Ratings agency S&P Global Ratings has said that investments by Saudi Arabia’s Public Investment Fund (PIF) will support credit growth amongst companies throughout the Kingdom.
An SAR 1500 billion investment channel, PIF is at the heart of economic reforms to change the economy in a manner that moves it away from oil-dependency. It plans to inject at least SAR 150 billion annually into the local economy until 2025 and to amplify its assets to SAR 4 trillion within four years.
“Investment initiatives that we expect will spur corporate credit growth, mostly in construction-related industries”
S&P explained: “The Public Investment Fund has recently announced investment initiatives that we expect will spur corporate credit growth, mostly in construction-related industries. This will offset the gradual lifting of support aimed at easing the impact of the pandemic.”
The Saudi Central Bank has extended a deferred payment program to support private sector financing until 30 June as part of measures to restrict the impact of the Covid-19 pandemic on the economy. It also said a guaranteed financing program had been extended for a further year until 1 March 14 2022, in order to encourage and support small and medium enterprises.
The fund plans to inject at least $40 billion annually in the local economy until 2025
Domestic credit growth in the Kingdom, the largest Arab economy, is expected to remain robust in 2021 and 2022, following a 14% year-on-year increase in 2020, S&P said. One reason for this growth is the escalating demand for housing from Saudi nationals, which has been a shot in the arm for mortgage growth.
“Over the next couple of years, we forecast that mortgage portfolios will expand by about 30% a year,” said S&P.