Saudi investment minister calls on PIF to reduce domestic expenditures and create opportunities for the private sector

Saudi Arabia’s Investment Minister Khalid al-Falih has called on the kingdom’s Public Investment Fund (PIF) to reduce its spending on domestic projects and encourage greater private sector investment as the fund prepares to unveil a new strategic plan. Speaking at the Future Investment Initiative (FII) conference in Riyadh on Tuesday, al-Falih emphasized the need to “scale back” government and PIF expenditures to enable the private sector to take a larger role in developing value chains and economic clusters.

The PIF, a central pillar of Crown Prince Mohammed bin Salman’s Vision 2030 economic reform plan, has been instrumental in funding projects aimed at diversifying Saudi Arabia’s economy away from oil dependence. However, many flagship initiatives have faced delays due to low oil prices and budget constraints, prompting a reassessment of spending priorities.

Last year, PIF Chairman Yasir Al-Rumayyan announced plans to focus more on domestic investments and reduce overseas commitments. The fund, which manages over $900 billion in assets, is concluding its 2021-2025 strategy and is expected to release an updated roadmap soon.

At the conference, Al-Rumayyan highlighted a 24% increase in foreign direct investment (FDI) into Saudi Arabia in 2024, reaching $31.7 billion. Investment Minister al-Falih noted that 90% of this FDI targeted the non-oil sectors, signaling a shift in economic focus.

Larry Fink, CEO of BlackRock, participating in a panel discussion, pointed to strong investor interest in Saudi projects, citing a recent $11 billion deal for a pipeline in the Jafurah gas field that attracted five times more demand than available. Fink described this as evidence of the kingdom’s and the broader Gulf Cooperation Council’s (GCC) emerging status as a major capital destination.

The Jafurah transaction, involving Saudi Aramco, reflects ongoing efforts to develop energy infrastructure, even as the kingdom aims to reduce its reliance on hydrocarbons. The deal involves upfront payments to investors in exchange for revenue streams over the next two decades, underscoring the evolving nature of Saudi Arabia’s investment landscape.