Middle-east Arab News Opinion | Asharq Al-awsat

Saudi Arabia ponders creation of new sovereign wealth fund | ASHARQ AL-AWSAT English Archive 2005 -2017
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File photo showing a view of the Riyadh skyline. (Asharq Al-Awsat)

File photo showing a view of the Riyadh skyline. (Asharq Al-Awsat)

File photo showing a view of the Riyadh skyline. (Asharq Al-Awsat)

London, Asharq Al-Awsat—Saudi Arabia’s Shura Council is to discuss proposals for the Kingdom to form a new sovereign wealth fund to invest its budget surplus, Asharq Al-Awsat has learned.

The proposals will be discussed in two sessions on Monday and Tuesday, after the council’s Finance Committee puts the final touches to the proposal.

Asharq Al-Awsat has learned that the proposed National Reserve Fund will be tasked with the investment of 30 percent of the accumulated surplus of the Saudi national budget.

Dr. Saad Mareq, president of the Finance Committee at the Saudi Shura Council, told Asharq Al-Awsat: “The aim [of the fund] is to guarantee financial stability in the Kingdom so that it becomes a sovereign fund to invest state reserves, enjoy financial and administrative independence, have links to the Council of Ministers, and carry out its duties according to regulations. The fund will be based in Riyadh and have branches around the Kingdom and abroad.”

According to the proposal, the fund’s resources would consist of the capital allocated by the state at the start of its operation, with a proviso that this is not less than 30 percent of the total accumulated budget surplus, an annual rate deducted from the budget surplus of at least 20 percent, returns from the privatization of state firms, and the returns from the funds’ investments, in addition to other resources allocated to the fund and the fees which the state imposes in favor of the fund.

Withdrawals from the national reserve fund are prohibited except in extremely urgent cases and would require a Royal Decree. The draft proposal also states that “the fund has a president with a rank of minister, who will be the executive officer in charge of the management of the fund’s affairs, and the president will have a deputy of senior level who carries out duties according to the powers given to him by the president, within the regulations, and who replaces the president in his absence.”

The proposal also includes the creation of a governing council for the fund, which will be tasked with overseeing its activities, as well as a committee to review the fund’s compliance with its own procedures and the Kingdom’s financial legislation.

Saudi Arabia’s existing sovereign wealth fund, SAMA Foreign Holdings—run by the country’s central bank, the Saudi Arabian Monetary Agency (SAMA), consisting mainly of oil surpluses—is the world’s third-largest, with assets totaling 737.6 billion US dollars.