Saudi economy is resilient, says World Bank expert

Updated 07 February 2016

Saudi economy is resilient, says World Bank expert

WASHINGTON: Saudi Arabia has five years’ worth of reserves at current spending levels and oil prices, Shantayanan Devarajan, chief economist of the World Bank’s Middle East and North Africa Region said in an interview with Tass.
“The fact is that Saudi Arabia did not cut back its oil exports when the price of oil plummeted in late 2014 (and stayed low in 2015). From an economic point of view, this strategy is sustainable only if Saudi Arabia can manage its fiscal policy so it doesn’t run out of foreign exchange reserves. At current spending levels, the estimates are that it has five years’ worth of reserves,” the expert said.
“The Saudi economy is as resilient as it is able to make the fiscal adjustments to respond to low oil prices. They have already announced the reduction of fuel subsidies,” Devarajan added.
Oil prices accelerated the decline early in January against the decision of the Saudi Aramco to increase discounts on its major blends for European consumers.
Brent price dropped by nearly 30 percent below $28 per barrel in the first three weeks of January but recovered lately to $35 a barrel.
A recent report from Jadwa Investment said that the Kingdom has maintained a high level of spending in the 2016 fiscal budget despite the global environment of lower oil prices.
Education and health care remain the focus of government spending, accounting for 35 percent of total spending.


South Korea seeks arrest of Samsung heir in succession probe

Updated 35 min 12 sec ago

South Korea seeks arrest of Samsung heir in succession probe

  • Jay Y. Lee faces a return to jail just a little over two years after being released from detention

SEOUL: South Korean prosecutors have requested an arrest warrant against Samsung Group heir Jay Y. Lee, they said on Thursday, in the investigation of a controversial 2015 merger and alleged accounting fraud in a suspected bid to aid his succession plans.
The move spells fresh trouble for Lee, who, if arrested, faces a return to jail just a little over two years after being released from detention in February 2018.
Lee already faces trial on a charge of bribery aimed at winning support to succeed ailing group patriarch Lee Kun-hee, and which involved former President Park Geun-hye, and spent a year in detention until the bribery case was suspended in 2018.
Prosecutors said they sought Lee’s arrest on suspicions of stock price manipulation and audit rule violations, among other offenses.
In a statement, Lee’s lawyers expressed “deep regret” at the prosecution’s decision to seek his arrest, adding that he had fully cooperated with the investigation while Samsung was going through management crises.
Prosecutors have been investigating suspected accounting fraud at drug company Samsung Biologics after the Korean financial watchdog complained the firm’s value had been inflated by $3.7 billion in 2015.
Prosecutors contend the violation helped boost the value of its major owner, Cheil Industries, which counted Lee as its top shareholder, and merged with Samsung C&T, a de facto holding firm, Yonhap news agency said.
Samsung requested an outside review of the investigation to weigh the validity of the indictment and the Seoul Central District Prosecutors’ Office is following the necessary procedures, it said in a statement.
Last month, prosecutors questioned Lee, 51, over the latest investigation. He also apologized for a series of controversies around his succession planning.
Lee’s year in detention followed separate charges that he bribed Park to win government support for the 2015 merger which helped tighten his control of South Korea’s top conglomerate.