Saudi Arabia’s Council of Economic and Development Affairs approves Financial Sector’s Development Program 2020

The Saudi Council of Economic and Development Affairs (CEDA), has formally approved the Financial Sector Development Program, one of the main programs under the umbrella of the Saudi Vision 2030. (File Photo: SPA)
Updated 10 May 2018
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Saudi Arabia’s Council of Economic and Development Affairs approves Financial Sector’s Development Program 2020

  • The Financial Sector Development Program is one of the main programs under the umbrella of the Saudi Vision 2030
  • The program aims to create a diversified and effective financial services sector to support the development of the national economy

RIYADH: The Saudi Council of Economic and Development Affairs (CEDA), has formally approved the Financial Sector Development Program, one of the main programs under the umbrella of the Saudi Vision 2030.
The program’s objectives include creating a diversified and effective financial services sector to support the development of the national economy, diversifying its sources of income, and stimulate savings, finance, and investment by addressing the sector’s challenges.
The program is underpinned by three main pillars: enabling financial institutions to support private sector growth, ensuring the formation of an advanced capital market, and promoting and enabling financial planning. These pillars are aligned with the ambitious strategic objectives of Saudi Vision 2030 of diversifying the economy, growing investments to new sectors, supporting emerging sectors and attracting foreign investment.
The new program offers a range of initiatives that have been designed based on thorough studies of the program’s requirements and best international practices. Collectively, the initiatives will offer a diverse suite of products and services that facilitate access to a highly-digitized inclusive financial system that maintains the Kingdom’s financial stability
The first pillar — “enabling financial institutions to support private sector growth” — includes a number of Vision 2030-related initiatives, such as enabling new types of players to enter the market, incentivizing the financial sector to finance Small and Medium-sized Enterprises (SMEs), and driving toward a cashless society.
These initiatives involve a number of measures, including revising and enhancing existing laws and regulations, incentivizing merchants and citizens to adopt e-payment solutions, ensuring enforcement of mandatory vehicle and health insurance, and facilitating mergers and acquisitions within the insurance sector to increase its scale and solvency.
The second pillar — “ensuring the formation of an advanced capital market” — aims to make the Saudi financial market more attractive to local and international investors through a number of initiatives that will see more diversified investment products and developed legislations. The program will also encourage the privatization of some state-owned services and entities, thus further deepening the equity market and increasing market capitalization, while at the same time improving service quality and spending efficiency. The program’s initiatives also involve the development of several regulatory aspects related to the debt facilities market to deepen the debt market.
The third and final pillar — “promoting and enabling financial planning” focuses on boosting the demand and supply-sides of savings to bolster the Kingdom’s savings ecosystem. This involves creating incentives to offer a diverse range of lucrative and safe savings products and, at the same time, increasing awareness and promoting financial literacy and planning. This, in turn, is expected to encourage banks to diversify their savings offerings to reach a wider customer base. A number of the planned savings products will be backed by the government and designed to help citizens achieve certain long-term goals, such as their children’s future expenses, supplementary retirement income, and affordable home ownership.
The Financial Sector Development Program fits within Vision 2030‘s objectives of raising Saudi households’ savings rate to 10% of their disposable income, thereby helping citizens boost their savings rates and safely invest those savings to supplement their income. By 2020, the program also seeks to increase the total size of financial assets to GDP ratio to 201%, increase the number of adults who have bank accounts from 74% to 80%, increase SMEs’ share of total bank loans to 5% and generate high-paying jobs in the financial sector.


Oil dips as market eyes possible easing of OPEC supply curbs

Updated 52 min 20 sec ago
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Oil dips as market eyes possible easing of OPEC supply curbs

SINGAPORE: Oil prices edged lower on Wednesday with the possibility of higher OPEC output weighing on the market, although geopolitical risks are expected to keep prices near multi-year highs.
Brent futures fell 43 cents, or 0.5 percent, to $79.14 a barrel by 0218 GMT, after climbing 35 cents on Tuesday. Last week, the global benchmark hit $80.50 a barrel, the highest since November 2014.
US West Texas Intermediate (WTI) crude futures eased 25 cents, or 0.4 percent, to $71.95 a barrel, having climbed on Tuesday to $72.83 a barrel, the highest since November 2014.
“Looks like the market is pausing at current levels,” said Michael McCarthy, Chief Market Strategist at brokerage CMC Markets.
“If sanctions are introduced against Iran, most of the OPEC producers would like to be pumping more oil, particularly giving the higher prices.”
The Organization of the Petroleum Exporting Countries (OPEC) may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters.
The OPEC-led supply curbs have largely cleared an inventory surplus in industrialized countries based on the deal’s original goals, and stocks continue to decline.
“...Investors are mindful of upcoming talks between Russia and Saudi Arabia about whether they should look at a controlled relaxation of over-compliance with their output cut agreement,” ANZ said in a note.
Rising supply in the US, where shale production is forecast to hit a record high in June, has limited the upward move in prices.
Concerns about a potential drop in Iranian oil exports following Washington’s exit from a nuclear arms control deal with Tehran have driven prices to multi-year highs.
On Monday, the US demanded Iran make sweeping changes — from dropping its nuclear program to pulling out of the Syrian civil war — or face severe economic sanctions.
Iran dismissed Washington’s ultimatum and one senior Iranian official said it showed the US is seeking “regime change” in Iran.
In addition, Venezuela’s crude output could drop further following a disputed presidential election.
The US is actively considering oil sanctions on Venezuela, where output has dropped by a third in two years to its lowest in decades.
US crude and distillate stockpiles fell last week, while gasoline inventories increased unexpectedly, data from industry group the American Petroleum Institute showed on Tuesday.