In this Jan. 19, 2013 file photo, Saudi Finance Minister Ibrahim al-Assaf attends the meeting of the Arab Foreign Ministers in Riyadh.

RIYADH: There is no need for the Kingdom to create a sovereign wealth fund to manage its oil wealth, Finance Minister Ibrahim Al-Assaf said, rebuffing suggestions by prominent officials and businessmen.

At present, the surplus funds of Saudi Arabia are mostly invested abroad by the Saudi Arabian Monetary Agency (SAMA), which had net foreign assets worth SR2.75 trillion ($733 billion) in October.

Most of that money is believed to be in low-risk US dollar assets such as US Treasury bonds and bank accounts, which tend to earn low returns compared to the more aggressive, higher-risk investments favored by some other rich oil exporters.

So as oil prices have plunged this year, there have been calls for Saudi Arabia to create a sovereign wealth fund that would invest its money more actively, making up for the reduction in oil revenues.

The Shoura Council has discussed a proposal for a sovereign fund this year, but without reaching a conclusion.

Al-Assaf, speaking to Saudi television, said he saw no need for such a change.

“I believe the Kingdom’s policy is the most suitable for its circumstances,” he said, adding that Saudi Arabia had ridden out the global financial crisis in 2008 with relatively little damage.

SAMA’s international reserves are managed professionally by Saudis as well as by international fund managers, and the return from investing the reserves is similar to — and in some years higher than — the returns of Norway’s sovereign fund, he said.

Over the past five years the total return on SAMA’s reserves was around 11 percent and over the past 10 years, including the period of the financial crisis, it was 7 to 8 percent, he added.

“Even the funds that were believed untouchable were hit by the financial crisis and incurred huge losses, and were forced to shift their strategies to more secure investments.”

Al-Assaf also noted that Saudi Arabia already had a large, domestic state fund, the Public Investment Fund, which unlike a foreign-focused fund was helping to develop the local economy by investing in local companies in areas from technology to agriculture.

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