Arab states warned against complacency over debt

Arab states warned against complacency over debt
Jihad Azour, director of the IMF’s Middle East and Central Asia department, said higher oil prices should spur a change in the region’s fortunes. (AP)
Updated 02 May 2018

Arab states warned against complacency over debt

Arab states warned against complacency over debt
  • Oil prices have reached around $75 a barrel from under $30 a barrel in early 2016
  • After the GCC saw their economic growth shrink by 0.2 percent last year, their economy is expected to return to growth in 2018

DUBAI: The International Monetary Fund on Wednesday warned Arab states against complacency over a looming debt crisis, urging continued economic reforms despite a rise in oil prices.
Crude prices have rebounded in the region thanks to a deal by producers to trim production, but the IMF said such a change in fortunes should not get in the way of overhauling state spending.
“Required reforms include further steps toward full elimination of energy subsidies, and changes to pension and social security systems — including revisions to retirement age and benefits,” the IMF said in its Regional Economic Outlook for May.
Jihad Azour, director of the IMF’s Middle East and Central Asia department, said higher oil prices should spur change.
“We should not be complacent ... oil prices are going up. That definitely does not mean that we should not introduce the reforms. On the contrary, the current environment offers the opportunity to accelerate some of these reforms,” Azour said.
Oil prices have reached around $75 a barrel from under $30 a barrel in early 2016.
Overall growth in the Middle East and North Africa (MENA) region, which includes all Arab countries and Iran, was forecast by the IMF to reach 3.2 percent this year compared to just 2.2 percent in 2017.
The partial recovery in oil prices will be a boost for the Gulf Cooperation Council states — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE — which supply almost a fifth of global crude oil.
After the GCC saw their economic growth shrink by 0.2 percent last year, impacted by a 0.7 percent contraction by the Saudi economy, their economy is expected to return to growth in 2018.
The Council’s economy is forecast to grow by 2.2 percent this year and 2.6 percent in 2019, the IMF said.
Following the oil price slump in mid-2014, GCC members undertook fiscal measures and reforms to cut public spending and boost non-oil revenues.
Azour said that Saudi Arabia’s economic consolidation measures to cut a persistent budget deficit and diversify the economy away from oil remains the correct policy.
“The current strategy that is based on reaching a balanced budget by 2023 is the right one,” he said.
Despite the improved economic forecast, the IMF estimated cumulative overall fiscal deficits in the region to be $294 billion in 2018-22.
Around $71 billion of government debt is expected to mature during the same period.
“The rapid buildup of debt in many of them (MENA countries) is a cause for concern. Debt has increased by an average of 10 percentage points of GDP each year since 2013, with countries financing large fiscal deficits,” the IMF report said.
An impending increase in interest rates, making borrowing more expensive, will complicate the problem, it added.
According to the IMF, the economy of oil-importers should grow by 6.2 percent annually to maintain unemployment at the current rate of 10 percent.
MENA countries need to create 25 million new jobs over the next five years, Azour said, while warning of the negative consequences of unemployment coupled with rising debt levels.
“The average debt in the region for oil-importing countries exceeds 80 percent,” of gross domestic product (GDP), he said, stressing such a figure is “beyond what is acceptable.”


Exxon Mobil ordered to pay $14.25m penalty in pollution case

Exxon Mobil ordered to pay $14.25m penalty in pollution case
Updated 16 min 45 sec ago

