Jordan says 2021 budget ‘most difficult in kingdom's history’

Jordan says 2021 budget ‘most difficult in kingdom's history’
Jordan's King Abdullah II (L) delivers a speech to the parliament in the capital Amman. (AFP file photo)
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Updated 19 January 2021

Jordan says 2021 budget ‘most difficult in kingdom's history’

Jordan says 2021 budget ‘most difficult in kingdom's history’
  • Finance minister says pandemic and exceptional regional circumstances have minimized growth
  • Jordan's estimated deficit expected to be JOD2.06 billion

AMMAN: Jordanian MPs are set to deliberate the 2021 state budget bill, which the government has described as the “most difficult in the kingdom’s history.”

The government submitted the draft budget law for 2021 and budgets of independent public institutions to the Lower House on Sunday, with an estimated post-foreign aid deficit of JOD2.06 billion ($2.89 billion), or 6.5 percent of gross domestic product (GDP), compared with JOD2.16 billion in 2020.

Minister of Finance Mohamad Al-Ississ said: “This year’s budget is the most difficult for Jordan ever. The coronavirus pandemic and exceptional regional circumstances have minimized growth.”

Presenting the draft budget bill to lawmakers, Al-Ississ said that the government, which won a vote of confidence from MPs last week, would not impose any new taxes in 2021, adding that while Jordanians had showed resilience in 2020, their economic conditions were hit hard by the pandemic and the accompanying containment measures.

MPs are expected to start debating the budget next month.

Jordan imposed a nationwide lockdown from March 17 to May 30 last year in a bid to curb the spread of COVID-19, before gradually reopening some sectors. Other areas of the economy remain closed until now.

“Jordanians have undertaken an unprecedented test in 2020,” the minister said, expecting the national economy to shrink by 3 percent in 2021.

Domestic revenues are estimated in the 2021 budget law at around JOD7.8 billion before foreign grants, which are expected to reach JOD577 million in the budget law, down from the JOD851 million in the re-estimated value for 2020.

BACKGROUND

Jordan imposed a nationwide lockdown from March 17 to May 30 last year in a bid to curb the spread of COVID-19.

The value of total expenditure in the 2021 budget is expected to reach JOD9.93 billion or 31.2 percent of GDP, compared with JOD9.37 billion or 30.6 percent of GDP in 2020.

The minister said that inflation rates were projected to rise to “healthy and reasonable” levels in 2021 at 1.3 percent, reflecting some economic rebound, expecting a 6.5 percent growth in national exports with the world’s gradual recovery from the pandemic.

Economist Khaled Zubaidi criticized the 2021 state budget law as contradictory and incapable of achieving the desired economic growth of 2 percent projected by the minister.

"The law talks about economic growth, rebound and job creation but how can this be realized in a budget with huge deficit," Zubaidi said.

The government recently said it had written off the US-guaranteed eurobonds due at a total value of $1.25 billion.

The unemployment rate in Jordan reached 23.9 percent in the third quarter of 2020, up by 4.8 percent compared with the same period of 2019, according to official figures.

Jordan’s economy is expected to grow by 1.8 percent in 2021 and 2 percent in 2022, according to a World Bank report.

It predicts a moderate recovery for the MENA region, with economies shrinking by about 5 percent in 2020 as a result of the pandemic, inflicting heavy job losses and a sharp increase in the number of people living below the poverty line of less than $5.50 a day.

It expected the MENA region's economies to recover modestly to 2.1 percent in 2021, reflecting the lasting damage from the pandemic and low oil prices.

 


DP World explores quantum computing technology to optimize business

DP World explores quantum computing technology to optimize business
Updated 17 min 55 sec ago

DP World explores quantum computing technology to optimize business

DP World explores quantum computing technology to optimize business
  • The company organized training sessions for its employees, as well as actual quantum computing coding exercises

DUBAI: Dubai’s port company DP World is exploring quantum computing technology to optimize its operations, the company said in a statement.

