Saudi Arabia is going ahead with a tourism and culture project in the capital Riyadh worth $20 billion, despite the Kingdom’s growing financial crisis. According to its CEO, the Diriyah Gate Development Authority has been ordered to go “full speed ahead” by Crown Prince Mohammad Bin Salman.
“We don’t know the economic impact of Covid over a 12-, 24- or 36-month period,” Jerry Inzerillo told Bloomberg, “but I can tell you one thing I know from his Majesty [sic] the Crown Prince: It will not affect the planning of the principal city of Riyadh.”
Having been approved by the Kingdom’s de facto ruler and with allocated funds to work with, many major parts of the project are now reportedly under construction. The first phase is set to be completed by the end of 2023.
The effect of the Coronavirus pandemic – and the concurrent oil price war – on Saudi Arabia’s economy, however, has caused many to speculate whether such projects are sustainable. Saudi Arabia’s foreign reserves fell by $20 billion in April and the International Monetary Fund announced that the economies in the Gulf region are expected to fall by more than seven per cent this year.
To counter the economic downturn, Saudi Arabia boosted its tourism industry after the lifting of its nationwide Covid-19 lockdown last month, in a bid to make it a key pillar of economic recovery. It announced, for example, the launch of a $4 billion tourism development fund in June, as well as the launch of its “Saudi Summer” scheme.
Concerns about the economy and the effects of the pandemic have caused a split in public and private investment in such projects. According to Inzerillo, there are foreign tourism companies who “need until the [autumn] to ascertain what the fallout in the global tourism picture is.” Although the investment may be uncertain, though, Saudi investors have been extremely interested in the projects, with “major Saudi entrepreneurs, royal family and non-royal family” coming forward.
This is apparently giving hope to the Kingdom’s plans for the tourist sector. “I’m more optimistic than I was 18 months ago,” said Inzerillo. “Travel is going to boom again. You know why? Because people don’t want to feel penned in.”