Jordan public debt reached 85% of GDP in 2020

Jordan public debt reached 85% of GDP in 2020
Tourism is a major source of revenue for Jordan. (AFP)
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Updated 15 April 2021

Jordan public debt reached 85% of GDP in 2020

Jordan public debt reached 85% of GDP in 2020
  • External debt reached 13.7 billion dinars in 2020

RIYADH: Jordanian public debt surged by 10.6 percent in 2020 to 26.50 billion dinars ($37.4 billion) as the government spent heavily to support its economy during the COVID-19 pandemic.

Jordan’s public debt ended 2020 at 85.4 percent of GDP, up from 75.8% a year earlier, according to Ministry of Finance data. The ministry recently changed its methodology for calculating public debt, excluding obligations from the Social Security Investment Fund, which amounted to 6.67 billion dinars.

The Hashemite Kingdom’s internal debt was 12.78 billion dinars last year, while external debt stood at 13.72 billion dinars, Ministry of Finance data show.

Unemployment rose to 25 percent in the fourth quarter of 2020, with youth unemployment reaching 55 percent, according to International Monetary Fund data.

Jordan responded “quickly and decisively” in its support of the economy during the COVID-19 pandemic and is making progress on its program of economic reforms, IMF Managing Director Kristalina Georgieva said on Monday in a statement to mark the kingdom’s 100th year.

“Timely and targeted fiscal measures have helped protect jobs and the vulnerable, while equitable tax reforms – aimed at tackling evasion, closing loopholes, and broadening the tax base – have helped maintain debt sustainability,” Georgieva said.

However, the country must address high unemployment to deliver durable, jobs-rich and inclusive growth, she said.


Dubai’s SHUAA sells 20% stake in Mirfa International Power and Water Company to Japanese investor

Dubai’s SHUAA sells 20% stake in Mirfa International Power and Water Company to Japanese investor
Updated 2 min 25 sec ago

Dubai’s SHUAA sells 20% stake in Mirfa International Power and Water Company to Japanese investor

Dubai’s SHUAA sells 20% stake in Mirfa International Power and Water Company to Japanese investor
RIYADH: SHUAA Capital has sold its 20 percent equity stake in Mirfa International Power and Water Company (MIPCO), to Japan’s Sojitz Corporation (Sojitz).
MIPCO was established in 2014 under the Department of Energy’s privatization program.
The company developed and operates a power generation and seawater desalination plant in the Al Dhafra region of Abu Dhabi, with a 1600MW net power capacity and a 52.5 MIGD net water capacity. SHUAA did not disclose the purchase price.
“In addition to acquiring shares in the project which has successfully achieved commercial operation, this transaction is also important for us from the perspective of establishing a business relationship with SHUAA which has a large presence in the financial sector in the Middle East,” said Masakazu Hashimoto, COO of Sojitz’s infrastructure and health care unit,
“Sojitz is aiming to continue and further expand its business in the Middle East,” he added.
Having originally invested in MIPCO in 2015 to support the development phase of the project, this divestment is in line with the group’s planned exit strategy, it said in a stock exchange filing.
MIPCO’s shareholders also include the Abu Dhabi National Energy Group (TAQA) and Engie, the French low carbon energy and services group, both of which will remain shareholders (with 60 percent and 20 percent stakes respectively).
Sojitz is a multinational trading and investment group, listed on the Tokyo Stock Exchange, with assets of about $21 billion across a number of sectors.
SHUAA has appointed Standard Chartered Bank as financial adviser on the transaction and Linklaters as legal adviser.

