https://arab.news/g4mf4
One morning, while I was serving as the vice governor of the ֱn Monetary Agency (now the Saudi Central Bank or SAMA), my office manager informed me that a dignified elderly man named Sheikh Abdullah Al-Suwailem, sent by the late Prince Sultan, wished to see me.
I welcomed the late Sheikh Abdullah and he told me that his son, Dr. Khalid held a Ph.D. in Economics from an American university, along with a fellowship from the Harvard.
He had recently returned to the Kingdom and was interested in working at SAMA. I was very pleased, as the institution was actively seeking individuals with this level of academic qualifications in such a specialized field. I asked Sheikh Abdullah to have his son, Dr. Khalid, meet with the director general of financial and administrative affairs to arrange his appointment within the investment department/investment operations division.
The very next morning, Khalid began his work, steadily progressing through the ranks until he became the director general of the Investment Department, a role he held until his retirement.
I had retired several years earlier, in 1995. During our time at SAMA, we did not interact much on a personal level, but our official interactions were ongoing and uninterrupted.
After his retirement from SAMA, Khalid continued his professional journey as a visiting scholar and researcher at the prestigious universities of Harvard and Stanford. He began publishing research, particularly on the topic of investing surplus assets managed by both SAMA and the Public Investment Fund. Whenever he published a paper with his fellow researchers, he would kindly send me a copy to get my feedback. I always encouraged him to continue and would occasionally provide minor remarks — if any at all.
On Sept. 5, he published a research paper with his colleagues, offering specific recommendations to both SAMA and the PIF —the two entities where the Kingdom deposits and invests its reserves. I read the paper carefully, summarized it, and added a few comments I felt would be helpful.
Ten years ago, the PIF held only a modest amount — not exceeding $150 billion. Most of the Kingdom’s reserves, both foreign and domestic, were deposited and managed by SAMA’s Investment Department. At the time, most sensitive financial data was completely undisclosed.
Over the past 10 years, the PIF’s assets have grown significantly, reaching SR3.42 trillion in 2024, far surpassing SAMA’s assets, which had shrunk to SR1.91 trillion by July 2025. It is well known that the investment strategies of the fund and SAMA differ:
The PIF focuses on developing key sectors and investing in 215 local and international companies across strategic sectors and infrastructure megaprojects.
The central bank, on the other hand, has continued with its traditional investment approach: managing financial portfolios, engaging global asset managers, investing in treasury bonds of varying durations, and refraining from investments in weapon manufacturers or companies forbidden under Islamic law.
Now that data has become more accessible to readers and investment professionals, it has not been difficult for Khalid and his colleagues at leading research institutions and universities such as Harvard and Stanford to benefit from this publicly disclosed information.
The paper in question, co-authored by Dr. Khalid Al-Suwailem, Dr. Ashby Monk, and Dr. Malan Rietveld, was published at Stanford University, and titled “Towards a new Saudi model for sovereign investment.”
The paper discusses the policies needed to support what the authors refer to as “The Big Push” —a major economic transformation effort that ֱ must undertake as part of Vision 2030. The motivation for this research is to send a strong signal to financial policymakers in the Kingdom that oil revenues — upon which the country has long relied — have started to decline gradually, resulting in a boom-and-bust cycle in public spending.
Despite the significant and consistent growth of non-oil revenues, which now represent over 50 percent of the real gross domestic product, oil income alone is no longer sufficient to fund the “Big Push” transformation or meet the Kingdom’s growing population demands.
After thorough and precise analysis, the paper points out that the fiscal breakeven oil price has risen to the point that, as of early 2025, the Kingdom needs a price of $113 per barrel to achieve budget balance — an unlikely figure under current and foreseeable circumstances unless an extraordinary event occurs.
A successful implementation of these domestic and foreign investment strategies could lead to a distinctive Saudi model for sovereign investment.
Dr. Ahmed bin Abdullah Al-Malik
Hence, a major shift in the Kingdom’s investment strategy is essential. Under Vision 2030, foreign reserves are now intended to be reallocated to large-scale domestic investments, rather than simply being accumulated. This has resulted in the withdrawal of foreign investments and their redirection into massive infrastructure projects, causing a sharp decline in foreign currency reserves held by SAMA.
Khalid and his co-authors argue that in order to ensure the sustainability of this investment direction, the PIF must evolve from an emerging fund focused primarily on domestic projects into a more mature model that can provide sustainable income from both domestic and foreign assets.
To achieve this, the researchers — along with colleagues from Oxford University — present the following dual-track investment strategy focused on income generation from both domestic and foreign sources
Domestic income
Many of the major domestic projects funded by the PIF have matured and begun generating income through profits, taxes, dividends, rents and asset sales
The study emphasizes “Asset recycling” as a key strategy, where the PIF can monetize infrastructure assets (e.g., toll roads, ports) by selling them or selling future revenues to low-risk investors. The proceeds can then be reinvested in new green infrastructure projects.
This investment model has been successfully implemented in Canada and Australia, and it also helps attract foreign direct investment and private capital.
Foreign income
Foreign currency income is urgently needed to pay for imports required for infrastructure megaprojects and build foreign reserves to maintain the Saudi riyal’s fixed exchange rate to the US dollar, which has been in place since 2006.
The study recommends increasing the share of the PIF’s foreign assets from 20 percent currently to a balanced 50/50 allocation between local and foreign assets by 2040.
Raising the PIF’s stake in Saudi Aramco from 16 percent to 20 percent, and eventually to 25 percent, to convert oil wealth into financial wealth, and enable greater investment in foreign income-generating assets.
The paper also proposes that the foreign assets portfolio reach $1 trillion, which would yield an estimated $50 billion in sustainable annual returns. This would eliminate the need for the high levels of borrowing currently seen across the public and private sectors — a situation that has led to liquidity challenges in banks, hindering the financing of numerous projects.
A successful implementation of these domestic and foreign investment strategies could lead to a distinctive Saudi model for sovereign investment. This model would combine domestic development with global investment excellence, similar to the models employed by Canada, Yale University and Norway.
Interestingly, in a recent interview with the PIF governor, I heard that the fund aims to shift toward an 80/20 allocation in favor of foreign investments, as opposed to the 50/50 ratio proposed in this study. This difference may be due to the anticipated increase in the government’s ownership stake in Saudi Aramco.
• Dr. Ahmed bin Abdullah Al-Malik is the former deputy governer of SAMA.