World Economy

Saudis Cancel Projects Worth $266b

Saudis Cancel Projects Worth $266bSaudis Cancel Projects Worth $266b

The Saudi Economic and Development Affairs Council has agreed on shelving SR1 trillion ($266 billion) worth of future projects as the kingdom is reeling under a sharp oil price crunch, said a report.

The Saudi council has decided to stop contracting on planned projects whose projected economic and development feasibility does not match their costs and does not contribute to accelerating growth and improving the people’s living standards, according to state news agency SPA.

A meeting chaired by Deputy Crown Prince Mohammad bin Salman bin Abdulaziz, Second Deputy Premier and Minister of Defense, also announced plans to complete the payments due to the private sector by the year end, said the report.

The council came out with a package of solutions and procedures for the settlement of dues that met the requirements, authorized by the chairman of the council, prior to being submitted to the king, it added.

The government appears to have delayed payments and canceled contracts to offset losses, but in doing so it has sunk many of the country’s biggest construction companies into near bankruptcy, including the Saudi Binladen Group and Saudi Oger, which is run by Lebanon’s new premier, Saad Haririr. Oger’s workers have gone unpaid for months.

The kingdom has spent $1 billion paying off a portion of the stranded Asian workers with Saudi Binladen, according to sources familiar with the matter. This was intended to prevent a labor crisis and help send the workers home after massive layoffs.

Currently, Saudi Arabia is expected to have a deficit of $87 billion in 2016. According to economist Giyas Gokkent, from the US-based Institute of International Finance, this is around 13% of the country’s GDP.


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