Saudi Arabia will use the proceeds from its state-owned oil giant Aramco’s IPO to bolster its local economy, according to its finance minister Mohammed Al Jadaan.
According to local media reports, around $30 billion of Aramco IPO proceeds will be pumped into Saudi Arabia’s local economy. The kingdom will also invest heavily in its defence industry as tensions between the kingdom and Iran escalates.
Saudi Arabia will pump Aramco’s IPO proceeds into its economy in phases and will continue for several years.
In an interview at the World Economic Forum, Mohammed Al Jadaan told the media “If you look at history, we in this region have managed to weather through worse geopolitical situations, including actual, real wars. We in Saudi have to focus on the economy and reform. Our focus is firmly on non-oil GDP growth, with a focus on tourism, entertainment, sports, technology, and financial sector”
He added, “We work with our military industry to develop our own military assets in the mid-term to deal with these risks, including investment by Public Investment Fund (PIF).”
By upgrading different sectors within its economy, Saudi Arabia plans to reduce the kingdom’s dependence on oil.
Over the years, Saudi Arabia’s economy has suffered due to lower oil prices; however, Mohammed Al Jadaan predicts healthier oil prices in 2020 due to solid demand, reduced output and easing trade tensions.
Saudi Aramco raised around $25.6 billion in its initial public offering after listing its shares on the Riyadh Stock Exchange at $8.53 per share.
Initially, Aramco planned to raise $100 billion by listing its shares on the Riyadh Stock Exchange as well as the London Stock Exchange. However, the oil giant refrained from an international listing.