S&P expects stable growth in Saudi Arabia

The rising oil price has improved Saudi Arabia's fiscal position. (Reuters)
Updated 06 October 2018

S&P expects stable growth in Saudi Arabia

  • Oil price boosts government spending
  • Debt under control

LONDON: The Saudi economy is expected to grow at an average of more than 2 percent between 2019 to 2021 according to the S&P ratings agency.
Affirming the country’s long and short term sovereign ratings, it said that higher than expected revenues generated by the stronger oil price have been met with higher spending but that the government would take steps to consolidate public finances over the next two years.
“We continue to anticipate that public investment will increase under a four-year stimulus plan whose goal is to stabilize private sector demand, even as the government moves on other fiscal consolidation measures such as energy tariff hikes,” the agency said in a statement.
S&P also said that it expected an increase in net general government debt of about 2 percent of GDP between 2018 to 2021, down from 3 percent in its previous review.
The rebounding oil price has helped to improve the budgetary positions of regional oil exporters such as Saudi Arabia, the UAE and Oman.
However it has set alarm bells ringing in some energy importing countries with pressure mounting on OPEC to pump more oil to keep a lid on energy inflation.
In a wide ranging interview with Bloomberg this week, Saudi Crown Prince Mohammed bin Salman that the oil price was determined by market forces.
“We never in the history of Saudi Arabia decided that this is the right or wrong oil price,” he said.
“The oil price depends on trade — consumer and supplier — and they decide the oil price based on trade and supply and demand. What we are committed in Saudi Arabia is to make sure there is no shortage of supply. So we work with our allies in OPEC and also non-OPEC countries to be sure that we have a sustainable supply of oil and there is no shortage and that there is good demand, that it will not create problems for the consumers and their plans and development.”
He also clarified that Saudi Arabia had spare capacity of 1.3 million barrels without the need for further investment.

Fishing rights top Brexit talks agenda

Updated 54 min 53 sec ago

Fishing rights top Brexit talks agenda

  • A no-deal scenario is widely expected to cause economic chaos

LONDON: Last-ditch Brexit trade talks continued in London on Sunday with fishing rights remaining an “outstanding major bone of contention,” according to British Foreign Minister Dominic Raab.

EU chief negotiator Michel Barnier told reporters that “work continues, even on a Sunday,” as he arrived for the second day of talks.

Barnier had arrived in London on Friday following a spell in self-isolation after a member of his team contracted coronavirus and ahead of the resumption of talks with British counterpart David Frost on Saturday.

Both men warned that a deal could not be reached without major concessions from the other party.

There are only five weeks to go until the end of the current transition period, during which trade relations have remained largely unchanged.

The two key sticking points remain post-Brexit access to British fishing waters for European vessels and the EU’s demand for trade penalties if either side diverges from common standards or state aid regulations rules.

Raab told Sky’s Sophy Ridge on Sunday that this could be the final week of “substantive” talks, with time running out to agree and ratify a deal.

“There’s a deal to be done,” he said.

“On fishing there’s a point of principle: As we leave the EU we’re going to be an independent coastal state and we’ve got to be able to control our waters,” he added.

Barnier told envoys last week that London was asking that European access to UK waters be cut by 80 percent, while the EU was willing to accept 15 to 18 percent, according to a Brussels source.

A British official called the demands “risible,” according to the domestic Press Association, adding that the “EU side knows full well that we would never accept this.”

“There seems to be a failure from the Commission to internalize the scale of change needed as we become an independent nation,” said the source.

However, Raab was cautiously optimistic over the “level playing field” issue, saying “it feels like there is progress toward greater respect” for Britain’s position.

A failure to reach an agreement would see Britain and the EU trading on World Trade Organization terms, with tariffs immediately imposed on goods traveling to and from the continent.

As it stands, Britain will leave Europe’s trade and customs area on Dec. 31, with no prospect of an extension.

A no-deal scenario is widely expected to cause economic chaos, with customs checks required at borders.

Concern is particularly acute on the border between EU member Ireland and the British province of Northern Ireland, where the sudden imposition of a hard border threatens the delicate peace secured by 1999’s Good Friday Agreement.

The talks have already dragged on much longer than expected and time is running out for ratification of any deal by the European Parliament by the end of the year.