According to Bloomberg Asharq, Saudi Arabia is weeks away from securing its first significant funding package for a key part of Crown Prince Mohammed bin Salman's program to diversify the kingdom's economy. A loan of 14 billion riyals ($3.7 billion) for the Red Sea Development Company is set to close with a small group of local banks, including the National Commercial Bank, the Saudi Fransi Bank, Riyad Bank, and the Saudi British Bank, according to informed sources.
The sources, who requested anonymity for privacy reasons, indicated that the financing deal for the first phase of development will be classified as a green loan, as the proceeds will be used to fund environmentally sustainable investments. They added that the loan term will be 15 years, with an interest rate approximately 1% above the Saudi interbank rate. The Red Sea Development Company declined to comment.
The company began reaching out to banks for the loan for the first time in mid-2019.
### Economic Diversification Away from Oil
Opening up to tourism is one of the ways Saudi Arabia intends to harness to diversify its economy away from oil. Its other ambitious projects include an entertainment center near the capital Riyadh and a completely new city, "NEOM," in the northwest, which is expected to cost $500 billion to build.
The Red Sea Development Project, owned by the Saudi Public Investment Fund, will oversee a luxury tourist area roughly the size of Belgium. Upon completion in 2030, the project aims to attract one million visitors annually, evenly split between local and international tourists.
Construction of a new international airport for the region has begun, with the first phase of the project expected to be completed by the end of 2022 with the opening of four hotels. CEO John Pagano noted in a November interview that an additional 12 hotels would open the following year.