Air Seychelles sets final terms in Etihad debt row

Air Seychelles sets final terms in Etihad debt row
Updated 54 min ago

Air Seychelles sets final terms in Etihad debt row

Air Seychelles sets final terms in Etihad debt row
  • Etihad sold its stake in Air Seychelles to the government for one dollar last month

NAIROBI: State-owned Air Seychelles will not pay more than $20 million to holders of bonds worth $72 million, a government official told Reuters, even though creditors have threatened to wind the African airline up if they are not paid in full.
The standoff is the latest twist in broader efforts by creditors to recover $1.2 billion owed by Abu Dhabi’s Etihad Airways and airlines it partly owned when the debt was issued in 2015 and 2016, such as Air Seychelles.
At the time, Etihad owned 40 percent of Air Seychelles and it was in a consortium along with the Gulf airline and other carriers that borrowed the money through special purpose vehicle EA Partners.
When the COVID-19 pandemic struck last year, Air Seychelles said it was struggling to honor its portion of the debt worth $71.5 million and it has been engaged in restructuring talks with a steering committee of creditors since July.
A senior government official from the Indian Ocean archipelago told Reuters it would not be able to offer bondholders more than $20 million to settle the debt.
“The $20 million which has been offered represents the upper limit with regards to the funding that Air Seychelles and/or the government of Seychelles can get approval for and successfully raise on the international market for settlement of the bond,” Patrick Payet, secretary of state for finance, said.
A committee of EA Partners creditors asked Air Seychelles last month to repay its debt, according to an EA Partners regulatory filing.
“Should Air Seychelles not comply ... the creditor will apply to the Supreme Court of Seychelles for an order that Air Seychelles be wound up,” the filing last month said.
The committee told Reuters this week it had rejected the $20 million offer but had not yet filed a winding-up petition to give the government a “grace period” to finalize a separate settlement with Etihad.
Etihad sold its stake in Air Seychelles to the government for one dollar last month and agreed to give it a 79 percent discount on the money it still owed the Gulf carrier, which is also about $72 million, Seychelles News Agency reported.
Creditors said it was unacceptable for Seychelles to offer financial investors a similar discount to the one it had received from Etihad, as the airline was a strategic shareholder.
Payet said that should creditors not accept the $20 million offer, the airline would have to consider other options, including insolvency and liquidation proceedings.
“It is the bondholders’ right to pursue legal options,” he said. “However, all our forecasts show in such an eventuality, the bondholders will recover significantly less than the $20 million currently on offer and it will take considerably longer to receive anything.”


KSA property market shows signs of post-virus recovery

KSA property market shows signs of post-virus recovery
Updated 06 May 2021

KSA property market shows signs of post-virus recovery

KSA property market shows signs of post-virus recovery
  • Resdiential mortgage growth supports sector
  • Retail stable despite upheaval across industry

RIYADH: Saudi Arabia’s real estate market has shown the first signs of a post-pandemic recovery, according to a report from broker Knight Frank.
It said that the outlook for the Kingdom’s real estate market was improving, supported by growth in residential mortgages.
Faisal Durrani, head of Middle East Research at Knight Frank, said: “Like other global economies, the pandemic has driven a widespread economic slowdown across the Kingdom. However, improved business confidence during the closing months of 2020, underpinned by economic reforms linked to Vision 2030 and the rapid response to COVID-19, has helped to drive a turnaround in performance in all main segments of the real estate market.”
In the grade A office market, rents experienced fragmented performance in the Kingdom’s three main centers, with rents in Riyadh increasing marginally by 0.5 percent to SR1,465 ($390.67) per square meter during the first quarter, while in Jeddah rents fell 2.8 percent to SR1,008 per square meter.
In Dammam, grade A office rents declined 4.3 percent to just over SR900 per square meter in the first three months of 2021.
The recent decision to exempt real estate transactions from a 15 percent value-added tax (VAT) charge has helped to boost activity in the residential market.
“The overall improvement in business confidence and market sentiment has led to a surge in residential mortgage loans, which rose by 38 percent in the 12 months to the end of February. That has, in turn, materialized in the form of a marked increase in residential transactions across the country, with Riyadh and Jeddah experiencing a 25 percent and 34 percent increase in deal numbers over the last 12 months,” Durrani said.
Despite the COVID-19 pandemic and retailers moving online, average vacancy rates in malls have remained stable. The market-wide vacancy rate in Riyadh increased by 1 percentage point in Q1 2021 to 16 percent.
Saudi Arabia has the world’s largest hotel construction pipeline, and the country’s supply is expected to increase by 61.1 percent over the next three years, the highest rate among the most 50 populated countries in the world, according to a report by hospitality data firm STR.
Durrani said: “The hospitality market has been somewhat of a bright spot. Despite continued weakness in Riyadh, Jeddah and the Dammam metropolitan area, these areas have experienced strong growth in both average daily room (ADR) rates, as well as revenue per available room.”
The resumption of the Umrah pilgrimage has underpinned performance in Jeddah’s hospitality market, where in the year to March 2021, ADRs grew by 18.7 percent, while occupancy decreased marginally by 2.2 percent.
Over this period, revenue per available room grew by 16.2 percent.


