IMF endorses Saudi plan for $500bn Neom zone

Visitors watch a 3-D presentation during an exhibition on ‘Neom,’ a new business and industrial city, in Riyadh. (Reuters)
Updated 01 November 2017

IMF endorses Saudi plan for $500bn Neom zone

DUBAI: The International Monetary Fund (IMF) has endorsed an ambitious Saudi Arabian plan to build a $500 billion business and industrial zone extending into Jordan and Egypt, saying the project could benefit the whole region.
Jihad Azour, head of the IMF’s Middle East department, said Riyadh would need to balance the huge cost of the zone and other economic projects with its drive to cut a big state budget deficit caused by low oil prices.
But the plan to develop the zone, known as Neom, could stimulate trade and allow the Middle East to capitalize on its location as a bridge between Asia and Europe, Azour said in an interview.
“It is a signal that greater regional cooperation is back on the table,” he said.
“We see value and necessity in regional cooperation.”
The Neom scheme, unveiled by Saudi Crown Prince Mohammed bin Salman at an international conference in Riyadh last week, would develop industries such as energy and water, biotechnology, food, advanced manufacturing and entertainment in a 26,500 square-kilometer (10,230 square mile) zone with its own laws and judicial system.
The project has been welcomed by Jordanian officials but so far there has been little public response from the Egyptian government, a diplomatic ally of Saudi Arabia. Riyadh has indicated that much of the huge cost of the zone will be borne by the Saudi government, but a large, though undisclosed, portion would come from domestic and international private investors.
Azour said major private sector participation would be important for Neom’s success, with the Saudi government providing land and regulation rather than trying to be closely involved in most investment decisions.
Governments in the region are starting to look outward again after having spent the past five or six years focused on coping with political instability and a plunge in oil prices, he added.
“Authorities in various countries are now reassessing more and more the need to do reforms and projects to grow faster and to address the issue of job creation.”
Neom could fit in with two other international economic schemes, Azour said: The Belt and Road Initiative, Beijing’s drive to win trade and investment deals along routes linking China to Europe, and the G-20 Compact with Africa that aims to promote private investment across the ­continent.
—  REUTERS


Saudi finance minister reassures public on taxes

Updated 10 December 2019

Saudi finance minister reassures public on taxes

  • Mohammed Al-Jadaan: There will be no more fees and taxes until after the financial, economic and social impacts have been considered carefully
  • The government expects to generate about SR203 billion in taxes this year – more than 20.5 percent higher than the previous year

RIYADH: Saudi finance minister Mohammed Al-Jadaan pledged that there would be no more taxes or fees introduced in the Kingdom until the social and economic impact of such a move had been fully reviewed.

He was speaking at the 2020 Budget Meeting Sessions, organized by the Ministry of Finance and held in Riyadh on Tuesday, where a number of ministers and senior officials gathered following the publication of the budget on Monday evening.

“There will be no more fees and taxes until after the financial, economic and social impacts have been considered carefully, especially in terms of economic competitiveness,” said Al-Jadaan.

The government expects to generate about SR203 billion in taxes this year – more than 20.5 percent higher than the previous year and more than 10 percent higher than the expected budget for this year. 

Most of that increase has come from taxes on goods and services which rose substantially as a result of the improvement in economic activity over the year.

The reassurances from the minister come as the Saudi budget deficit is estimated to widen to about SR187 billion, next year, or about 6.4 percent of GDP.