It said it was working with D-Wave Systems, a Canadian quantum computing company, to look at how the advanced technology can be applied to DP World’s logistics and trade business.

The company organized training sessions for its employees, as well as actual quantum computing coding exercises.

The technology, DP World said, can be applied to industrial logistics, fleet and traffic management, and other operations across the supply chain.

“Quantum computing capabilities complement our need to reach ultimate smart trade and achieve a seamless logistics infrastructure, where everything is connected, devices work in harmony, and all our operations components communicate with each other intelligently,” Mohammed Al-Muallem, DP World’s chief executive, said.

Quantum computers provide exponential processing power to solve complex problems, better than traditional computers.

The move is part of DP World’s digital push.


Mobily profits surge on home fiber business

Mobily profits surge on home fiber business
Updated 22 min 38 sec ago

Mobily profits surge on home fiber business

Mobily profits surge on home fiber business
  • The pandemic has brought mixed fortunes to the global telecoms industry, boosting some business lines such as home fiber

RIYADH: Mobily’s net profit surged by about 74 percent in the first quarter to SR226 million ($60.2 million) boosted by its home fiber business.
Overall revenues were broadly flat over the period at about SR3.6 billion, the Saudi telecoms giant said in a stock exchange filing on Monday.
The pandemic has brought mixed fortunes to the global telecoms industry, boosting some business lines such as home fiber as more people went online to shop and connect with friends on social media, but squeezing others such as international roaming charges which have shrunk as people were forced to stay at home.
The pandemic is estimated to have wiped about $43 billion from global sector revenues last year according to one study from Analysys Mason.
Mobily attributed its profit growth over the period to its fiber-to-home active base which offset the drop in international roaming.
The company also benefited from a fall in funding rates with overall financial charges dropping by almost 22 percent to SR126 million.

 


Turkey bans crypto assets over illegal transaction fears

Turkey bans crypto assets over illegal transaction fears
Updated 19 April 2021

Turkey bans crypto assets over illegal transaction fears

Turkey bans crypto assets over illegal transaction fears
  • The much-criticized move against the digital currency will come into effect on April 30

ANKARA: Turkey’s Central Bank has banned the use of crypto assets in payments as part of the country’s efforts to regulate cryptocurrencies, which have gained huge popularity in recent months.

The government has been closely monitoring cryptocurrencies for some time, alleging that extremists might use them to fund illegal activities or facilitate money laundering.

“Their use in payments may cause irreparable damages for the parties to the transactions, and include elements that may undermine the confidence in methods and instruments used currently in payments,” the bank said.

The new regulation will come into effect by April 30, but the legislation’s announcement lowered the value of Bitcoin by more than 4 percent on Friday.

Besides forbidding crypto  payments for buying goods and services, the regulation also bans transferring money to cryptocurrency platforms via fintech systems. But many investors in Turkey view Bitcoin and other cryptocurrencies as a shelter against inflation, with the lira facing a significant devaluation against foreign currencies due to the country’s financial volatility.

The lira has lost about half of its value since the 2018 currency crisis.

Increasing inflation rates, which reached a six-month high last month of 16 percent, as well as official unemployment rates hitting 13.4 percent are making people turn to cryptocurrency to gain money and compensate their losses with stable assets.

The booming business of cryptocurrencies has replaced Turks’ rush for gold and real estate as a hedge against the struggling lira and rising interest rates. This new digital money is mostly used by the country’s tech savvy younger population, which is seeking to protect its livelihood against Turkey’s recent economic troubles.

HIGHLIGHTS

• Turkey bans crypto payments for buying goods and services.

• The regulation also forbids transferring money to cryptocurrency platforms via fintech systems.

• Many investors in Turkey view Bitcoin and other cryptocurrencies as a shelter against inflation.

The government’s crypto asset ban drew anger from domestic investors. About 100,000 tweets were sent from Turkey-based social media accounts in one day criticizing the legislation.

The country’s main opposition Peoples’ Republican Party (CHP) also criticized the government’s midnight move against cryptocurrency use. 

