Saudi minister urges PIF to facilitate domestic spending, pave way for private sector

• Minister Khalid urges PIF to pave way for private sector.
• The PIF president said the fund last year would focus on domestic projects.
• The Fund’s initial strategy for the period 2021-2025 expires in December of this year.
  

Saudi Arabia’s investment minister urged the kingdom’s Public Investment Fund (PIF) on Tuesday to ease spending on domestic projects and pave the way for more private sector investment as the fund prepares to draw up a new strategic plan.

“It’s time to maybe limit this government or PIF spending to prove and create some of these value chains and clusters and let the private sector start investing,” Khalid al-Falih said on Tuesday as financial titans gathered in Riyadh for the country’s top investment conference.

Crown Prince Mohammed bin Salman’s economic plan has seen hundreds of billions spent on projects designed to transform the kingdom’s economy away from its dependence on hydrocarbons.

At last year’s edition of the Future Investment Initiative (FII) conference, PIF chairman Yasir Al-Rumayyan said the fund would use more of its resources to finance domestic plans to wean the economy off oil, and said the fund plans to cut its overseas investments.

But many of the plan’s flagship projects have been delayed amid low oil prices and a budget deficit that has forced Saudi Arabia to prioritize and cut back.

Saudi Arabia’s PIF, one of the world’s largest sovereign wealth funds with more than $900 billion in assets, is at the heart of Vision 2030. The fund’s initial strategy for 2021-2025 expires this year and it is due to announce an updated strategy.

Foreign investment in the country is set to rise 24 percent in 2024 to $31.7 billion, Rumayyan said earlier Tuesday as he opened the event, attended by Colombian President Gustavo Petro, Blackrock’s Larry Fink, JP Morgan’s Jamie Dimon and Citi’s Jane Fraser.

Falih later added that 90% of this foreign direct investment was in Saudi Arabia’s non-oil sector, without elaborating.

“We just did a transaction here in the kingdom and we had five times more demand than we could supply. It was for a pipeline in Jafurah and the amount of money that was interested in investing here in the kingdom was at a record level,” Fink told a panel.

“For me, this is just an indication of the transformation here in the kingdom, but more importantly, across the region, and I think we’re seeing more and more, as the GCC, becoming one of the most important destinations for capital.”

That Jafurah deal, which raised $11 billion up front for Saudi state oil giant Aramco in exchange for 20 years of payments to investors, is exactly where the kingdom is trying to reduce its reliance.