Digital rendering from Nome's the Line Project in Saudi Arabia
The line, NEOM
Saudi-Arabia's Mammoth Soverägn Wealth Fund recorded a significant decline in investments into its so-called giga projects, which, according to his annual report, corresponds to a decrease of $ 8 billion after the end of 2024.
GigaProject investments decreased by 12.4% to 211 billion Saudi -riyal (56.2 billion US dollars). In the meantime, the assets supervised by the PIF rose by 19% to around $ 913 billion from the end of 2023, which made it one of the largest and fastest growing sovereign assets on the planet. The giga projects, which include the futuristic NEOM development of 500 billion US dollars, accounted for 6% of the PIF assets in 2024 compared to 8% in the previous year.
The depreciation takes place under lower global oil prices and a growing budget deficit for the Saudi kingdom, the economy of which despite the efforts to diversify it, and significant growth of sales for non-oil revenue depends heavily.
The PIF's annualized returns have decreased from 8.7% in the previous year to 7.2%. The fund of the funds in a number of blue chip companies like Above And TeslaAnd has large sports franchise companies such as LIV Golf and the British Soccer Club Newcastle United -also expanded the financing base and collected public debts of almost 10 billion US dollars and $ 7 billion.
International investments went back to 17% of the portfolio when the fund in 20% in the previous year improved its focus on domestic investments.
One reason for the considerable leap from the PIF in AUM is more Saudi oil giant Aramco, which is assigned to the fund. Analysts, however, find that the percentage of income that the Saudi government and PIF can come from these Ölinvestitations if crude oil prices continue to drop, as some industry forecasts expect, will be the case.
Lower crude oil prices and reduced ARAMCO dividends Due to lower oil requirements projections, PIF's investment funds are expected to restrict. In the meantime, the investments in growth -strong areas such as artificial intelligence are expected, analysts say.
Budget crossing
Neia, a new region in western Saudi Arabia, which is built from scratch and is about the size of Massachusetts, is part of Vision 2030, which is aimed at diversifying the Saudi economy from the oil revenue and creating new jobs and industries for its aspiring young population.
The idea of the Saudi crown prince Mohammed bin Salman, NeiM, is said to contain a number of futuristic cities and developments that the kingdom expects to bring millions of new residents and to revolutionize life and technology in the country. Budget crossing, surgical complications and global oil market conditions have forced the kingdom to fight back some of these projects or completely delete, sources that have worked on NEAM have told CNBC.
The cost of NEOM total was estimated at 500 billion US dollars and 1.5 trillion dollars. After many years of apparently unlimited expenses, an abrupt shift began to see in 2024 when the Saudi budget deficit increased and the price of an oil fell far below what the kingdom needed to compensate for its budget.