Saudi Central Bank extends SME deferred payment program another 3 months

Buildings are seen in Riyadh, Saudi Arabia. (File/Reuters)
Buildings are seen in Riyadh, Saudi Arabia. (File/Reuters)
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Updated 22 June 2021

Saudi Central Bank extends SME deferred payment program another 3 months

Saudi Central Bank extends SME deferred payment program another 3 months
  • Program aims to support small and medium-sized enterprises still struggling due to the pandemic
  • More than 106,000 contracts have benefited since it was launched in March 2020 with a value of approximately SR167 billion

RIYADH: The Saudi Central Bank (SAMA) announced on Tuesday that it is extending a deferred payment program for a second time to help support small and medium-sized enterprises (SMEs) that are still struggling during the coronavirus (COVID-19) pandemic.
SAMA said the program — one of the bank’s initiatives to support private sector financing — will be extended for another three months from July 1 through Sept. 30.
The move is part of SAMA’s role in maintaining the stability of the financial sector, enabling it to promote economic growth and maintain employment levels in the private sector, especially within micro enterprises and other SMEs.
More than 106,000 contracts have benefited from the program since it was launched in March 2020 while the value of the deferred payments for those contracts has amounted to approximately SR167 billion ($44.5 billion).
SAMA has also offered a secured financing program for SMEs as more than 5,282 contracts have benefited from that program with a total financing value of more than SR10 billion, the bank said in a statement.
These programs are meant to support the private sector and the levels of liquidity in the financial sector. They enable financing agencies to provide support while mitigating the economic and financial effects on the SME sector, the bank said.
This is the second time SAMA has extended the two programs to support SMEs. It renewed the deferred payment program for three months last March, while it also extended the guaranteed financing program for an additional year until March 14, 2022.


Gulf economies expected to grow 2.2 percent this year, says World Bank

Gulf economies expected to grow 2.2 percent this year, says World Bank
Updated 2 min 31 sec ago

Gulf economies expected to grow 2.2 percent this year, says World Bank

Gulf economies expected to grow 2.2 percent this year, says World Bank
  • Most GCC countries are expected to continue to post deficits over the coming years
  • The countries that posted the largest deficits in 2020 — Bahrain, Kuwait and Oman — are expected to remain in deficit until 2023

RIYADH: Economies of the Gulf Cooperation Council (GCC) will likely grow at an aggregate 2.2 percent this year after a 4.8 percent contraction last year caused by the pandemic and lower oil prices, the World Bank said on Wednesday.

“With recent progress made with the rollout of the COVID-19 vaccine globally and with the revival of production and trade worldwide, the prospects for an economic recovery are firmer now than at the end of last year,” it said in a research report.

“Although downside risks remain, the forecast stands for an aggregate GCC economic turnaround of 2.2 percent in 2021 and an annual average growth of 3.3 percent in 2022–23.”

It remains vital for GCC countries — which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the UAE — to diversify their economies, the World Bank said, as oil revenues account for over 70 percent of total government revenues in most GCC countries.

It said it expects Kuwait and Qatar to introduce a value-added tax (VAT) this year, following the example of other GCC states that have implemented the revenue-diversifying measure in different phases over the last few years.

On the fiscal side, most GCC countries are expected to continue to post deficits over the coming years, the World Bank said, after shortfalls intensified last year because of the coronavirus crisis.

The countries that posted the largest deficits in 2020 — Bahrain, Kuwait and Oman — are expected to remain in deficit until 2023, but with narrower ratios than in the 2020 downturn. While a rebound in oil prices may lift economic prospects in the short term, the World Bank said downside risks to its outlook are “extremely high” because of the region’s heavy exposure to global oil demand and the service industries.

“Mobility restrictions including for international travel may hurt attendance at future high-profile events in the GCC — the 2020 (rescheduled to 2021) World Expo in the UAE and the 2022 Federation Internationale de Football Association (FIFA) World Cup in Qatar,” it said.


SABB records net profit of $504 million

SABB records net profit of $504 million
Updated 7 min 24 sec ago

SABB records net profit of $504 million

SABB records net profit of $504 million

JEDDAH: The Saudi British Bank (SABB) recorded a net profit after zakat and income tax of SR1,889 million ($504 million) for the six months ended on June 30, 2021.

This is an increase of SR7,785 million or 132 percent compared to the loss of SR5,896 million for the same period in 2020.

Operating income of SR3,984 million for the six months ended June 30, 2021, a decrease of SR703 million, or 15 percent, compared to SR4,687 million for the same period in 2020.

Lubna Suliman Olayan, board chair of SABB said: The bank’s “performance in the second quarter of 2021 builds on the progress made in the first quarter of the year, as we continue the implementation of our five-year strategic plan.”

