Turkish finance minister says does not see big risk to economy

Turkish lira banknotes are pictured at a currency exchange office in Istanbul, Turkey August 13, 2018. (File/Reuters)
Updated 29 August 2018

Turkish finance minister says does not see big risk to economy

  • Turkish Finance Minister Berat Albayrak said he does not see a big risk to the country’s economy or financial system
  • He does not see a big risk because Turkey’s net public debt and household debt are very low and its financial system is very strong

ISTANBUL: Turkish Finance Minister Berat Albayrak does not expect a big risk to the economy or financial system, he was quoted as saying on Wednesday, amid what investors say is a widening crisis caused by a sell-off in the lira.
The lira has lost around 40 percent of its value this year, driving up the cost of fuel and food and heightening concern about an economic downturn and risks to banks. The currency has been weakened by worries about President Tayyip Erdogan's grip on monetary policy and worsening rift with the United States.
Ratings agency Moody's on Tuesday sounded more alarm about Turkish banks, downgrading 20 financial institutions and citing the increased risk of a deterioration in funding.
However, the newspaper Hurriyet quoted Albayrak, who is Erdogan's son-in-law, as saying he did not see a major threat to the economy.
"We do not see a big risk about Turkey's economy or financial system," he told reporters on his flight back from Paris earlier this week, according to Hurriyet.
There were no risks because Turkey's net public debt and household debt are low and its financial system is strong, Albayrak said.
Albayrak has signalled that Turkey wants to mend its ties with the European Union as it faces what he said are moves by the United States that threaten the global economy. He and Erdogan have also emphasised that Turkey would aim to trade in local currencies rather than use the dollar.
The newspaper also quoted him as saying that steps would be taken to prevent foreign currencies from being used for real estate and shopping-mall store rents and sales.
Retailers in Turkey's malls, which often pay their rent in dollars, have also said their businesses were suffering due to the ailing lira.

Virus pressure tests Saudi Arabia reforms as Aramco has Forbes debut

Updated 28 May 2020

Virus pressure tests Saudi Arabia reforms as Aramco has Forbes debut

  • ‘In terms of profits, the Saudi companies have done well. We will see more companies rising in the next few years

RIYADH: Saudi companies such as oil giant Aramco are displaying resilience in the face of the coronavirus pandemic because of reforms introduced before its arrival, say analysts.

The world’s largest oil company has become emblematic of wider corporate reforms triggered by the Saudi Vision 2030 blueprint for social and economic change.

Saudi Aramco this month appeared in the top five of the Forbes Global 2000 list, which ranks the world’s 2000 largest companies.

It comes as the world’s most profitable company reported profits on $88.2 billion last year.

This year’s rankings arrive amid a global pandemic which has devastated the earnings of some companies, improved the position of others and tested the resilience of all.

It has also shone a spotlight on the ability of the the Kingdom’s top companies to withstand the twin shock of the COVID-19 lockdown and the collapse of oil prices.

Saudi Aramco debuted on the prestigious Forbes list after completing the world’s largest initial public offering last year.

The rankings are based on a combination of sales, profits, market capitalization and assets. Three of the top five companies on the list are from China, including Industrial and Commercial Bank of China in the top spot for the eighth straight year with more than $4.3 trillion in assets.

Forbes noted that many of the companies on its list have come through a particularly difficult first quarter as a result of the COVID-19 pandemic, or what it describes as “The Great Cessation.”

“Many companies and organizations have faced difficulties in managing and mitigating the impact of COVID-19 crisis. However, there are some companies that have prepared well and put in action plans to avoid this crisis with the least damage,” said Fahad Alfaifi, a Saudi-based strategy and business planning consultant.

The pandemic has come at a time of historic change in the Kingdom’s corporate landscape driven by economic reforms which form a major part of the Vision 2030 agenda. This aims to reduce the country’s reliance on oil revenues and stimulate investment in sectors of the economy that create new jobs for a youthful population.

This backdrop has meant many companies in the Kingdom were already changing the way they did business before the arrival of the pandemic and the collapse of oil prices created new challenges.

Last year’s annual Global Competitiveness Report, issued by the World Economic Forum, placed the Kingdom third among G20 counties and 11th globally

in terms of IT governance which rates a country’s ability to adapt digital technologies such as e-commerce and financial technology.

Such technology skills are becoming increasingly important for economies as they to re-calibrate and adapt to the post-pandemic world.

Nasser Al-Qarawee, the director of the Saudi Study and Research Center, attributed the success of some Saudi companies to the great achievements made by the private sector lately and predicted that more Saudi companies would eventually join Aramco on the Forbes list.

“The national economy has seen enormous improvements and development in terms of laws and legislation that have helped reduce restrictions and bureaucracy, while the government has worked at the same time on reducing dependency on oil. Vision 2030 will further cement the Kingdom’s strong presence globally and make it have a larger influence on global decisions, not only economically but also politically.”

Tawfiq Al-Swailem, CEO of the Gulf Bureau for Research and Economic Consultations, said that many Saudi companies would emerge from the pandemic in a strong position.

“In terms of profits, the Saudi companies have done well, although the entire world is living through a state of ferocious economic war,” he said. “We will see more Saudi companies rising in the next few years.”