Saudi grocer Othaim sales dip a year on from panic buying supermarket sweep

Saudi grocer Othaim sales dip a year on from panic buying supermarket sweep
Updated 06 May 2021

Saudi grocer Othaim sales dip a year on from panic buying supermarket sweep

Saudi grocer Othaim sales dip a year on from panic buying supermarket sweep
  • VAT and school closures also hit performance
  • Global supermarket sector returns to normality

DUBAI: Saudi supermarket chain Abdullah Al Othaim Markets reported a 42 percent drop in first quarter profit, a year on from the early panic-buying days of the pandemic.
Net profit fell to SR57.7 million ($15.4 million) for the first three months of the year from almost SR100 million a year earlier, the company said in a Tadawul filing. Sales fell 11.9 percent over the same period to about SR2.1 billion.
The company said that the decline followed the “abnormal growth in retail sales as a result of high demand to buy groceries and food supplies,” following the coronavirus outbreak in the Kingdom last year. It also cited the closure of schools and an increase in value added tax as factors that weighed on its performance.
Supermarkets worldwide have benefited from a boom in grocery buying over the last year, especially at the start of the pandemic when supermarket shelves were stripped of essential items as consumers went in to panic buying mode. As restaurants and cafes closed their doors, many consumers compensated by buying more food to consume at home.
Now global supermarket chains are adjusting to the return of more normal consumer purchasing patterns as lockdowns are lifted and economies re-open.
Sainsbury’s CEO Simon Roberts said on Wednesday that that while customers shopping more normally would impact sales growth this year, the costs of the crisis would also fall.
“Like our customers, we are all looking forward to things feeling more normal over the coming months,” he said.


Saudi banks in a ‘sweet spot’ says fund manager

Saudi banks in a ‘sweet spot’ says fund manager
Updated 06 May 2021

Saudi banks in a ‘sweet spot’ says fund manager

Saudi banks in a ‘sweet spot’ says fund manager
  • Shareek program to boost corporate borrowing
  • Saudi banks well positioned with low cost of funding and deposits

DUBAI: Saudi banks are in a “sweet spot” to tap rising corporate and mortgage lending according to a top regional fund manager.
It comes after a rampant rise in the stock price of the Kingdom’s big lenders.
“I think Saudi banks in general are in a sweet spot,” Hedi Ben Mlouka, CEO and founder of FIM partners, told Bloomberg TV on Thursday. “You are seeing growth no longer coming from a low base, we are talking big numbers here that move the balance sheet and the profitability of these banks. The ‘Shareek’ program is going to spur the first growth we have seen in corporate borrowing to support all this capex,” he said.
The $2.7 trillion Shareek program was announced by the Saudi government last month and aims to provide incentives for publicly quoted companies to channel dividend payments into long-term investment in the Kingdom.
“The Saudi banks are in the best position to take advantage of that because their cost of funding and cost of deposits is low,” said Mlouka. “The Islamic banks are the best positioned from that perspective because they have the lowest cost of funding.”
Saudi banks have been among the best performers among regional publicly traded stocks in the first quarter, with the shares of Tadawul-listed lenders up by an average of 26 percent since the start of the year, according to Bloomberg data.
Saudi Arabia’s debt capital market is expected to grow as the Kingdom doubles down on its Vision 2030 goals, S&P Global Ratings said this week.
The Kingdom is banking on the increasing role of its debt and equities market in financing Vision 2030, the report said, as it seeks to attract more foreign direct investments.
“We think banks will continue to play an important role in financing Vision 2030, but foresee an increased role for the local capital market,” said S&P Global Ratings credit analyst Timucin Engin in the report published Tuesday.