Saudi Arabia takes out loan to finance mega-city projects – Middle East Monitor

Further question marks have been raised about the health of the Saudi Arabian economy following revelations that Crown Prince Mohamed Bin Salman was to take out a loan to finance part of his mega NEOM project. a futuristic $ 500 billion city-state near the Red Sea and the borders of Egypt and Jordan.

The loan was taken out by the Red Sea Development Company (TRSDC), the official developer backed by the kingdom’s sovereign wealth fund, the Public Investment Fund. According to The National, the TRSDC plans to close a $ 3.7 billion loan from five local banks by the end of 2020 as it ramps up construction on the project. The loan was confirmed by John Pagano, Managing Director of TRSDC.

This loan is likely to raise other questions about the Saudi economy. As the world’s largest oil producer, Saudi Arabia has traditionally not needed to borrow money, until government spending and royal largesse outstrips income. But currently, the kingdom’s debt is increasing due to years of falling oil prices.

The spread of Covid-19 contributed to its debt crises, prompting Saudi Arabia to borrow $ 26.6 billion after it depleted its foreign exchange reserves and announced a $ 32 billion stimulus package.

READ: Arab economies contract, pushing a quarter of the population into poverty

In July, Saudi ArabiaA’s economic difficulties were such that the kingdom “considered all options” to strengthen its economy, including the sale of state assets and, for the first time, the introduction of income tax.

Kingdom’s woe exacerbated by murder of Saudi journalist Jamal Khashoggi in 2018. Global investors who once saw the kingdom’s crown prince as a safe bet were frightened by the grisly murder that Western intelligence concluded that it was authorized by the de facto ruler.

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