Crown Prince Mohamed bin Salman of Saudi Arabia and his administration have long positioned the Saudi Pyblic Investment Fund (PIF) as the world's largest sovereign fund to take advantage of significant domestic and international investment opportunities, ever since MBS assigned it the responsibility of overseeing all of the projects he declared over the previous seven years.
Tim Callen of the International Monetary Fund carried out an objective economic analysis of the PIF and its real assets, which are growing in accordance with the narrative pushed by Saudi Crown Prince Mohammed bin Salman (MBS). He disclosed that only the PIF risks and delusions are growing, as his investment programs are now threatening the Saudi economy.
In his analysis, Kalin disclosed that the PIF's growth rates were offset by a notable decrease in the assets of certain Saudi public sector institutions. This presents an economic risk that MBS may not fully understand if the Fund's orderly seizure of these assets fails to yield financial returns.
It is important to note that the Saudi Central Bank and government are providing capital injections and asset transfers to support the PIF’s expansion of its investments. For instance, the investment fund's assets increased by 32% between December 2017 and July 2023 as a result of the transfer of 8% of Aramco shares.
Additionally, approximately one-third of the assets managed by the investment fund—whose proportion of local investments in start-ups and growing businesses is increasing—come from holdings of Saudi stocks.
To boost its growth rate in 2019, the PIF used 17% of the proceeds from Aramco's IPO and the foreign exchange reserves of the Central Bank. The returns from its investment portfolio accounted for 31% of the asset increase, while borrowing accounted for 5%.
The analysis indicates that there is a clear risk because approximately 15% of the PIF's assets are not disclosed in the financial disclosure reports of its budget, indicating that these assets may have come from transfers of state assets to the PIF.
Additionally, the PIF raised money through Tadawul and ACWA Power's initial public offerings and sold its shares in SABIC, GASCO, and STC. This allowed it to increase its investments in capital recycling, which is a technique used to give the impression that a citizen's investments are growing.
Like all corrupt rulers, MBS has no choice but to use oppression, restrictions, price increases, and high taxes to conceal his failure.
