Crown Prince Mohammed bin Salman of Saudi Arabia is drawing attention by sharply raising Saudi investment in the United States to $1 trillion. But with the Public Investment Fund (PIF) rapidly depleting its capacity for new investments, questions remain over whether the plan can be kept.
On the 19th (local time), the New York Times (NYT) focused on the promise between Crown Prince bin Salman and U.S. President Donald Trump, reporting that skepticism prevails in Riyadh and on Wall Street. The day before, Crown Prince bin Salman made his first visit to the United States in seven years and, amid Trump's lavish welcome, raised the investment amount in the United States from the previous $600 billion (about 876 trillion won) to $1 trillion (about 1,460 trillion won), but observers said the chances of it being realized are low.
According to the NYT, PIF has aggressively poured funds for years into large-scale projects such as Neom City, coffee franchises, and electric-vehicle (EV) Start - Up companies, but many have stalled, leading to financial troubles. For example, Neom City announced an ambitious plan to build a new city worth 670 trillion won and create a ski resort in the desert, but construction delays have reportedly led to a recent review.
With international oil prices staying low, Saudi Arabia's fiscal situation is also worsening. The Saudi Finance Ministry said the country's net debt increased by about $30 billion (about 43 trillion won) in the first quarter, the largest first-quarter jump on record. Saudi Arabia's total debt stands at about $354 billion (about 507 trillion won), approaching 30% of Saudi gross domestic product (GDP).
Still, the Saudi government is reportedly braving deficit finances and expanding debt to diversify its industries away from an oil-dependent economic structure in step with "Vision 2030." Internally, PIF officials are said to be telling overseas investors that "new investments will be difficult for the time being."
In response, PIF is pushing reform through a sweeping restructuring. The head of the Neom City construction project was abruptly replaced, and multiple large projects, including a Red Sea resort that is posting losses, are reportedly being wound down. At the same time, plans are said to be under discussion to shift PIF's investment strategy from mega on-site projects to traditional, proven investment asset such as listed stocks and bonds.
In fact, PIF has recently continued aggressive investments in artificial intelligence (AI) companies and the gaming industry. A prominent example is U.S. game developer Electronic Arts (EA); in September this year, PIF agreed to acquire EA through a $55 billion leveraged buyout (LBO, acquiring a company by borrowing money secured by the target's asset) merger and acquisition (M&A). When the transaction is completed, PIF will become EA's largest shareholder.
The PIF board says it aims to reach $2 trillion in asset within five years, but it is unclear whether the funds to grow those asset will come from investment revenue or additional government fiscal injections.
Meanwhile, during this U.S. visit, Crown Prince bin Salman said he would push to ▲ purchase U.S.-made F-35s ▲ codify U.S. defense commitments ▲ invest in U.S. artificial intelligence (AI) infrastructure ▲ expand civilian nuclear power cooperation. President Trump called Crown Prince bin Salman "my longtime friend," emphasizing, "We have always been on the same side on every issue."