Exxon Mobil ordered to pay $14.25m penalty in pollution case

Exxon Mobil ordered to pay $14.25m penalty in pollution case
HOUSTON (AP) — A federal judge ordered Exxon Mobil to pay a $14.25 million civil penalty Tuesday in an 11-year-old lawsuit alleging it violated the Clean Air Act for eight years at its flagship Baytown, Texas, refinery.
In setting the penalty, which would go to the U.S. Treasury, U.S. District Judge David Hittner of Houston reduced a previous award he handed down in 2017 of almost $20 million. The 5th U.S. Circuit Court of Appeals overturned that ruling on Exxon's appeal last July and remanded the case to Hittner.
In a statement, Exxon Mobil spokesman Todd Spitler said the company is “currently reviewing the decision and considering next steps.” Luke Metzger, executive director of Environment Texas, the nonprofit advocacy group that filed the suit in 2010, said he expected further appeals.
The group Environment Texas sued the Irving, Texas-based company in 2010. After a trial of almost three weeks in 2014, Hittner ruled against the company and ordered the larger penalty two years later. The appeals court remanded the case to Hittner last July.
“Exxon has been fighting this case for 11 years now, refusing to take any responsibility for spewing millions of pounds of illegal pollution into Texas communities,” Metzger said in a statement. “We call on Exxon to finally stop its scorched-earth litigation tactics, pay its penalty and drop these endless appeals.”
In his latest opinion, filed Tuesday, Hittner said Environment Texas, the Sierra Club and the National Environmental Law Center had proved thousands of instances of illegal flaring and unauthorized releases of pollutants causing smoke, chemical odors, ground-level ozone, and respiratory problems.

US oil industry lobby weighs support of carbon pricing

US oil industry lobby weighs support of carbon pricing
Updated 24 min 53 sec ago

US oil industry lobby weighs support of carbon pricing

US oil industry lobby weighs support of carbon pricing
  • The API is considering carbon pricing “among other policy solutions to reduce emissions and reach the ambitions of the Paris Agreement”

WASHINGTON: The American Petroleum Institute (API) is weighing endorsing a price on carbon emissions, a major shift after long resisting mandatory government climate policies, a source familiar with the decision making said.
The API, the main US oil industry lobby group that includes most of the world’s biggest oil companies, is considering carbon pricing “among other policy solutions to reduce emissions and reach the ambitions of the Paris Agreement,” the source said, confirming a report about the policy shift by the Wall Street Journal.
The group is confronting its previous resistance to regulatory action on climate change amid a shift in industry strategy on the issue and the new US presidency.
European member Total quit the group because of disagreements over API’s climate policies and support for easing drilling regulations and the Biden administration is pursuing a policy agenda that would shift the United States from fossil fuels.
A draft statement of the policy shift reviewed by the Wall Street Journal said the group does not endorse a specific carbon pricing tool such as a tax on carbon emissions or emissions trading scheme. The source said, however, that the group’s State of American Energy report released in January was supportive of a market-based carbon pricing policy.
The API did not comment on whether or when the group would formally endorse a price on carbon but said it has been working for nearly a year on an industry-wide response to climate change.
“Our efforts are focused on supporting a new US contribution to the global Paris agreement,” said API spokeswoman Megan Bloomgren.
Within API, there has been a widening rift between Europe’s top energy companies https://www.reuters.com/article/us-total-api/frances-total-quits-top-u-s-oil-lobby-in-climate-split-idUSKBN29K1LM, which over the past year accelerated plans to cut emissions and build large renewable energy businesses, and their US rivals Exxon Mobil Corp. and Chevron Corp. that have resisted growing investor pressure to diversify.
Other major industry groups like the USChamber of Commerce and the Business Roundtable, which includes Chevron, over the last year have endorsed market-based carbon pricing.
Chevron said it has engaged those groups and API “to support well-designed carbon pricing.”
“We support economy-wide carbon pricing as the primary policy tool to address climate change, applied across the broadest possible area to maximize environmental and economic efficiency and effectiveness,” Chevron spokesman Sean Comey said in an emailed statement.
BP and Shell declined to comment.


Dubai’s Emaar to buy out minority shareholders in malls unit

Dubai’s Emaar to buy out minority shareholders in malls unit
Updated 55 min 3 sec ago

Dubai’s Emaar to buy out minority shareholders in malls unit

Dubai’s Emaar to buy out minority shareholders in malls unit
  • Emaar Properties, which already owns close to 85 percent of Emaar Malls, will swap 0.51 of its own shares with shareholders of Emaar Malls

DUBAI: Dubai developer Emaar Properties on Tuesday said it was buying out minority shareholders of its shopping centre unit, less than a decade after floating shares in the company.

