Saudi Arabia needs to launch sovereign fund, invest wisely: Alkhabeer CEO

Saudi Arabia needs to create a sovereign wealth fund to manage the oil windfall and rely on talented wealth managers to invest the funds, as this will help offset budget deficits, according to Ammar bin Ahmed Saleh Shata, CEO of Alkhabeer Capital. 

Speaking to Riyadh newspaper, Saleh said investing the reserves through a sovereign fund will help maintain the cash flow required to cover part of the state’s spending, and could cover budgetary deficits in case oil prices remain low.

He also suggested that the Saudi Arabian Monetary Agency (SAMA), the kingdom’s central bank, should not interfere in the creation and management of these funds, but should focus on stabilizing the currency rate exchange.

Saleh also slammed the government’s decision to deposit reserves in SAMA’s low-yielding instruments and using it as a short term-tool to support the national economy. This has led to the tragic loss of the opportunity to realize huge profits over the past ten years, he added.

He called for the creation of a fund along the lines of Norway’s sovereign fund, given its political and economic success.

The kingdom's government has always held that there was no need to create a sovereign wealth fund to manage its oil wealth, ignoring such suggestions by prominent officials and businessmen.

At present, surpluses from the exports of crude oil are mostly invested abroad by SAMA in low-risk and low-returns assets.