The slump in oil prices has hit the finances of Saudi Arabia, whose budget deficit reached 98 billion dollars in 2015. This is why the Saudi government needs to make changes about the State’s economic growth and development model. To do this, Saudi Arabia plans to restructure its current fund and to create the largest sovereign fund in the world. The fund is aimed at controlling more than 2 trillion dollars and seeks to reduce the Saudi’s dependence on oil and to stimulate the economic growth of other industries.
The Public Investment Fund (PIF) will administer the national oil company, Saudi Aramco, which will be gradually transformed from an oil group into an industrial conglomerate. Additionally, PIF already holds shares in two major companies in Saudi Arabia, Saudi Basic Industries Corp, the second largest chemical manufacturer in the world and the National Commercial Bank, the largest bank in the country. In July 2015, it bought 38 per cent of the South Korean company Posco Engineering & Construction and it has signed a 10 billion dollars agreement with a Russian state fund to make investments in Russia. Saudi Arabia is making drastic changes and getting prepared to expand in different markets to gain its economic balance back.