Saudi Arabia Orders Government Agencies to Freeze Consultancy Payments

Saudi Arabia has ordered government entities to freeze payments to strategy advisers, management consultants, and law firms, according to people familiar with the matter. The instruction applies to ministries and government-controlled entities including the Public Investment Fund and many of its subsidiaries.

The order was issued earlier this month and currently lasts until the end of June. The Financial Times reported that Saudi Arabia had stopped awarding new work to western consultants. A spokesperson for the Finance Ministry said the government has always looked to ensure all investments, including consultancy services, provide clear returns in line with the strategic objectives of Vision 2030.

The spokesperson disputed that payments were being delayed, saying invoices due are paid within the contractual time frame. Year-to-date, more than 85 percent were made a couple of weeks before the due date, and 99.5 percent within the contractual timeframe, the spokesperson added.

The freeze includes work on existing contracts and a halt on hiring consultants for new work. Some firms affected by the order have continued working despite uncertainty over payments, while others were instructed to finish short-term assignments before pausing new projects.

Some government bodies have sought exemptions for essential contracts.

Arabia recorded its biggest quarterly deficit since 2018 as the kingdom ramped up spending to offset the effects of the Iran war and a slowing economy. Debt also rose by the most in years as Riyadh tapped domestic lenders to help finance the gap. Saudi Arabia's Vision 2030 plan has been a source of contracts for consultancy firms over the past decade.

Last year, the Public Investment Fund barred one firm from receiving new contracts for 12 months.