Saudi Arabia joins Islamic finance body

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Updated 24 October 2017
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Saudi Arabia joins Islamic finance body

RIYADH: Saudi Arabia’s central bank has joined an international standard-setting body for Islamic finance, a move that could help standardize industry practices and ease cross-border transactions in the Kingdom.
The Bahrain-based Acc-ounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) said in a statement it had admitted the Saudi Arabian Monetary Agency (SAMA) as an institutional member.
Islamic products represent around half of banking system assets in the Kingdom, but the regulator doesn’t distinguish between Islamic or conventional banks and applies the same prudential standards to all of them.
SAMA confirmed the move in a separate statement, without specifying whether it planned to make AAOIFI standards enforceable or if it would adopt all or some of them.
Saudi-based Islamic banks include Al Rajhi Bank and Alinma Bank, while National Commercial Bank is in the process of converting into a full-fledged Islamic lender.
Saudi lenders remain domestically focused, but adopting AAOIFI standards could help them to venture into other Muslim-majority countries.
The Saudi government has also taken steps to tap into Islamic finance, issuing debut Islamic bonds earlier this year denominated in both riyals and US dollars.
Last week, the Jeddah-based Islamic Research and Training Institute said it had signed an agreement to  develop blockchain technology in the Islamic finance sector.
The agreement is the latest effort to combine blockchain technology to tap demand from Muslim investors, with firms from Indonesia to Canada having already received Shariah-compliant certification for their products.
Involvement of the IDB, a multilateral development institution, could also encourage other fintech firms to incorporate Islamic finance to tap markets across the Middle East, Asia and Africa.
 


Saudi Arabia’s 2019 budget boosts spending by 7%

Updated 49 min 40 sec ago
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Saudi Arabia’s 2019 budget boosts spending by 7%

  • Spending projected to hit $295 billion next year
  • Analysts expect ‘gradual’ pickup in non-oil economic growth

RIYADH: Saudi Arabia plans to increase state spending by more than 7 percent in 2019, according to a budget released by the Finance Ministry on Tuesday.

Spending is projected to rise to 1.106 trillion riyals ($295 billion) next year, up from an actual 1.030 trillion riyals this year, Saudi state television quoted the budget as saying.

The move is seen as an effort to boost economic growth, which has been hurt by low oil prices, which have plummeted more than 30 percent since October. 

“We believe that the 2019 fiscal budget will be focusing on supporting economic activity – investment and wider,” Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB), told Arab News. 

“The continuation of the handout package will be positive for household consumption by nationals. We expect to see some overall fiscal loosening in 2019, which should support a further gradual pickup in real non-oil GDP growth.”

Malik said the government spending projection in the 2019 budget is in line with earlier official indications. 

A pre-budget statement in September, the first of its kind in Saudi Arabia, predicted next year’s budget would be SR1.11 trillion.

The Kingdom has run a budget deficit since 2014 as a slump in oil prices lowered state income. Saudi Arabia aims to balance its budget by 2023.