On Monday in Riyadh, the sessions of the 2022 Budget Forum, organized by the Ministry of Finance, began with the participation of a number of Their Highnesses.
His Excellency the Minister of Finance, Muhammad Al-Jadaan, His Excellency the Governor of the Public Investment Fund, Mr. Yasser Al-Rumayyan, and His Excellency the Vice Chairman of the Board of Directors of the National Development Fund, Mr. Muhammad Al-Tuwaijri, participated in the first session, entitled “Financial Sustainability and the Development of the National Economy”.
His Excellency the Minister of Finance, Mr. Muhammad Al-Jadaan, explained that the government spending process over the past 25 years has seen great fluctuations, as spending keeps pace with oil prices.
The private sector predicts the economic trend in general, as well as projects faltering as a result of fluctuations in spending on them, and the government sometimes has to make some decisions as a result of declines in revenues and using budget surpluses to achieve short-term gains that are beneficial in the short term but are not beneficial in the medium and long term.
His Excellency indicated that there has been a very large decline in fluctuations and government spending during the past five years, and these fluctuations have decreased to a very large extent this year by approximately 2.7% compared to 25% in previous periods, and the Kingdom’s Vision 2030 announced that among its objectives are diversification of the economy, and controlling public finances.
His Excellency the Governor of the Public Investment Fund, Mr. Yasser Al-Rumayyan, explained that the Kingdom was able to continue implementing the objectives of the Kingdom’s Vision 2030.
He indicated that the Fund is one of the largest sovereign wealth funds in the world and the fastest growing and developing.
Mr. Al-Rumayyan stated that the fund, despite the challenges resulting from the repercussions of the Corona pandemic, maintained its performance and seized many investment opportunities.
He noted that the assets rose and exceeded a target by the end of the third quarter of this year to reach 1.8 trillion Saudi Riyals, has established 47 companies since 2016 in some strategic sectors such as real estate development, infrastructure, recycling, clean energy, and others. Since 2017, more than 400,000 direct and indirect business activities have been created.
He indicated that the fund’s strategy focused on 13 local strategic sectors based on the global and local perspectives.
He noted that a group of companies affiliated with the Fund signed development contracts worth more than 13 billion riyals, representing more than 70% of the value of the contracts of the Red Sea Development Company.
The King Abdullah Financial District signed contracts worth 10 billion riyals to complete the works and activate the center, while Al-Jadiyah Company signed development contracts worth more than 5.5 billion riyals.
Al-Rumayyan stated that the fund, through the Local Content Development Program, aims to increase the contribution to the local content to reach 60% in 2025, by expanding opportunities for local companies, stimulating local suppliers, increasing the localization of imported goods and services. He indicates that the program aims to develop local investments to reach 5 trillion riyals by 2030.
His Excellency revealed that the Public Investment Fund has completed initial public offerings for several companies owned by the fund, such as the Saudi Tadawul Holding Group, in addition to the first secondary public offering in the Saudi market for part of the fund’s share in the Saudi Telecom Company (STC).
It has worked with many sectors such as the Red Sea and Al-Jadiya Project, in addition to the Saudi Military Industries Company and Al-Soudah Development Company.
He pointed out that the fund has worked in entering and having a strong global presence in new sectors and countries, such as investing in Lucent Corporation of approximately $2.9 billion, bringing global investors into the company’s public offering at the end of July 2021, and investing $2.8 billion in India.
Al-Tuwaijri, confirmed that the Fund consists of 12 organizations that have met and harmonized in the past two years into one organization.
He indicated that the goal of the fund is to serve development, noting that the fund is not primarily profitable and aims to directly achieve sustainability and that its objectives are all developmental.
His Excellency clarified that the fund has a unified treasury for liquidity management, a unified treasury for risk management, and a unified treasury that supports clear and specific objectives in economic diversification, job creation, and support for other parties, as well as unified capital, noting that previously these funds worked unilaterally.
He indicated that the fund stimulates the private sector, as it works to develop this sector and deals with commercial banks and financing institutions to ensure their effectiveness in serving economic development, including the establishment of the Infrastructure Fund, which serves the local and international private sector.
His Excellency said: “The National Development Fund is in direct harmony, as it has disbursed approximately 28 billion riyals to support the sectors most affected by the Corona Virus – Covid 19 pandemic, such as the transportation sector, the aviation sector, and other sectors,” noting that the Fund supports national development, It is keen on economic diversification to create jobs and financial sustainability.