Saudi Arabia's PIF considers Jordan transport and logistics deals in $24bn investment push

Exclusive: Sovereign wealth fund explores investment options in mega infrastructure projects, including railways, Jordan's finance minister says

Mohamad Al Ississ, Jordan's Minister of Finance, at a panel discussion at DIFC on Monday. Pawan Singh / The National

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, is considering investments in Jordan’s large-scale infrastructure projects as part of its $24 billion Mena investment push, Jordan's finance minister has said.

It is currently exploring mega schemes related to the transport and logistics sectors and considering options to invest in Jordanian railways, Mohamad Al Ississ told The National in an interview in Dubai on Monday.

“I’m hoping 2023 will be the right time to start seeing results,” Mr Al Ississ said, when asked when the PIF is expected to finalise its first investment deal.

“As the pipeline [of projects] matures, we expect to see [results] soon.”

Jordan is also seeking interest from the PIF or other GCC investors in a $2.5bn renewable energy scheme, he said, without giving details.

“We have terrific opportunities in listed and non-listed companies. Jordan has been on the forefront of opening its sectors [for investment] … Jordan is open for business,” Mr Al Ississ said.

Last week, the PIF said it plans to invest $24bn in the broader Middle East and North Africa region to expand its portfolio of assets, a move that will also boost regional economies.

The sovereign fund has set up five investment companies in addition to the Saudi Egyptian Investment Company it launched in August.

These investment vehicles will seek opportunities in Jordan, Bahrain, Iraq, Oman and Sudan, Crown Prince Mohammed bin Salman said at the time.

Together, the six companies will invest in key sectors including infrastructure, real estate, mining, health care, financial services, food and agriculture, manufacturing, telecoms, technology and other strategic industries.

The move is in line with the PIF’s strategy of diversifying Saudi Arabia’s economy and generating “attractive financial returns over the long term”.

The kingdom’s announcement follows the UAE, Egypt and Jordan’s agreement in May to form an industrial partnership to bolster Arab economic integration.

A $10bn investment fund allocated and managed by Abu Dhabi's holding company ADQ is seeking investments across five priority sectors: petrochemicals; metals, minerals and downstream products; textiles; pharmaceuticals; and agriculture, food and fertilisers.

There’s an opportunity for “petro-dollars that have been flowing into oil exporters to actually benefit oil importers in a win-win model, whereby oil exporters diversify their economies and make good returns, while creating jobs and growth opportunities in oil importers”, Mr Al Ississ said.

“I think the UAE, PIF and others should really step up their work here.”

Jordan’s partnership with the GCC is mutually beneficial and servers the interests of both parties in multiple ways, he said.

In 2018, the Central Bank of Jordan received $1bn in deposits from Saudi Arabia, the UAE and Kuwait as part of a package to support its economy.

The UAE has already converted its deposit into a concessional loan and Jordan is hoping Saudi Arabia and Kuwait will follow suit and further increase support to Jordan's economy. Saudi Arabia currently has more than $330m and Kuwait has $500m in deposits with the Jordanian central bank, the finance minister said.

“Jordan is a model of exemplary reforms in the region. The GCC is keen on that model to succeed,” he said.

Jordan, which has limited natural resources and imports more than 90 per cent of its energy needs, hosts more than three million refugees from Syria, Iraq and Palestine, which has put additional pressure on financial resources.

The country, which heavily relies on foreign aid and grants to finance its fiscal and current account needs, has received $1.36bn in financing since 2020 from the International Monetary Fund through a four-year extended funding facility.

Jordan's economy is forecast to expand 2.4 per cent in 2022, lower than an earlier 2.7 per cent estimate, the IMF said in May. Gross domestic product will rise to above 3 per cent over the medium term.

Despite the challenging circumstances brought on by the Covid-19 pandemic, sound policies have contributed to macroeconomic stability in the country, which seeks to cut state subsidies and reduce its large public debt as part of its economic overhaul drive, the IMF said at the time.

Mr Al Ississ said that Jordan has done well to implement reforms and both the IMF and World Bank should increase the “envelope” of their support for the countries that have “reformed well”.

“The IMF [and the World Bank] need to step up their fiscal and financial support to counties that have been delivering on their programmes,” he said.

The IMF has tools such as the Resilience and Sustainability Fund and it deploys them to give additional headroom to countries facing a looming crisis.

The same applies to the World Bank in terms of expanding the envelop size of its support, he said.

“It is not enough to issue a forecast that a storm is approaching. We need to make sure that we build rafts to support countries that storm is hitting,” Mr Al Ississ said.

Jordan, which has managed to narrow its primary deficit by 1.2 per cent of GDP to 4.5 per cent in 2021, raised $650 million through sale of Eurobonds in June and the country is open to tapping the market again if it sees a window to sell more bonds.

“We don’t have a Eurobond maturing until 2025, however, as financing space is becoming increasingly limited, I always try and avoid crowding out the private sector,” Mr Al Ississ said.

“We have a very interesting spread now. In times of uncertainty, I might take [advantage of that] opportunity,” he said. The next potential bond sale would be more than $500m and less the $1bn in size, he said.