Saudi Arabia has curtailed contracts with Western consultancy firms and delayed some payments amid heightened regional tensions stemming from the ongoing conflict involving Iran, industry executives said. The kingdom’s move comes as it navigates financial pressures linked to the fallout from Iranian drone and missile attacks on its neighbors in response to U.S.-Israeli operations.

Consultancy leaders said Riyadh has imposed tighter controls on state spending, particularly on the large-scale investments launched under Crown Prince Mohammed bin Salman’s Vision 2030 economic reform plan. While officials have not formally announced the measures, industry sources report a freeze on new contract awards and postponed payments, reflecting broader efforts to manage volatile oil revenues and a widening fiscal deficit.

Executives from firms including McKinsey, Boston Consulting Group, and the Big Four accounting firms noted that Saudi ministries and procurement officials have been instructed to seek special approval from the Ministry of Finance before proceeding with new consultancy contracts. Payment delays reportedly extend to July, with decisions on outstanding work and new deals deferred until the end of the second quarter. One executive described the suspension as a symbolic gesture aimed at demonstrating fiscal prudence under current regional uncertainties.

The Saudi Finance Ministry, however, contested claims of widespread payment delays, asserting that 99.5 percent of invoices are settled within the contractual timelines. The ministry emphasized its focus on ensuring that all investments, including consultancy services, deliver clear returns aligned with Vision 2030’s strategic objectives.

Over the past two years, the kingdom has reevaluated spending priorities, delaying or scaling back multiple projects, including key elements of Neom, the ambitious $500 billion development initially envisioned as a futuristic city stretching 170 kilometers. Observers suggest Saudi Arabia is leveraging the conflict as an opportune moment to downsize initiatives that had grown excessively costly.

Despite the current tightening, consultancy executives expressed cautious optimism that work would continue, albeit on a more measured and controlled basis, as Saudi Arabia adjusts its budgetary approach in response to regional instability and fluctuating energy revenues.