Saudi Arabia has halted the issuance of new contracts for Western consulting firms and delayed certain payments as it moves to tighten control over public spending amid a widening fiscal deficit and the economic fallout of regional conflict, according to reporting by the Financial Times. Executives cited by the Financial Times said the decision followed escalating tensions linked to the Iran war, which has raised concerns about oil revenue stability and regional security risks.
The policy shift comes as the kingdom reassesses its ambitious Saudi Vision 2030 agenda, led by Crown Prince Mohammed bin Salman, which has driven massive state investment in megaprojects and infrastructure over the past decade. Consulting firms including McKinsey, Boston Consulting Group, and major accounting networks have played a central role in these initiatives, benefiting from extensive government contracts tied to national transformation projects.
According to executives quoted in the Financial Times, ministries have been instructed not to approve new consultancy awards without special clearance, while payments for existing invoices have been postponed in some cases. Some sources described an informal freeze on new work, with one stating that firms were told payments may not resume until mid-year, though ongoing projects are expected to continue.
The Saudi finance ministry, however, disputed claims of payment delays, stating that nearly all invoices in 2026 had been processed within contractual timelines and reaffirming that government spending remains aligned with long-term strategic goals under Vision 2030. Officials emphasized that investments and consultancy services are evaluated based on measurable returns and national priorities.
The developments come as Saudi Arabia faces increased fiscal pressure, with a reported widening budget deficit and higher defence expenditures following regional instability. The Financial Times noted that defence spending has risen significantly while policymakers also prepare for major upcoming international commitments, including Expo 2030 and the 2034 FIFA World Cup.
Analysts and industry executives told the Financial Times that the slowdown reflects a broader recalibration of spending priorities that has been unfolding for several years, with some large-scale projects already scaled back or delayed. Flagship developments such as NEOM have reportedly been affected as authorities reassess costs and timelines for mega-infrastructure initiatives.
The report also highlights how the kingdom has sought to balance economic transformation with fiscal discipline, especially as global energy markets fluctuate. While oil prices and export adjustments have provided some financial buffer, recent data cited by the Financial Times indicates a significant increase in the fiscal deficit and higher government spending, particularly in defence.
Despite the current pause in new consultancy awards, executives expressed cautious confidence that long-term demand for advisory services in Saudi Arabia would remain strong. However, the latest measures underscore a period of tightening oversight and strategic reprioritization as the kingdom navigates economic reform, regional conflict pressures, and the financial demands of its long-term development agenda.
