Saudi Arabia PIF fund sees $8 billion writedown in megaprojects
Digital creation of Neom’s The Line Project in Saudi Arabia
Line, Neom
According to the annual report of Saudi Arabia’s Mamut Egemen Servet Fund, although it reached approximately 1 trillion dollars to assets, it has seen a major decrease in investments called “Gigaprojects”.
Gigaproject investments decreased by 12.4% and 211 billion Saudi Rial ($ 56.2 billion). Meanwhile, the beings supervised by the PIF rose from the end of 2023 to approximately $ 913 billion, which made it one of the largest and fastest growing Egemen Servet funds on the planet. Gigaprojects, which includes the development of $ 500 billion in futuristic $ 500 billion, formed 6% of PIF’s assets in 2024 compared to the previous year.
Although Writritown, lower global oil prices and economy, diversifying it, it is in the midst of an increasing financial deficit for the Saudi Kingdom, whose economy is largely affiliated with oil, despite its efforts and major out -of -oil income growth.
Since 2017, PIF’s annual returns have fell from 8.7% to 7.2% in the previous year. Fund with important assets in various blue chip companies such as Uber And Teslaand Liv Golf and British Football Club Newcastle United with large sports franchises – expanding the funding base by expanding the floor of about $ 10 billion and 7 billion dollars was seen to collect.
As international investments focused on fund domestic investments, it fell from 20% compared to the previous year and fell to 17% of the portfolio.
Some of the reasons behind PIF’s important leap in AUM are the allocation of the Saudi state oil giant Aramco to the fund. However, analysts, if raw prices continue to fall, some industrial predictions, as expected, said the percentage of income that the Saudi government and the PIF can be obtained from these oil investments will decrease in the backup.
Low oil prices and lower oil demand projections are expected to decrease the Aramco dividends and to limit the investment funds of PIF. Analysts are expected to increase their investments in high growth areas such as artificial intelligence.
Carries budget
Neom, a new region built in Western Saudi Arabia, the size of Massachusetts, is part of Vision 2030, which aims to remove the Saudi economy from oil revenues and creates new jobs and industries for the developing young population.
Neom, the brain of Saudi Crown Prince Mohammed bin Salman, will include a series of futuristic cities and developments that the kingdom will bring millions of new calm and to revolutionize life and technology in the country. However, budgetary outputs, operational complications and global oil market conditions The kingdom, the resources working on the Neom, told CNBC to scal or completely shelved some of these projects.
The cost of Neom as a whole It is estimated to have a cost between $ 500 billion and $ 1.5 trillion. After years of apparently unlimited expenditures, as the Saudi budget deficit increased, 2024 began to see a sudden change, and a barrel of oil fell well below what they needed to balance the budget of the kingdom.
