Saudi wealth fund to cut back lending to domestic projects

Saudi Arabia’s Public Investment Fund (PIF) is set to reduce lending to domestic projects, as part of the kingdom’s reform plan to expand the institution into the world’s largest sovereign wealth fund, Bloomberg reported on Tuesday.

At the end of 2015, the loans granted by the fund to strategic national projects grew to SAR 104 billion ($27.5 billion), compared to SAR 57 billion riyals in 2011, the agency added, citing information in Saudi Arabia’s sovereign bond prospectus.

According to the prospectus, PIF “will not act as a source of lending to the same extent that it has historically.”

The kingdom is planning to transfer ownership of Saudi Aramco to PIF, while offering a less than 5 percent stake in the state-owned oil producer in an initial public offering (IPO).

Accordingly, PIF will manage assets of over $2 trillion. The move would also make diversified investments the government’s main source of revenue, instead of oil, Deputy Crown Prince Mohammed bin Salman told Bloomberg in March.