FT: Saudi Arabia Freezes New Consultant Contracts Amid War Costs
Saudi Arabia stopped issuing new contracts for Western consulting firms' operations within its borders and has delayed some payments, according to executives who spoke with the Financial Times.
The decision comes as Riyadh attempts to manage a widening fiscal debt and economic pressure linked to the US-Israeli war on Iran, which has crippled the region's oil exports, a main source of income for Saudi Arabia. Consultancy executives told FT that the pause began after the outbreak of the war on Iran. The move signals tighter scrutiny over state spending as Riyadh reassesses major investments under its long-term economic transformation agenda.The pause has highlighted long-standing tensions over the scale of reliance on international consultancy firms within Saudi Arabia’s development model, particularly under Vision 2030.Firms including McKinsey & Company, Boston Consulting Group, and major players within the Big Four accounting and advisory networks have been deeply embedded in state-led planning and restructuring programs.These firms have supported major projects tied to economic diversification, infrastructure expansion, and tourism development, which form the core of the kingdom’s long-term transformation agenda.One executive described to FT an informal pause in new payments, stating that ministries had been instructed not to approve new awards without special authorization, while some invoices were expected to be delayed until later in the year.
Another said decisions on contracts had been pushed back to the end of the second quarter, describing the shift as part of a broader cycle of reprioritization rather than a complete halt in activity.Saudi Arabia’s Finance Ministry rejected claims of widespread payment delays, insisting that consultancy spending remains aligned with Vision 2030 objectives and is evaluated based on projected returns.Officials stated that in 2026, “99.5 percent” of invoices were paid within contractual deadlines, while emphasizing continued commitment to strategic investment programs.At the same time, fiscal reporting has acknowledged rising pressure on public finances, including a widening deficit and increased state spending linked to defense and economic stabilization priorities.Executives said the war has accelerated an existing cycle of fiscal tightening and project reassessment across government-linked development initiatives.Concerns over potential disruptions to energy flows, alongside increased security-related expenditure, have contributed to a more cautious spending environment, particularly around maritime chokepoints such as the Strait of Hormuz.
Saudi Arabia has already adjusted timelines and scope for major megaprojects, including delays and scaling back of elements within NEOM, while maintaining commitments to major upcoming global events such as Expo 2030 and the 2034 World Cup.Despite the slowdown, both officials and industry sources describe the current phase as a reprioritization rather than a structural departure from the Vision 2030 framework.
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