It is estimated that the size of government capital spending in Saudi Arabia for the current year is about 251 billion riyals, thanks to the spending of the Public Investment Fund along with the spending estimated in the general budget.
According to the analysis of the reporting unit in Al-Eqtisadiah newspaper, which was based on data from the Ministry of Finance and the Public Investment Fund, it is estimated that capital spending for 2021 will reach the highest level since 2018.
The estimated spending from the state’s general budget is 101 billion riyals, while the Public Investment Fund will spend 150 billion riyals.
The Investment Fund, which has become a major engine in achieving the Kingdom's Vision 2030, acts as a catalyst to diversify the local economy's resources away from oil.
According to the available data, the spending of the Public Investment Fund locally for the year 2021, estimated at 150 billion riyals, is the highest ever, as the fund increased its spending by nearly 54 percent from the volume of spending for the year 2020, which is about 97.5 billion riyals, while the volume of spending for the year 2019 was at Approximately 58 billion riyals.
During the next five years, the Public Investment Fund aims to invest about one trillion riyals cumulatively in the local economy, which will, accordingly, contribute to the creation of 1.8 million jobs, directly and indirectly by the end of 2025, as these jobs will be focused on several vital and promising sectors such as entertainment, tourism, sports, building materials, and services. Construction, and real estate services.
For the first time, capital spending by the Public Investment Fund exceeds spending in the state's general budget. The fund has become one of the main engines for the growth of the Saudi economy, as the fund’s spending constitutes about 59.8 percent of total spending.
Therefore, we find that the total capital expenditure (the general budget and the investment fund) is in a state of expansion for the second year in a row, as the total spending for the year 2020 is estimated to reach 234.5 billion riyals, according to the preliminary data.
The Public Investment Fund seeks to support the creation of investment opportunities for the private sector and to create opportunities and partnerships with it to contribute to economic development in the Kingdom, as the Fund has worked to develop important strategic partnerships with the private sector through major projects, infrastructure projects and others, to activate many important sectors such as Housing, hospitality, tourism and entertainment, as the fund seeks to involve the private sector as an investor and supplier, to contribute to raising the percentage of local content.
Meanwhile, Saudi Arabia seeks to increase the participation of government funds in capital spending, such as the Public Investment Fund, which is the largest in terms of contribution, and the National Development Fund.
The Board of Directors of the Public Investment Fund headed by Prince Muhammad bin Salman bin Abdulaziz, Crown Prince, Deputy Prime Minister, and The Chairman of the Council of Economic and Development Affairs this week approved the approval of the Public Investment Fund strategy for the next five years, which aims to raise the fund’s assets from 1.5 trillion riyals to Four trillion riyals by the end of 2025, as well as the commitment to inject at least 150 billion riyals annually into the local economy, increasingly until 2025.
Economic Reports Unit
