Saudi Arabia suspends transport and housing contract awards

07 March 2016

Freeze order is in line with controlling 2016 budget deficit

Saudi Arabia’s transport and housing ministries, and their attached agencies, have been asked to suspend the signing of new contracts effective February until further notice.

A copy of the directive, dated 14 February and coming from one of the attached agencies, was provided to MEED.

Besides the stoppage of contract awards in the first quarter of 2016, the directive also said all projects that were awarded in the fourth quarter of 2015 will have to be postponed.

However, the agencies can request for a review of schemes deemed very important and that have already been approved, the directive said.

All projects related to umrah and pilgrimage are also excluded from the contract award freeze order.

In September, Saudi Arabia’s Finance Ministry ordered government clients to not award any project contracts for the rest of the year.

The kingdom’s public spending capacity has been adversely affected by the 18-month decline in oil prices. The government expects an $87bn budget deficit in 2016.

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