Date first published: 05/02/2026
Key sectors: all
Key risks: economic risks; business risks; frustration of process
Risk development
On 29 January Saudi Arabia unveiled a new National Privatisation Strategy aimed at significantly expanding the role of public-private partnerships (PPPs) in developing, operating and managing gigaprojects, in line with the goals of Vision 2030. The strategy targets 18 sectors and seeks to boost resident and visitor satisfaction with public services, create tens of thousands of skilled jobs, sign more than 220 PPP contracts and mobilise over SAR240bln (US$64bln) in private capital. The announcement came after the government delayed, reassessed or scaled back several ambitious gigaprojects. On 24 January the 2029 Olympic Games, originally scheduled in the futuristic NEOM city, were indefinitely postponed while on 26 January Riyadh suspended construction of the Mukaab, a massive cube-shaped skyscraper planned as the centrepiece of Riyadh’s New Murabba district.
Why it matters
The new strategy came as authorities were compelled to scale back their ambitions in response to a range of constraints. The kingdom remains heavily reliant on oil revenue to fund its gigaprojects, yet crude prices have fallen below expectations, hovering around US$60 per barrel – well under the roughly US$100 per barrel Saudi Arabia needs to balance its budget. To bridge this gap, the government has increasingly turned to international debt markets, selling more than US$20bln in bonds in January alone. Although demand for Saudi debt remains strong and overall debt-to-GDP levels are still low, signs of tightening domestic liquidity have emerged, making it prudent to slow gigaprojects to better manage cash flow and ease pressure on banks and financial markets.
Furthermore, foreign investors showed limited appetite for the kingdom’s most ambitious gigaprojects, leaving the US$1tn Public Investment Fund (PIF) to bear much of the financial burden. Reports from 27 January showed that the PIF has urged some of the kingdom’s wealthiest families to increase their investments in domestic projects and partner with foreign investors. As a result, Riyadh is recalibrating its plans, prioritising sectors where it has clearer competitive advantages and stronger returns, including data centres, artificial intelligence (AI), mining and tourism. Moreover, to attract foreign investments, the Saudi Capital Market Authority announced on 2 February a review of foreign ownership rules to raise the 49 per cent cap, following the 1 February opening of the stock market to all foreign investors.
Background
The new strategy followed the successful completion of the 2018 Privatisation Programme, which achieved key milestones such as the approval of more than 200 projects with investments estimated at SAR800bln (US$213.4bln) and the signing of nearly 90 agreements. The programme was a key component of Vision 2030, Crown Prince Mohammed bin Salman (MBS)’s flagship initiative launched on 25 April 2016, designed as a strategic plan to diversify the kingdom’s oil-dependent economy. Built around three pillars – a vibrant society, a thriving economy and an ambitious nation – Vision 2030 positions gigaprojects as key drivers to advance the kingdom’s long-term development objectives.
Risk outlook
In the short term, more Vision 2030 initiatives are expected to face schedule revisions or scaled-back implementation. However, the targeted focus on competitive sectors, combined with strategic partnerships with prominent Saudi families and a planned revision of foreign ownership rules, is expected to significantly enhance the kingdom’s appeal to international investors and drive increased foreign capital inflows in the medium term. The potential revision of Saudi Arabia’s foreign ownership rules is highly anticipated in 2026, with Goldman Sachs and JPMorgan estimating that fully removing the cap could bring around US$10bln in new investment to the Riyadh stock exchange.