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00:00My colleagues, Abir, Zainab and Christine put this story together last Friday talking about Saudi Arabia potentially looking for another host for the 2029 Winter Olympics because of some construction delays. Let me just start off by asking you if that actually does happen. How damaging would it be for Saudi Arabia and its global reputation? Yeah. I mean, good morning. Well, look, I think it's clearly not great for the global reputation. If in the end, the Winter Games need to be moved. Of course, at this stage, that's not clear what the the end outcome will be, but he's certainly going to be better to do it sooner rather than later, if that is going to be the outcome. And I don't think ultimately that moving the Winter Games will have a, you know, a big impact on either the, you know, the Vision 2030 programme more broadly going forward or even on other global and regional events that the kingdom's going to be hosting, such as the World Cup or the 2030 Expo hosting those, he's going to be challenging. It'll require a lot of infrastructure development. But I don't think either of them are going to be as technically challenging as the Terry Jenner resort, which is the basis of the winter or the Asian Winter Games. Yeah, it was always going to be a very ambitious project, starting out with, you know, hosting winter games, creating the snow that's necessary. Is there an argument that perhaps investors, international investors, may actually respond well to this and that it shows that Saudi Arabia are being a lot more pragmatic and rational about the types of projects that they can undertake and the timeframe in which they can undertake those projects? Yeah, I think that that's a valid argument. Look, I mean, I think there's been no doubt for a while about whether the scale and ambition of many of the Saudi giga projects is, you know, is realistic. And I think it's also fair to point out that I don't think the economy, in terms of the overall desire to grow the economy, diversify the economy, necessarily needs the biggest and best projects to do that. Having some successes, developing, you know, more entertainment options, more tourism options, you know, more alternative alternate energy that, you know, the basis of some of these projects. If you can do that to some extent, it can it can help hugely, I think, with the the growth and diversification ambitions. And I think investors would actually respond positively if the government comes out, you know, plan to some scaling back of these projects and is in transparent going forward about what the scale and the cost of the projects are, investors can then work out. Yeah. What rate of returns will be. Yeah. So in which parts of the economy or which sectors specifically are you expecting further recalibration to occur? Well, I think, you know, one that's been in the news is clearly, you know, the line and maybe more broadly other parts of Neom as well, which is clearly the most expensive and in many ways also, you know, technically, I think very challenging there. I think you're doing reviews of other Gorgon projects would also be would be helpful to the authorities. You know, it's undoubtedly true, right, that we're sitting on, you know, a smaller pot of money for the for the government now than was the case in 2022 oil prices and below 70 rather than around $100 a barrel. So I think looking at these projects, seeing what is financially doable, what is technically doable, and whether the assumptions that were first put out underlying these projects still hold, that would make a lot of sense. And that is going to help come out with the right outcomes for the Saudi economy going forward. Yet so much of the discourse has been about what the Saudi Arabian government is doing to recalibrate or reprioritize spending. What about the PIF? The annual report came out last week. You penned very interesting analysis on some of the takeaways from that report. And two of your findings jumped out to me. Number one, A Um, Drew, but only because of the passage of that Aramco dividend to off. And the second is that if you look at if you infer what the rate of return was for last year, essentially it was flatlining. So it seems as though there are some clear headwinds facing the PIF as well from this point onwards. Yeah, I think that's right. You know, so we know that, you know, the PIF received a rather large chunk of Aramco equity from the government in in the early part of last year. That, according in my calculations, accounted for almost all of the asset growth that the pilot recorded last year, Last year. And in rates of return, I mean, the rates of return, the payoff is enjoyed up until 2024 were pretty robust, right? Average annual rates of eight and a half to 9%. But at least from what I can calculate from the available information, the rate of return was with close to zero last year, of course. Part of that is the, you know, the Saudi stock market, of which many of the assets held didn't perform particularly well last year. But also it looks like there have been write downs on some of the bigger projects as as the payoff calls and how what extent the reasons exactly where we don't know that information hasn't been made publicly available, but that is what you can glean from the information published in the report.

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Callen: Limited Impact of Shifting Winter Games in Saudi

Saudi Arabia and the Olympic Council of Asia are in talks with China and South Korea to potentially move the 2029 Asian Winter Games. It comes as Saudi Arabia faces construction challenges with its planned ski resort, Trojena. Tim Callen, visiting fellow at the Arab Gulf States Institute and Former IMF Mission Chief to Saudi Arabia spoke to Bloomberg’s Horizons Middle East and Africa anchor Joumanna Bercetche on the impact of this move on the country’s economy & global reputation. (Source: Bloomberg)

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