An Ex-CIA Chief Suggests that Saudi Arabia is Going Broke

The Saudi Aramco IPO could be a ploy to raise money for a nation under financial duress. That’s the statement from former CIA chief David Petraeus in an interview with CNBC. Petraeus says that the nation needs to list its state oil company on the public markets in order to raise money.

“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 $500 billion now,” Petraeus said. The former general is the current chair of the KKR Global Institute.

General David Petraeus Talks Saudi Aramco IPO

Meanwhile, Petraeus said that the country continues to experience budget deficits. He put them in the range of $40 billion t0 $60 billion. These figures further depend on Saudi activities within the borders of their neighbors in the Middle East.

“The bottom line is that they need the money, they need that outside investment that is crucial to delivering ‘Vision 2030’ which cannot be realized 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,” he said.

Finally, the Saudi Aramco IPO will occur in December. The float will make the state oil giant the most profitable public company in the world. The country plans to diversify away from its reliance on oil profits with its Vision 2030 plan. The program will further engage in widespread economic and social reforms. Moreover, current estimates peg the valuation of Saudi Aramco up to $2 trillion.

That said, certain investors will sit out this IPO due to environmental concerns. Last month, Singapore’s Temasek Holdings said it won’t participate. Temasek has a 2030 target to reduce the carbon footprint of its portfolio companies by 50%.