Saudi Arabia can bridge budget gap through debt, says Citi Bank chief

David Livingstone, chief executive officer for Europe, Middle East and Africa at American bank giant Citi, told Arab News that the Kingdom’s status as the largest regional economy would give it good access to debt markets. (Supplied)
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Updated 02 July 2020

Saudi Arabia can bridge budget gap through debt, says Citi Bank chief

  • Kingdom’s status as the largest regional economy would give it good access to debt markets
  • Possibility that the Middle East might come out of recession later than some other parts of the world

DUBAI: Saudi Arabia has the capacity to help fund its budgetary needs during the COVID-19 crisis via a mixture of local and international capital markets, according to a senior banker.

David Livingstone, chief executive officer for Europe, Middle East and Africa at American bank giant Citi, told Arab News that the Kingdom’s status as the largest regional economy would give it good access to debt markets.

“I would say being the biggest economy and having lots of investable wealth in the Kingdom gives Saudi Arabia access to capital liquidity to fund the government budget. Certainly, international capital markets will continue to play a role. It’s not a sole reliance on international capital markets - it’s a combination of domestic also,” he said.

Citi has been involved in some of the big bond issues Saudi Arabia has raised, including the record-breaking $12bn Saudi Aramco bond last year. Livingstone highlighted the growing sophistication of the domestic debt markets as a fund-raising resource.

“The domestic market in the Kingdom continues to mature, and with it the ability to be able to balance funding, and not always rely on international capital markets. That is a very good strategy,” he said.

Livingstone was speaking ahead of a two-day webinar forum by the bank under the theme “Navigating the Future: What’s next in a post-covid world?”, along with other top Citi executives.

He downplayed suggestions that the Kingdom’s policymakers had resorted to austerity measures in their response to the economic crisis resulting from pandemic lockdowns.

“I would say that austerity is not a given, because ultimately the big challenge with COVID is the damage that’s been done to the economic actors in the economy - to individuals, to small businesses, to the corner shop, and enterprises and larger organizations. That’s where the balance lies between the livelihoods and economic balance that governments are having to make, and it’s not easy,” he said.

“There is a judgment that has to be made based on the national economy, because ultimately the way to get out of this is for governments to measure their domestic policy against their domestic ability to absorb those policies,” he added.

On the question of timing and shape of the economic recovery, Livingstone said there was a possibility that the Middle East might come out of recession later than some other parts of the world.

“Most people are expecting a sharper recovery in the Middle East region in 2021, which is somewhat delayed. But we think the global recovery can get shifted,” he said.

He also said it was “appropriate activity” for Saudi Aramco to consider funding its ambitious dividend policy partly through debt issuance.

“I think capital markets are for funding the needs of corporates, and the wholesale funding of corporate balance sheets, whether it’s for its own capital expenditure or organic growth or to fund shareholder return,” he said.

On economic growth in the region, and on the prospects for global trade, he warned against taking too pessimistic a view in the current depressed climate. “I think we need to be careful about making assumptions at the trough,” he said.


India to invest $1.46 trillion to lift virus-hit economy

Updated 15 August 2020

India to invest $1.46 trillion to lift virus-hit economy

  • Modi announced a national digital heath plan under which every Indian will get an identity card containing all health-related information
  • Modi said the government has identified 7,000 infrastructure projects to offset the economic impact of the pandemic
NEW DELHI: India’s prime minister said Saturday his country has done well in containing the coronavirus pandemic and announced $1.46 trillion infrastructure projects to boost the sagging economy.
The key lesson India learnt from the pandemic is to become self-reliant in manufacturing and developing itself as a key supply chain destination for international companies, Prime Minister Narendra Modi said.
“The coronavirus epidemic is a big crisis, but it can’t stall India’s economic progress,’’ Modi said in a speech from New Delhi’s 17th century Mughal-era Red Fort to mark 74 years of the country’s independence from British rule. He wore an orange and white turban with a long scarf around his neck.
He also said that three vaccines are in different phases of testing in India and it will start mass production as soon as it got a green light from scientists. “Detailed plans are in place for large-scale production of corona vaccine and making it available to every Indian,” he said.
India’s coronavirus death toll overtook Britain’s this week to become the fourth-highest in the world as the country reported over 2.5 million confirmed cases, just behind the US and Brazil.
Modi also announced a national digital heath plan under which every Indian will get an identity card containing all health-related information.
The celebrations were curtailed on Saturday because of the pandemic, with invitations going only to 4,000 guests instead of normal 20,000, media reports said.
The International Monetary Fund projected a contraction of 4.5 percent for the Indian economy in 2020, a “historic low,” but said the country is expected to bounce back in 2021.
Modi said the government has identified 7,000 infrastructure projects to offset the economic impact of the pandemic.
“Infrastructure will not be created in silos anymore. All infrastructure has to be comprehensive, integrated and linked to each other. Multi-modal connectivity infrastructure is the way forward,” he said.
He said that India saw a record 18 percent jump in foreign direct investment in the past year, a signal that the international companies are looking at the country.
Modi didn’t refer to China directly, but India is trying to capitalize on its rival’s rising production costs and deteriorating ties with the United States and European nations to become a replacement home for large multinationals.
Referring to border tensions with China in the Ladakh area, he said Indian forces had given a befitting response in the mountainous region where thousands of soldiers from the two countries remain in a tense standoff since May. India said 20 of its troops died in hand combat with Chinese troops on June 15.
“Whether it’s terrorism or expansionism, India is fighting the challenges bravely,” Modi said in apparent references to threats from neighboring Pakistan and China.