“Rather than issuing a midnight legislation, you should have decided on such sensitive issues after consulting all relevant parties,” CHP leader Kemal Kilicdaroglu said.

Regulation in the field of cryptocurrencies was not a new debate for Turkey, where the government expected to achieve some political goals from blockchain technology, according to Dr. Mehmet Bedii Kaya, an expert of IT law at Istanbul Bilgi University.

The government, in line with its 11th Development Plan, was set to implement a digital central bank based on blockchain technologies.

“On the other hand, there is a significant number of Turkish citizens who use cryptocurrencies for short and long-term gains,” Kaya told Arab News. “I think that this latest regulation has been prepared with a quick reflex, without considering the potential financial losses it might generate with the wave of resulting misinformation.”

Kaya said that payment institutions were already under the close supervision of the Central Bank. “These fintech institutions, which are active in the cryptocurrency market, are very innovative and dynamic. Therefore the Turkish state considered this dynamism as a risk and source of complexity. However, these key players shouldn’t have been disqualified.”

After Tesla CEO Elon Musk announced it was now possible to buy Tesla vehicles in the US with Bitcoin, an Istanbul-based luxury car distributor called Royal Motors began accepting payments in cryptocurrencies last week.

Crypto trading volumes hit $27 billion between early February to March 24, according to data analyzed by Reuters, while trading gained momentum especially after the Central Bank governor was dismissed by presidential decree and further weakened the lira.

Last week, the Turkish government asked crypto trading platforms to provide it with user information.


France’s Alstom on track to expand presence in Saudi Arabia

France’s Alstom on track to expand presence in Saudi Arabia
Updated 19 April 2021

France’s Alstom on track to expand presence in Saudi Arabia

France’s Alstom on track to expand presence in Saudi Arabia
  • The French technology provider has been part of several other key projects in the Kingdom

RIYADH: French transport technology provider Alstom, which is working on the Riyadh Metro project, is targeting expansion in Saudi Arabia.

Andrew DeLeone, who is president of Africa, the Middle East and Central Asia at Alstom, said the company was a  long-standing partner of Saudi Arabia.

“We have been active for decades and played an integral role in the Kingdom’s energy sector,” he told Arab News. “We installed the first gas turbine in the Kingdom in 1951. We are one of the largest technology players in the Riyadh Metro program, which is one of the largest public transport systems in the world. We are supplying solutions and the Riyadh Metro’s lines 3, 4, 5 and 6 have been built by Alstom and its civil partners, as part of the FAST consortium, and the system is set to provide comprehensive, citywide, mass-transit coverage.”

The Al-Eqtisadiah newspaper reported in January that the Riyadh Metro would be launched in the third quarter of this year. 

When fully operational, it will comprise six lines with a total length of 176 km, and 85 stations. Once launched, Alstom will continue to provide services for the metro. 

“We will be continuing in Riyadh for many years as part of the O&M (operations and maintenance) for these four lines and (as a) major presence in the metro system,” DeLeone added.

Alstom has supplied 69 trains for the Riyadh Metro and an Urbalis signaling system. 

It has also implemented HESOP (harmonic energy saver) technology in the project. HESOP recovers the electrical energy generated by trains during braking which, in addition to reducing operational costs, will cut about 3 million kilos of carbon emissions and decrease power consumption by 6.6 million kilowatts a year.

Alstom also has a number of other projects in its current Saudi portfolio.

FASTFACTS

• Alstom installed the first gas turbine in the Kingdom in 1951.

• It is one of the largest technology players in the Riyadh Metro program.

• Alstom has supplied the key components for the high-speed trains that connect Makkah and Madinah.

“We will also deliver the transit solutions for the King Abdullah Financial District when the project resumes and completes. We have supplied the key components for the high-speed trains that connect Makkah and Madinah. We will also be delivering the people mover system in the Kingdom, which is now operating in Jeddah airport.”

DeLeone said that Saudi Arabia was already making inroads into driverless technology solutions. 

