Published on :
Violently decried four years ago after the assassination of journalist Jamal Khashoggi, Saudi Arabia is now more courted than ever. The manna it draws from its oil authorizes all excesses. The latest: to organize the Asian Winter Games of 2029.
Twenty-four billion dollars in budget surplus this year, 26 and a half billion expected in 2023, the Saudi economy is doing quite well in these times of crisis. The Standard & Poors agency recently estimated GDP growth at 7.5% in 2022, at a time when recession is taking hold around the world. And the inflation that weighs on many economies will barely exceed 2.5% this year, according to the Saudi Ministry of Finance.
A notable performance when you know that the kingdom has come a long way. The pandemic had dried up its two main sources of income, namely oil and religious tourism. Today, this period is only a distant memory. the Hajj and the Umrahthe great and the small pilgrimages fill up and oil prices exceed 90 dollars a barrel, where they had fallen below 10 dollars during the pandemic.
The current energy crisis should benefit the country even more
The decision taken on October 5 by OPEC +of which Saudi Arabia is one of the most influential members, to drastically reduce its oil production quotas – a first since the start of the pandemic – will probably boost prices, to the greater benefit of oil-producing countries. oil and therefore Saudi finances.
Reflecting this opulence, the Public Investment Fund – no less than 606 billion dollars in assets in June – which the Saudi authorities aim to increase to 1,000 billion within three years, i.e. the equivalent of what weighs currently the Norwegian sovereign wealth fund, the largest in the world. At the head of this fund, the country’s strongman, Crown Prince Mohammed bin Salman, who has made it a key instrument for the modernization and diversification of the Saudi economy, but above all for his personal success.
The craziest projects can see the light of day
As those asian winter games that Saudi Arabia is preparing to organize in the middle of the desert. Abandoned in 2017 because deemed too expensive and uninteresting, they could be held in 2029 in Neom, another crazy project, a futuristic megalopolis, inspired by the superhero film Guardians of the Galaxy, of which Mohammed bin Salman is a big fan. Neom, which he wants to erect in the northwest of the country, has still not emerged from the ground. But 500 billion dollars have already been mobilized for its construction, to which must now be added the cost of a resort with ski slopes, an artificial freshwater lake, chalets and luxury hotels. Because the winter games are 28 events on snow and 19 on ice, which Saudi Arabia wants to organize in a region where it rains very rarely, not to mention snow…
But the paradox of all this is that Neom is sold as a zero-carbon city, respectful of the environment while the kingdom remains one of the first producers and exporters of oil on the planet.
This rain of petrodollars has nevertheless made it possible to initiate a diversification of the Saudi economy
The famous 2030 vision carried by Mohammed ben Salman with priority sectors such as infrastructure, aerospace, electric cars, video games and renewable energies. The Saudi sovereign wealth fund has just, just last week, mandated several large banks for the issuance of a green bond intended to finance environmental projects. It intends to devote more than 10 billion dollars by 2026 to renewable energies, decarbonized transport or the sustainable management of water supply.
But at the same time, the kingdom, one of the world’s leading oil producers, has just launched a major investment plan in hydrocarbon production and transport infrastructure, while setting itself the goal of achieving carbon neutrality. by 2060. The country, as we can see, is not a contradiction in terms. Since the announcement of OPEC+, the price of a barrel of crude has risen… the manna of petrodollars is not about to dry up.