Saudi economy is resilient, says World Bank expert

Updated 07 February 2016
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Saudi economy is resilient, says World Bank expert

WASHINGTON: Saudi Arabia has five years’ worth of reserves at current spending levels and oil prices, Shantayanan Devarajan, chief economist of the World Bank’s Middle East and North Africa Region said in an interview with Tass.
“The fact is that Saudi Arabia did not cut back its oil exports when the price of oil plummeted in late 2014 (and stayed low in 2015). From an economic point of view, this strategy is sustainable only if Saudi Arabia can manage its fiscal policy so it doesn’t run out of foreign exchange reserves. At current spending levels, the estimates are that it has five years’ worth of reserves,” the expert said.
“The Saudi economy is as resilient as it is able to make the fiscal adjustments to respond to low oil prices. They have already announced the reduction of fuel subsidies,” Devarajan added.
Oil prices accelerated the decline early in January against the decision of the Saudi Aramco to increase discounts on its major blends for European consumers.
Brent price dropped by nearly 30 percent below $28 per barrel in the first three weeks of January but recovered lately to $35 a barrel.
A recent report from Jadwa Investment said that the Kingdom has maintained a high level of spending in the 2016 fiscal budget despite the global environment of lower oil prices.
Education and health care remain the focus of government spending, accounting for 35 percent of total spending.


Abu Dhabi, Shanghai plan exchange focusing on China trade

Updated 24 April 2018
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Abu Dhabi, Shanghai plan exchange focusing on China trade

DUBAI: The emirate’s international financial center, has agreed in principle with the Shanghai Stock Exchange to cooperate in establishing an exchange focusing on China’s foreign trade and investment, ADGM said on Monday.
The partners signed a memorandum of understanding to develop the exchange in Abu Dhabi. It would cater to companies and investors involved in China’s Belt and Road initiative, a Beijing-backed drive to win trade and investment deals along routes linking China to Europe.
“At ADGM, we have the international platform to serve different kinds of enterprises and investors — global, regional and local — seeking exposure to the Middle East and North Africa and Belt and Road projects,” said Richard Teng, chief executive of ADGM’s Financial Services Regulatory Authority.
Teng said he could not give specifics of which instruments the new exchange would trade or when it might open, saying this would depend on demand among stakeholders in both ADGM and Shanghai.
Chinese financial institutions have approached ADGM to discuss the financial environment in Abu Dhabi and their development needs in the six-nation Gulf Cooperation Council (GCC), he added.
Trade and investment ties between China and the GCC have been growing rapidly. The region is a big oil supplier to China, and Sino-United Arab Emirates trade exceeded $46 billion in 2016, according to Beijing’s official Xinhua news agency.
Ultimately, the new exchange will support not only the Belt and Road initiative but also the internationalization of the Chinese yuan in the region, Teng said.
Abu Dhabi is trying to build up ADGM, which opened in October 2015 and is smaller than the international financial center in neighboring Dubai, as part of a drive to develop its economy beyond oil exports.