“We already see it in Jeddah airport as our people mover system is driverless. Our monorail system is also driverless. Riyadh Metro system is also a driverless transportation system. Driverless transport is here in the Kingdom and will be an essential part of the Riyadh Metro system.” 

Andrew DeLeone

With Saudi Arabia committing to developing an additional 10,000 km of rail and metro by 2030, and a key factor in this commitment being its ambition to lead the way in reducing transport emissions, relieving traffic congestion, and improving residents’ health and quality of life, DeLeone was confident Alstom could win even more projects in the Kingdom and wider region.

“Alstom has secured a five-year service contract extension for automated people mover systems at Dubai Airports and to provide comprehensive O&M services. We had a similar contract in Jeddah airport and (an) extended service contract. Despite the pandemic, our technology and services have seen growth. We will supply tram orders for the city of Casablanca.”

Last week, at a webinar organized by the Future Investment Initiative, the governor of Saudi Arabia’s Public Investment Fund (PIF) Yasir Al-Rumayyan said that environmental, social, and governance (ESG) programs made solid business sense in the Kingdom and worldwide. 

Alstom was already making progress on developing sustainable and greener modes of transport.

“Today is a big day for Alstom, with our first order of hydrogen trains in France, which is really a historic step in our leadership around CO2-free sustainable urban mobility. The dual mode electric-hydrogen train will mark a historic step in rail transport’s reduction in CO2 emissions, and in the development of a hydrogen ecosystem,” DeLeone said.

In January, Alstom merged with Canada’s Bombardier Transportation. 

Reuters reported the deal to be worth around €5.5 billion ($6.7 billion) and the combined conglomerate will have €15.7 billion in revenues with an order book of €71.1 billion. It will also employ around 75,000 staff in 70 countries.

The Kingdom and the wider region was a significant area for the new combined entity, with over 1,500 people delivering major projects in Riyadh, Dubai, and Qatar, according to DeLeone.

“A large percentage of our workers are in Saudi Arabia, delivering the programs, and we look forward to growth. It’s a place where we (can) grow our business, so we are going to grow our employee presence, supplier presence and grow the local impact.”


Saudi unemployment rate drops in Q4 2020

Saudi unemployment rate drops in Q4 2020
Updated 19 April 2021

Saudi unemployment rate drops in Q4 2020

Saudi unemployment rate drops in Q4 2020
  • Unemployment among young people decreased from 34.2 percent in Q3 2020 to 28 percent in Q4

JEDDAH: The unemployment rate in Saudi Arabia decreased to 12.6 percent in the fourth quarter (Q4) of 2020, down from 14.9 percent the previous quarter, according to the latest data from the General Authority for Statistics (GaStat).

According to a report by Riyadh-based investment management advisory Jadwa Investment, the decrease in joblessness was due to more women and young people joining the Saudi labor force at the end of 2020.

“The recovery in the labor market has proceeded quicker than we anticipated (with Saudi unemployment at 12.6 percent at the end of 2020, versus our forecast of 14 percent). At the same time, however, the swift recovery reinforces our view that Saudi unemployment will decline to 12.1 percent by the end of 2021,” the Jadwa report said.

Unemployment among young people decreased from 34.2 percent in Q3 2020 to 28 percent in Q4. Among men it declined from 7.9 percent to 7.1, while for women it was down from 30.1 percent to 24.4 percent, across the same period. 

According to GaStat’s numbers, 200,000 new private sector expatriate work visas were issued in Q4, compared to 46,000 in Q3. The sharp increase was largely due to a big increase in female expat visas, which increased by 181,000 in Q4 compared to just 4,000 in Q3.

Across the various sectors, public administration and accommodation and food services recorded the largest increase in employment among Saudi nationals and expat workers.

“That said, with the ongoing roll-out of vaccines in the Kingdom, we are expecting a more vigorous economic recovery in the second half of 2021, which, along with ongoing localization efforts (such as the recent
Ministry of Human Resources and Social Development decision to raise the level of Saudization in shopping malls, supermarkets, restaurants and coffee shops), will help create more employment opportunities for citizens,” Jadwa said in its report.