 2030 agenda: in 2024 alone it reportedly issued around US $50 billion in bonds.

**Domestic promises left unmet**

For a regime that pledged transformation and renewed prosperity for its citizens, the domestic arithmetic does not look benign. Among the problems: • Although the official 2025 budget statement suggests public debt equivalent to about 29.9 % of GDP (SAR 1,300 billion) under the “public debt” label, this may mask contingent liabilities, off-balance sheet projects and huge capital outlays still being financed through debt. • The IMF in its 2025 Article IV consultation acknowledged that the forecast fiscal deficit would be financed “primarily by borrowing, including through debt issuances, syndicated loans or facilities from export credit agencies, leading to an increase in the public debt-to-GDP ratio to about 42 % by 2030.” • Despite media-friendly headlines of diversification, many analysts warn the rapid borrowing and spending pace is unsustainable.

**Foreign ventures: influence over reform**

While Saudi Arabia spends heavily at home, it is also exporting capital — and risk — abroad in pursuit of regional influence. These foreign expenditures compound the overall fiscal and reputational risk. Some examples: • In Yemen, Saudi Arabia pledged around US $368 million in fresh economic support in September 2025 to bolster the government in Aden. • The kingdom previously deposited US $1 billion into Yemen’s central bank in 2023 to shore up the cash-starved government in exile. • In Lebanon, Reuters reported that Lebanon would ask Saudi Arabia to resume a previously-halted US $3 billion grant for the Lebanese army. • In Sudan, Saudi-aligned and Gulf-aligned funds have been implicated in backing rival factions, fuelling conflict, rather than stabilising governance.

These are not merely “aid packages,” but calculated strategic investments (or bets) in geopolitical theatres. In many cases the returns — economic or political — are far from assured. The gap between expectation and outcome is widening.

**Strategic investment deal – United States relations**

In May 2025, the White House released a fact-sheet stating that President Donald J. Trump secured a **historic US $600 billion investment commitment** from Saudi Arabia. That deal includes Saudi investment in U.S.

AI data-centres, energy infrastructure, technology firms (Google, AMD, Uber, etc.), and huge defence contracts. The fact sheet highlights that this investment is touted as transformative for both nations — yet the timing is telling: Saudi Arabia is simultaneously borrowing heavily and facing domestic execution risks on its major projects, even as it pledges enormous outward capital flows. This paradox raises questions about priorities: if a country is promising massive investment abroad, but internally its flagship transformation is faltering and its debt burden rising, what does this say about the leadership’s strategic coherence and fiscal discipline? • The reported US $600 billion in deals was described as the “largest set of commercial agreements on record” between the two countries. • The agreement spans sectors including defence, infrastructure, technology and energy, with some contracts valued at over US $142 billion in defence sales alone. This outward commitment underscores that Saudi Arabia under MBS is pursuing global prestige and alliances — but whether the domestic foundations (governance, finance, execution) are strong enough to support those ambitions remains deeply uncertain.

**The optics vs. the reality**

Imagine: hundreds of billions committed to futuristic desert cities (NEOM, “The Line”), ski resorts, luxury islands, AI-hubs and the like — even as much of the domestic economy remains tied to oil; as borrowing rises; and as foreign policy engagements absorb capital. According to one report:

“The country’s total debt now stands at $354 billion, or about 30 percent of its GDP. … A key reason behind the retrenchment is the kingdom’s deteriorating fiscal health.” And: “Saudi Arabia Turns to Debt Markets for Vision 2030 Financing … the kingdom’s total debt stood at some $308.7 billion at the end of September.” Meanwhile, some of the grand project assumptions are being peeled back. One report noted: “Initial projections for The Line to house 9 million people by 2030 have been reduced to fewer than 300,000 people.”

**Accountability, governance and execution**

Much of the critique centres not simply on ambition, but on execution — and the lack of transparent accountability. The FT notes that NEOM’s revision stemmed in part from unrealistic engineering assumptions, governance lapses, and the fact that private investment and international partners have not followed at the pace originally envisaged. The governance challenge is real. A 2020 study on “Managing Public Debt: the Case of Saudi Arabia” observed the sharp increase in debt and the need for stronger risk-management frameworks. That risk may be manifesting: if returns don’t materialise or if oil revenue weakens — as it has in recent years — then reliance on large-scale borrowing becomes brittle.

**Regional distraction, strategic cost**

While the domestic transformation is faltering, Saudi Arabia’s regional posture under MBS has also been expensive. Military interventions, influence operations in Lebanon, Sudan and Yemen, political patronage and soft-power expenditures add to the total cost. Money spent abroad is money not spent on domestic competitiveness, infrastructure or households. Although credible open-source evidence of “funding terrorists” in the broad sense you asked is harder to pin down (and requires care and nuance), what we do see is Saudi funds flowing into unstable theatres, allied militias and proxy engagements. For example, Sudan’s conflict has seen external backing of rival military commanders. To the extent that these foreign engagements underwrite instability, the financial cost is also reputational and strategic — and the dividend is far from obvious.

**What happens next?**

Saudi Arabia still retains enormous financial firepower: large sovereign reserves, the global role of Saudi Aramco, and a credit rating still well above many peers. But the trajectory is worrisome: more borrowing, more risk, more reliance on grand projects, and fewer clear pay-offs.

If the government is forced to delay or scale back major initiatives, or if oil prices slump, then taxpayers will ultimately feel the burden. The question for Saudi citizens — and for external investors — is whether this is just a recalibration or a structural failure of vision.

For MBS’s prestige to align with performance, Saudi Arabia must shift from spectacle to substance: meaningful returns, credible institutions, and realistic project scopes. Without that shift, the dream of NEOM becomes the cautionary tale of the kingdom’s transformation.

**🔵**[Link to the article in Arabic ](https://t.me/almuraqb/215)