Saudi Arabia is 'running out of money' and needs the Aramco IPO cash, ex-CIA director says

Jason Reed / ReutersDavid Petraeus chairs the KKR Global Institute
  • David Petraeus, former CIA chief, says that Saudi Arabia is running out of money and needs Aramco’s IPO to fuel its investments in the coming years.
  • Petraeus said that the Kingdom’s budget deficit depends on the price of Brent crude, which means that the country’s economy is in part tied to Aramco’s success to fund its Vision 2030 plan.
  • The ex-CIA chief said that KKR Global Institute, which he chairs, put $US2 billion into the UAE and was now looking at other places to invest.
  • View Business Insider’s homepage for more stories.

David Petraeus, former director of the CIA, says that Saudi Arabia is running out of money and needs Aramco’s IPO to fuel its investments in the coming years.

“It’s a fact that Saudi Arabia is gradually running out of money, they’d be the first to acknowledge that the sovereign wealth fund has been reduced, it’s somewhere below $US500 billion now,” Petraeus said to CNBC’s Hadley Gamble in Abu Dhabi on Thursday.

Petraeus said that the Kingdom’s budget deficit depends on the price of Brent crude, which means that the country’s economy is in part tied to Aramco’s success.

“The bottom line is that they need the money, they need that outside investment that is crucial to delivering ‘Vision 2030’ which cannot be realised without outside investment, this is just one component of a number of different initiatives that they’re pursuing to try to attract that outside investment,” Petraeus told CNBC.

Watch the entire CNBC interview here.

Petraeus currency chairs the KKR Global Institute, a branch of the private equity giant KKR that says it aims to “enable smarter investing through a better understanding of the world.”

Aramco is due to go public next month, with state reports suggesting it could be December 11, though this isn’t yet confirmed. Recently it released its prospectus, where after the oil attacks in September, further attacks were highlighted as a risk to Aramco’s success.

Bloomberg reported that a variety of bank valuations gave the oil-giant a wide range, roughly between$US1.2 trillion and $US2.2 trillion – state officials are seeking $US2 trillion.

The ex-CIA chief said that his firm put $US2 billion into the UAE and was now looking at other places to invest. “We are looking elsewhere in the region,” he said adding, “But as we do that we evaluate not just the financial aspects of the deal but also the geopolitical and security risks, the macroeconomic situation and the environmental, social and governance issues.”

“You have to have confidence in the rule of law. And what Saudi Arabia has to do is regain confidence of all the investors of the world so that it can attract the kind of outside investment that is necessary for Vision 2030′s success,” Patraeus told CNBC.

There are a “number of different elements that will determine the success of Vision 2030,” he said, and that the plan is in “everyone’s interests” to be successful.

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