Saudi Arabia boosts spending in second quarter as business reforms quicken

The Finance Ministry reported a widening budget gap of about SR33.5 billion. (Shutterstock)
Updated 31 July 2019

Saudi Arabia boosts spending in second quarter as business reforms quicken

  • The Finance Ministry reported a widening budget gap of about SR33.5 billion

LONDON: Saudi Arabia increased spending in the second quarter as the government boosted stimulus measures to spur growth.

The Finance Ministry reported a widening budget gap of about SR33.5 billion ($8.9 billion) for the period.
“A key positive trend is the pickup in capital expenditure, which points to some progress with investment activity and is likely to be in line with a wider trend,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, told Bloomberg.
A weaker oil price is encouraging Gulf states to quicken economic reforms aimed at reducing reliance on hydrocarbons while boosting job-creating capital expenditure on major projects.
“The results reflect the progress made in the realization of developmental projects according to the Kingdom’s 2030 Vision and confirm the efficiency of the financial and structural reforms implemented by the government,” said Finance Minister Mohammed Al-Jadaan in a statement carried by the Saudi Press Agency.
“These reforms include the diversification of government revenue sources by increasing non-oil revenues, reforming and developing the Public Financial Management to raise the efficiency and effectiveness of spending through many measures including the adoption of a government procurement system,” added Al-Jadaan.
Social protection expenditures were increased in programs such as the Citizen Account Program along with Social Security, cost of living allowance and student rewards.


Saudi index drops amid global weakness, Aldar tumbles in Abu Dhabi

Updated 25 August 2019

Saudi index drops amid global weakness, Aldar tumbles in Abu Dhabi

DUBAI: Most Middle East markets dropped on Sunday amid thin trading volumes, mirroring a tumble in global stocks last week and weighed down by sliding oil prices. 
Brent crude futures fell 58 cents on Friday, or 1%, to settle at $59.34 a barrel, while Wall Street stocks tumbled after President Donald Trump told U.S. companies to look at alternatives to China for manufacturing, following Chinese retaliatory tariffs on American goods. 
The Saudi index was the worst performer, losing 2.4%, dragged down by banks and the petrochemical sector. The rest of the region was also in red territory, except the Egyptian and the Bahraini exchanges, which were little changed. 
"We seem to be getting dragged down by international markets," said a Dubai-based trader. "It’s a quiet day, not the good kind." Islamic lender Alinma Bank was among the worst performers in Saudi Arabia, shedding 4%. 
The bank earlier this month posted a 12% rise in second-quarter net profit. 
In the petchem sector, Saudi Kayan Petrochemical Co was heavily hit, losing 3.9%, while blue chip Saudi Basic Industries Corp (SABIC) lost 2.5%. Arqaam Capital said in a research note on Sunday it expected some weakness in the Saudi stock market this week as global index compiler MSCI completes the second phase of its upgrade of Saudi Arabia to emerging market status. 
"We expect to see circa $6.8 billion of passive inflows into KSA (Saudi Arabia) as part of Phase 2 of EM inclusion, bringing KSA to its full weight," said the Dubai firm. "However, it appears that the KSA index trade is mostly over, as we have already recently seen significant selling pressure, and expect to see weakness into the trade this week."
In the UAE, large property developers were hurt. In Dubai, where the index lost 1.9%, Emaar Properties lost 3.9%, while in Abu Dhabi, where the index shed 1.4%, Aldar Properties tumbled 4.1%. 
Outside of the Gulf, the Egyptian index edged up 0.1%, as a 1.4% drop by Orascom Investment Holding was partly offset by a 3.7% spike in Egyptian Resorts Co, which was the best performer on Sunday and among the stocks seeing the highest trading volume.