Islamic banking can help boost SMEs

Updated 17 November 2015

Islamic banking can help boost SMEs

ANTALYA: Islamic bank financing products could help solve financing problems of small- and medium-size enterprises (SMEs), Turkish Deputy Prime Minister Cevdet Yilmaz said.
Yilmaz, responsible for the economy, has acknowledged the rise of global SMEs and their increased penetration to the local domestic market.
Addressing the World SME Financing Forum in Turkey's Antalya province on Saturday as part of a G-20 summit, Yilmaz said that Islamic finance could play a vital role in addressing the funding challenges of SMEs.
“We believe that Islamic finance could play a vital role in addressing the funding challenges of SMEs which have been elevated since global financial crisis. Islamic finance can help promote better diversification of risks with its risk-sharing and asset-based financing principles.”
Yilmaz said the Turkey, under its G-20 presidency, has put huge emphasis on SMEs in 2015.
“With our determination, SMEs had the chance to make their voices better heard at the G20 platform. To tackle the financing challenges, the alternative market-based financing and regulatory and macro-prudential measures were explored under our agenda.”
Yilmaz said that SMEs are frequently underrepresented at major international platforms.
“Hence, we aimed to provide a convenient platform as a conduit to voice the expectations and concerns of the SMEs to the G-20.
“We have established the World SME Forum with the International Chamber of Commerce. This forum will advocate for SMEs’ interests globally, in cooperation with other international development organizations and play a key role in helping SMEs’ connection with global markets.”
He said: ”The private sector has a role in harnessing technology and adapting to consumer needs and the government in creating an enabling environment for financial access.”


Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 18 min 32 sec ago

Saudi Arabia looks to cut spending in bid to shrink deficit

  • Saudi Arabia has issued about SR84 billion in sukuk in the year to date

LONDON: Saudi Arabia plans to reduce spending next year by about 7.5 percent to SR990 billion ($263.9 billion) as it seeks to reduce its deficit. This compares to spending of SR1.07 trillion this year, it said in a preliminary budget statement.

The Kingdom anticipates a budget deficit of about 12 percent this year falling to 5.1 percent next year.

Saudi Arabia released data on Wednesday showing that the economy contracted by about 7 percent in the second quarter as regional economies faced the twin blow of the coronavirus pandemic and continued oil price weakness.

The unemployment rate among Saudis increased to 15.4 percent in the second quarter compared with 11.8 percent in the first quarter of the year.

The challenging headwinds facing regional economies is expected to spur activity across debt markets as countries sell bonds to help fund spending.

Saudi Arabia has already issued about SR84 billion in sukuk in the year to date.

“Over the past three years, the government has developed (from scratch) a well-functioning and increasingly deeper domestic sukuk market that has allowed it to tap into growing domestic and international demand for Shariah-compliant fixed income assets,” Moody’s said in a statement on Wednesday. 

“This, in turn, has helped diversify its funding sources compared with what was available during the oil price shock of 2015-16 and ease liquidity pressures amid a more than doubling of government financing needs this year,” the ratings agency added.