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 poised to end waivers for 5 countries importing Iranian oil

Updated 29 min 7 sec ago
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US poised to end waivers for 5 countries importing Iranian oil

  • Japan, South Korea, Turkey, China and India were exempted from sanctions until May 2
  • Since November, Italy, Greece and Taiwan have stopped importing oil from Iran

WASHINGTON: The Trump administration is poised to tell five nations, including allies Japan, South Korea and Turkey, that they will no longer be exempt from US sanctions if they continue to import oil from Iran, officials said Sunday.
Secretary of State Mike Pompeo plans to announce on Monday that the administration will not renew sanctions waivers for the five countries when they expire on May 2, three US officials said. The others are China and India.
It was not immediately clear if any of the five would be given additional time to wind down their purchases or if they would be subject to US sanctions on May 3 if they do not immediately halt imports of Iranian oil.
The officials were not authorized to discuss the matter publicly and spoke on condition of anonymity ahead of Pompeo’s announcement.
The decision not to extend the waivers, which was first reported by The Washington Post, was finalized on Friday by President Donald Trump, according to the officials. They said it is intended to further ramp up pressure on Iran by strangling the revenue it gets from oil exports.
The administration granted eight oil sanctions waivers when it re-imposed sanctions on Iran after Trump pulled the US out of the landmark 2015 nuclear deal. They were granted in part to give those countries more time to find alternate energy sources but also to prevent a shock to global oil markets from the sudden removal of Iranian crude.
US officials now say they do not expect any significant reduction in the supply of oil given production increases by other countries, including the US itself and Saudi Arabia.
Since November, three of the eight — Italy, Greece and Taiwan — have stopped importing oil from Iran. The other five, however, have not, and have lobbied for their waivers to be extended.
NATO ally Turkey has made perhaps the most public case for an extension, with senior officials telling their US counterparts that Iranian oil is critical to meeting their country’s energy needs. They have also made the case that as a neighbor of Iran, Turkey cannot be expected to completely close its economy to Iranian goods.