The party may be coming to an end in Riyadh. Sources with direct knowledge of Saudi Arabia’s fiscal position have revealed that the kingdom’s decade-long spending binge, fuelled by petrodollars and a desire to project soft power, is now careening towards a cliff edge. Documents obtained by this newsroom show that the country’s sovereign wealth fund, the Public Investment Fund (PIF), has been burning through cash at an alarming rate, with reserves dwindling and a growing reliance on debt to sustain its lavish projects.
The scale of the spending is staggering. The PIF has poured tens of billions into everything from golf tournaments and soccer clubs to futuristic megacities like NEOM. But beneath the glitz, there are cracks. Government data leaked by a whistleblower within the Ministry of Finance shows that non-oil GDP growth has stalled, while the current account surplus has shrunk to near-zero. “They are living on borrowed time,” said a senior economist at a Gulf-based consultancy who spoke on condition of anonymity. “The break-even oil price for Saudi Arabia is now well above $80 a barrel, and with global demand softening, that’s a risky bet.”
The PIF’s ambitions have been a cornerstone of Crown Prince Mohammed bin Salman’s Vision 2030 plan to diversify the economy away from oil. But the plan has been a voracious consumer of cash. According to internal documents, the PIF’s cash and equivalents dropped by 40% in the last fiscal year, while its borrowing from local banks jumped by 60%. The fund’s portfolio is now heavily weighted toward illiquid assets like real estate and infrastructure, leaving it vulnerable to a liquidity crunch. “They are trying to build a Ferrari on a Toyota budget,” said a former senior Saudi banking executive now living in Europe.
The spending spree has also attracted scrutiny from international watchdogs. The Financial Action Task Force (FATF) recently upgraded its monitoring of Saudi Arabia over concerns about lax anti-money laundering controls, particularly around the use of shell companies and opaque financing structures linked to the PIF. Multiple sources confirm that the kingdom is facing a potential grey-listing if it fails to tighten oversight. “The sheikhs have been playing Monopoly with real money, and the rest of the world is starting to notice,” said a compliance officer at a London-based bank that has reduced its exposure to Saudi paper.
The human cost is also becoming visible. While the crown prince jets between Davos and Hollywood, the construction workers on NEOM’s desert site have gone unpaid for months. A report from a labour rights group, seen by this newsroom, details cases of wage theft and unsafe conditions at a PIF-backed concrete plant in Tabuk. “They treat us like machines,” said a worker whose name has been withheld for fear of reprisal. “We build their palaces and they don’t even pay our bus fare.”
The questions now are whether the reckoning will be a controlled descent or a hard landing. The PIF has been scrambling to sell assets, including a chunk of its stake in the Saudi national oil company, but the valuations are falling. “When the music stops, they will be left holding the chairs,” said the Gulf economist. With oil prices slipping below $70 and a global recession looming, the answer may come sooner than Riyadh expects.
