- Saudi Arabia is reportedly getting ready to slash Neom's budget.
- The megaproject is expected to get 20% less than its target funding, Bloomberg reported.
- Saudi Arabia has been struggling to justify the enormous cost of megaprojects such as Neom.
Saudi Arabia appears to be facing up to the reality of its Neom dreams.
The kingdom is set to cut billions of dollars in spending on some of its Vision 2030 megaprojects amid rumors of spiraling costs, Bloomberg reported.
Crown Prince Mohammed Bin Salman's Vision 2030 aims to transform Saudi Arabia both economically and politically by reducing its dependence on oil revenues and pivoting toward technology.
Neom, which has emerged as the plan's flashy centerpiece, is reportedly expected to be given 20% less than its target budget for the year.
Plans to launch a new airline for Neom are also on hold, unnamed sources told Bloomberg.
The decision is part of a sweeping review of Saudi's megaprojects. In June, an advisor linked to the kingdom's government told BBC News that some Vision 2030 projects were being reviewed, and some may face delays.
Saudi Arabia has been struggling to justify the enormous cost of megaprojects like Neom.
Experts previously told Business Insider that the kingdom has failed to attract the foreign investment it hoped for and that it's unlikely to do so in the near future.
The Saudi Public Investment Fund has borne the lion's share of the financial burden, but officials have reportedly become increasingly nervous about spiraling costs.
Planners have reportedly dismissed the official $500 billion budget for Neom as unrealistically low. Some estimates have put the projected bill at as much as $1.5 trillion.
Andreas Krieg, a Gulf specialist at the Institute of Middle Eastern Studies at King's College London, previously told BI: "Vision 2030 consumes a lot of money, and there's a lot of inefficiencies, especially when it comes to Western consultancy firms," he said.
Construction is underway on some elements of Neom, such as The Line — twin mirrored skyscrapers designed to be 105 miles long.
Krieg previously described The Line as a "completely ludicrous megaproject" that is not sustainable due to its huge cost.
Representatives for Neom did not immediately respond to a request for comment from Business Insider.