China state assets regulator says debt reduction, curbing risks still key

China’s Finance Minister Xiao Jie has tried to defuse concern over the country’s rising debt, saying government borrowing is below danger levels. (AP)
Updated 10 March 2018

China state assets regulator says debt reduction, curbing risks still key

BEIJING: Reducing debt and curbing risks remain priorities for China’s state-owned firms, the head of the country’s state assets regulator said on Saturday, as Beijing continues its restructuring and deleveraging efforts.
State-owned firms would be pushed to improve their asset quality and boost their equity capital, Xiao Yaqing, chairman of the State Assets Supervision and Administration Commission, told reporters on the sidelines of China’s annual meeting of parliament.
The regulator also would seek to use debt-for-equity swaps to further reduce debt at state-owned companies, he added.
In 2015, Beijing introduced reforms to its state-owned industrial sector aimed at strengthening central government-owned enterprises, while introducing more professional management systems such as the adoption of boards of directors.
Xiao said those reforms would quicken.
The sector reported a rebound last year, with enterprises owned by China’s central government showing profit growth of 15.2 percent, to 1.4 trillion yuan ($221.2 billion), the fastest in five years.
Total profit from China’s central government-owned firms for the first two months of 2018 rose 22.6 percent from a year earlier to 266.7 billion yuan ($42.1 billion), Xiao said.


Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 17 min 47 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.