The all-share deal comes as both businesses have seen profits plunge over the past year due to the coronavirus pandemic as fewer overseas visitors travel to Dubai.

Emaar Properties, which already owns close to 85 percent of Emaar Malls, will swap 0.51 of its own shares with shareholders of Emaar Malls, the two companies said.

That values Emaar Malls, which operates Dubai’s largest shopping centre, Dubai Mall, at 24 billion dirhams ($6.53 billion), according to Reuters calculations.

Each Emaar Malls share is valued at 1.85 dirhams in the deal, a 10 percent premium based on its last closing price, Reuters calculated.

Emaar Malls, as a wholly owned subsidiary of Emaar Properties, will continue to develop and operate shopping centres and retail assets, the companies said.

Emaar Properties, roughly 30 percent owned by state fund Investment Corp Dubai, will remain listed on the Dubai stock market.

Emaar Properties last month reported a 58 percent fall in 2020 net profit to 2.62 billion dirhams, while Emaar Malls’ yearly net profit dropped 70 percent to 704 million dirhams.

Emaar Properties raised about $1.6 billion listing Emaar Malls in 2014.


Changes in KSA so far just tip of the iceberg, Saudi PIF chief tells the ‘oil man’s Davos’

Changes in KSA so far just tip of the iceberg, Saudi PIF chief tells the ‘oil man’s Davos’
Updated 03 March 2021

Changes in KSA so far just tip of the iceberg, Saudi PIF chief tells the ‘oil man’s Davos’

Changes in KSA so far just tip of the iceberg, Saudi PIF chief tells the ‘oil man’s Davos’

DUBAI: Changes in Saudi Arabia in the past five years are just the “tip of the iceberg” of the transformation the Kingdom will experience under the Vision 2030 strategy and beyond, Yasir Al-Rumayyan, governor of the Public Investment Fund, said on Tuesday.
“The things we’d like to achieve in 2030 will be our optimal way of starting the next phase, which is what we will do until 2040, or after that to 2050,” Al-Rumayyan told a virtual session of CERAWeek — the “oil man’s Davos” — in Houston, Texas.
“Our society is changing, the people are becoming more receptive to new ideas on how companies should work and how society should function, and even the social contract is changing. If you add all of these together, you will have an idea of what Saudi Arabia, by embracing and implementing Vision 2030, will look like in nine years,” he said.
Al-Rumayyan, who is also chairman of Saudi Aramco, said plans remained in place to sell more shares in the world’s biggest oil company, after the biggest initial public offering (IPO) in history in 2019 when it sold less than 2 percent of its shares.
“From the very beginning we said we would be selling more of the shares owned by the government; once we see market conditions improving, and more appetite from different investment institutions and investors, we will definitely consider selling more shares,” he said.
He also underlined the Kingdom’s ambitions in renewable energy and hydrogen fuels. “Aramco is interested in renewables, believe it or not. It is the largest oil and gas company on the planet, but we are thinking of ourselves as an energy and petrochemical company.”
He told Daniel Yergin, the Pulitzer prize-winning oil historian, that PIF would invest $40 billion a year in Saudi Arabia to “stimulate the economy and
create jobs.”
 


Saudi forum to showcase key projects

Saudi forum to showcase key projects
Updated 03 March 2021

Saudi forum to showcase key projects

Saudi forum to showcase key projects
  • The Future Projects Forum aims to showcase future projects in the Middle East

Saudi Contractors Authority (SCA) will hold the Future Projects Forum (FPF) virtually during March 22-24.

The FPF will include the participation of more than 37 government and private  entities to present around 1,000 projects with an estimated total value exceeding SR600 billion ($16 billion).

The Future Projects Forum aims to showcase future projects in the Middle East. It also aims to create opportunities for contractors and investors via identifying details of future projects in the contracting sector and knowing the mechanism of qualification and competition.

The forum seeks to develop a wide network of relationships between contractors, investors and interested parties, in addition to creating partnerships between them.

 The number of delivered residential real estate projects increased from SR12.4 billion ($3.3 billion) in 2019 to SR13.9 billion in 2020.