Saudi Arabia, Russia cement nuclear energy ties

Rosatom said Russia and Saudi Arabia would look to establish a center for nuclear science and technology in KSA. (Rosatom)
Updated 15 December 2017

Saudi Arabia, Russia cement nuclear energy ties

LONDON: Saudi Arabia and Russia have signed a roadmap deal to implement a civil nuclear cooperation program that was inked in Moscow in October when King Salman met President Vladimir Putin.
A statement from Russian state-owned nuclear company Rosatom said on Thursday the countries aim to cooperate in the field of small and medium-sized nuclear reactors that can be used for both power generation and water desalination.
“The parties also plan to cooperate in training personnel for the Saudi nuclear industry and developing the Kingdom’s nuclear infrastructure,” Rosatom said.
Additionally, Russia and Saudi Arabia would look to establish a center for nuclear science and technology in KSA, one based on a Russian-design research reactor, said Rosatom in an announcement on its website.
Evgeny Pakermanov — president of Rusatom Overseas, a subsidiary of Rosatom responsible for promoting Russian nuclear technologies in overseas markets —  and Maher Abdullah Alodan, chief atomic energy officer of the King Abdullah City for Atomic and Renewable Energy (K.A.CARE), signed the document on behalf of Russia and Saudi Arabia respectively.
Jane Kinninmont, a senior research fellow specializing in the Middle East at London-based Chatham House, told Arab News: “As the Saudi king’s unprecedented visit to Moscow in October indicated, these days most players prefer to hedge their bets, balancing different relationships and avoiding over-aligning with any single power.”
The nuclear roadmap comprises a set of steps to be implemented by the parties in order to promote cooperation in areas designated in the accord, signed into effect in Moscow on Oct. 5, 2017.
The historic summit in the Russian capital indicated a thawing of relations between the two countries, which are on different sides in the Syrian civil war — but which, nevertheless, have a common interest in maintaining a stable oil price and have other joint commercial and geopolitical interests.
At the time of that meeting, Russian Energy Minister Alexander Novak said: “We (and Saudi Arabia) have a vast potential for developing cooperation in nuclear power. Nuclear power may become one of the basic sources and an extra catalyst for the development of various industries and innovation technologies in Saudi Arabia.”
Nabi Abdullaev, associate director at Control Risks in London, told Arab News: “With trade between Russia and Iran being below $2 billion (compared to $40 billion with Turkey), Russia is interested in balancing Tehran politically and in exploring economic opportunities with Saudi Arabia.”

Record budget spurs Saudi economy

The budget sets out to lift spending and cut the deficit. (Shutterstock)
Updated 19 December 2018

Record budget spurs Saudi economy

  • “It is a growth-supportive budget with both capital and current expenditure set to rise.”
  • Government spending is projected to rise to SR 1.106 trillion

RIYADH: Saudi Arabia on Tuesday announced its biggest-ever budget — with spending set to increase by around 7 percent — in a move aimed at boosting the economy, while also reducing the deficit. 

However, analysts cautioned that the 2019 budget is based on oil prices far higher than today — which could prove an obstacle in hitting targets. 

Government spending is projected to rise to SR 1.106 trillion ($295 billion) next year, up from an actual SR 1.030 trillion this year, Minister of Finance Mohammed Al-Jadaan said at a briefing in Riyadh. 

The budget estimates a 9 percent annual increase in revenues to SR 975 billion. The budget deficit is forecast at SR 131 billion for next year, a 4.2 percent decline on 2018.

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

“It is a growth-supportive budget with both capital and current expenditure set to rise.”

A royal decree by Saudi Arabia’s King Salman, also announced on Tuesday, ordered the continuation of allowances covering the cost of living for civil sector employees for the new fiscal year.

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

World oil prices on Tuesday tumbled to their lowest levels in more than a year amid concerns over demand. Brent crude contracts fell to as low as $57.20 during morning trading.

Malik cautioned that the oil-price assumptions in the Saudi budget looked “optimistic.”

“We see the fiscal deficit widening in 2019, with the higher spending and forecast fall in oil revenue,” she told Arab News.

Jason Tuvey, an economist at London-based Capital Economics, agreed that the oil forecast was optimistic, but said this should not pose problems for government finances.

“The government seems to be expecting oil prices to average $80 (per barrel) next year,” he said. 

“In contrast, we think that oil prices will stay low and possibly fall a little further to $55 … On that basis, the budget deficit is likely to be closer to 10 percent of GDP. That won’t cause too many problems given the government’s strong balance sheet. 

“Overall, then, we think that there will be some fiscal loosening in the first half of next year, but if oil prices stay low as we expect, the authorities will probably shift tack and return to austerity from the mid-2019, which will weigh on growth in the non-oil sector,” Tuvey said.

John Sfakianakis, chief economist at the Gulf Research Center, based in Saudi Arabia, said that the targets of the budget were “achievable” and the forecast oil price reasonable. 

“It is an expansionary budget that should spurt private sector activity and growth,” he said. 

“With Brent crude averaging around $68 per barrel for 2018 and $66 per barrel for 2019, the authorities have applied a conservative revenue scenario.”