Saudi wealth fund misses domestic spending target

[RIYADH] Saudi Arabia's wealth fund invested only half of the US$40 billion it planned to plow into the domestic economy this year to help drive diversification.

The Public Investment Fund will have invested US$22 billionby the end of the year, Crown Prince Mohammed Salman said in a statement after the government issued its budget for next year. He had announced in January a plan for the fund to invest 150 billion riyals (S$54.6 billion) a year from 2021 to 2025.

The fund, which the prince also chairs, is the main investor behind behind hundreds of billions of dollars of new developments ranging from entertainment hubs to sustainable cities and tourism developments.

Yet progress on many of those has been slow. Work on Neom, the crown prince's signature development, has progressed little further than "earthworks."

The fund was given an additional US$40 billion from the reserves in March 2020 to invest overseas, taking advantage of the crash in markets. It used all that cash to buy stakes in companies including Citigroup, Facebook and cruise-ship operator Carnival Corp.

Just a few months later it had sold most of those holdings. That illustrates how much easier it's been for the fund to deploy money internationally compared to the nascent diversification projects it focuses on at home. Pushed into deficit for the past eight years because of a slump in oil prices, the Saudi government has shifted most capital expenditure on development into the PIF, as the wealth fund is known, and another local development fund. The government had said that cuts to central government spending would be counteracted by the PIF's huge spending plans.

BLOOMBERG