Kingdom to cut spending, issue more bonds to shore up budget

Updated 08 September 2015
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Kingdom to cut spending, issue more bonds to shore up budget

JEDDAH: Saudi Arabia will cut spending and issue more bonds as it faces a record budget shortfall due to falling oil prices, the finance minister said on Sunday.
Following oil prices’ drop to below $50 a barrel, the Kingdom has so far relied on its huge fiscal reserves to bridge the gap but Finance Minister Ibrahim Al-Assaf said more measures would be necessary, AFP reported.
“We are working... to cut unnecessary expenditure,” Al-Assaf told Dubai-based CNBC Arabia in an interview in Washington.
“There are some projects like the ones that have been approved a few years ago and haven’t been carried out until now which means such projects are not currently necessary and can be delayed,” he added.
“Projects in sectors such as education, health and infrastructure are not only important for the private sector but also for the long-term growth of the Saudi economy.”
He said the government would issue more conventional treasury bonds and Islamic sukuk bonds to “finance the budget deficit” — which is projected by the International Monetary Fund at a record $130 billion for this year.
The Kingdom has so far issued bonds worth “less than SR100 billion ($27 billion/24 billion euros)” to help with the shortfall, he said.
“We intend to issue more bonds and could issue sukuk for certain projects... before the end of 2015,” Al-Assaf said.
Al-Assaf said the world’s top oil exporting country was well-prepared to cope with the plunge of crude prices since last year, and that Saudi policymakers were taking it seriously.
“We have built reserves, cut public debt to near-zero levels and we are now working on cutting unnecessary expenses while focusing on main development projects and on building human resources in the Kingdom,” he said in the interview, broadcast on Sunday.


US-China trade talks resume in Washington from Tuesday

Updated 47 min 29 sec ago
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US-China trade talks resume in Washington from Tuesday

  • The last set of talks ended Friday in Beijing with no deal
  • The next round of negotiations will commence with deputy-level meetings before moving on to principal-level talks on Thursday

WASHINGTON: US-China trade talks aimed at ending a damaging tariff war will resume from Tuesday in Washington, the White House has announced.
The last set of talks ended Friday in Beijing with no deal, though US President Donald Trump said the discussions were going “extremely well” and suggested he could extend a March 1 truce deadline for an agreement to be reached.
The next round of negotiations will commence with deputy-level meetings before moving on to principal-level talks on Thursday, a White House statement issued Monday said.
For the US, the talks will be led by Trade Representative Robert Lighthizer and include Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, economic policy adviser Larry Kudlow, and trade adviser Peter Navarro.
China’s commerce ministry meanwhile announced it would be represented by Vice Premier Liu He, Beijing’s top trade negotiator.
On Friday, Trump re-iterated he might be willing to hold off on increasing tariffs to 25 percent from the current 10 percent on March 1 on $200 billion in Chinese goods if Washington and Beijing are close to finalizing an agreement to deal with US complaints about unfair trade and theft of American technology.
American officials accuse Beijing of seeking global industrial predominance through an array of unfair trade practices, including the “theft” of American intellectual property and massive state intervention in commodities markets.
Since a December detente, China has resumed purchases of some US soybeans and dangled massive buying of American commodities to get US trade negotiators closer to a deal.
The talks are aimed at “achieving needed structural changes in China that affect trade between the United States and China,” Monday’s statement said.
“The two sides will also discuss China’s pledge to purchase a substantial amount of goods and services from the United States.”
Beijing and Washington have imposed duties on more than $360 billion in two-way trade, which are weighing on their manufacturing sectors and have shaken global financial markets.