DUBAI- Saudi Arabia has put on hold financing plans potentially worth billions of dollars for the expansion of Riyadh’s airport, sources said, a sign that the kingdom is re-assessing strategic priorities after the coronavirus crisis.
Riyadh Airports Company, which manages and operates King Khalid International Airport in the Saudi capital, approached banks last year with a request for financing proposals on the planned airport expansion, which sources said would have been worth several billions of dollars.
The expansion was part of the country’s aim to diversify the economy, create jobs and reduce dependence on oil revenues.
The company has now halted the process, three banking sources said.
“At this stage, it’s been cancelled,” said one of the sources. “In this environment I guess they have decided that it doesn’t necessarily make sense to borrow money to expand the airport right now,” said the source, speaking on condition of anonymity because the matter is private.
“It has been put on hold, postponed. They are prioritising projects based on budgetary needs,” a second source said.
The Saudi government did not immediately respond to a request for comment.
Saudi Arabia suspended international flights in the aftermath of the coronavirus outbreak, which has brought global aviation to its knees.
The kingdom had begun preparations in 2017 to sell a minority stake in Riyadh airport, the second biggest in the country. Those plans were also suspended, sources told Reuters in 2018.
Saudi Arabia, the world’s biggest oil exporter, saw its economy contract sharply last year due to the impact of lower petroleum revenues and the coronavirus crisis. It plans to cut state spending this year by about 7% to tame a yawning fiscal deficit.
Meanwhile, the country this week announced plans worth hundreds of billions of dollars to build a zero-carbon city at NEOM, a 26,500-square-km (10,230-square-mile) high-tech development on the Red Sea planned for completion in 2025.