She said the bank is now focused on supporting the Kingdom’s economic transformation.


Yemen central bank injects old riyal bills worth billions into market to challenge Houthi ban

Yemen central bank injects old riyal bills worth billions into market to challenge Houthi ban
Updated 04 August 2021

Yemen central bank injects old riyal bills worth billions into market to challenge Houthi ban

Yemen central bank injects old riyal bills worth billions into market to challenge Houthi ban
  • The Houthi ban has forced travelers to Sanaa and other areas controlled by the militant group into buying old banknotes from the black market at a higher rate

ALEXANDRIA: The Central Bank of Yemen in Aden has injected billions of riyals in old large-sized 1,000 banknotes into the market to address a chronic shortage of cash.

The bank also implemented several other economic measures to control the chaotic exchange market and put an end to the fall in the Yemeni riyal.

Since late 2019, the Iran-backed Houthis have banned the use of banknotes printed by the Yemeni government in Aden, creating a severe cash crunch in areas under their control which has led to local exchange firms and banks stopping paying salaries and raising remittance charges.

The Houthi ban has forced travelers to Sanaa and other areas controlled by the militant group into buying old banknotes from the black market at a higher rate and carrying Saudi riyals or US dollars.

In a challenge to the Houthis, the central bank has put billions of riyals in old banknotes into the market and started withdrawing the newly printed 1,000 banknote. Yemenis can get old banknotes from local banks and exchange firms.

However, the Houthis warned people against using the large banknotes and published copies and serial numbers of the newly circulated cash.

In a bid to regulate the exchange market and curb the plunging value of the riyal, the central bank has tightened regulations for opening new exchange shops or firms, demanding that applicants produce a three-year feasibility study prepared by a certified accountant showing estimated budgets.

Existing exchange companies must now send their annual financial statements to the bank, use an approved software for their financial activities, apply international financial reporting standards, and audit their accounts by accountants certified by the central bank.

Some Yemeni economists, however, have cast doubt over the central bank’s ability to enact the regulations after the Yemeni riyal on Wednesday broke another historic record low against the dollar.

Local money traders told Arab News on Wednesday that the Yemeni riyal was trading at 1020 to the dollar in government-controlled areas, compared to less than 980 a month ago. When the war broke out in late 2014, the Yemeni riyal was sold at 215 to the dollar.

The Yemeni government previously relocated the central bank’s headquarters from Sanaa to Aden, floated the Yemeni riyal to bridge the gap between the official rate and the black market, closed many exchange shops, and printed billions of riyals to pay public servants. But all the measures proved ineffective on the ground as the Yemeni riyal continued to drop.

Waled Al-Attas, an assistant professor of financial and banking sciences at Hadhramout University, told Arab News: “The central bank is required to control the market and close unlicensed exchange shops in parallel with tightening control and procedures on existing exchange entities.”

He noted that the latest injection of cash into the market had boosted foreign currency speculation activities and pushed up inflation.

“The large 1,000 banknote that the central bank pumped into the market represents an additional burden and additional liquidity that will cause more inflation, higher prices, and speculation on exchange rates,” he added.

The continuing devaluation of the Yemeni riyal has pushed up food and fuel prices in government-controlled areas and triggered protests.


Cryptocurrencies look up despite regulatory issues

Cryptocurrencies look up despite regulatory issues
Updated 04 August 2021

Cryptocurrencies look up despite regulatory issues

Cryptocurrencies look up despite regulatory issues

RIYADH, DUBAI: While regulatory issues continue to chase cryptocurrencies, their stock saw a rise on Wednesday with Bitcoin trading higher by 1.28 percent to $39,037.94 at 5 p.m. Riyadh time.

Ether, the second most traded cryptocurrency, traded at $2,609.22, up 3.56 percent, according to data from Coindesk.

The pressure on the digital currency continues, as HSBC became the latest lender to have suspended payments to cyrptocurrency exchange platform Binance in the UK.

“We have made this decision due to concerns about the possible risks to you,” the bank said in a statement, where it cited a consumer warning by the country’s financial regulator.

Regulators in Malaysia, Japan, Hong Kong, Thailand, and Germany have previously issued warnings against Binance.

HSBC earlier said it was not planning to launch a crypto trading desk or offer digital coins as an investment, describing these assets as “volatile” and lacking of transparency.

But Wells Fargo, one of the largest wealth managers in the US, has a different stance on cryptocurrency, as it recently launched crypto investment offerings to its clients.

This was confirmed to Business Insider by the company’s spokesperson, Bitcoin.com has reported.

Also in the US, NCR Corp., a global leader in ATM software applications, said it was acquiring Libertyx, an American crypto company that claims to be the US “first and largest network of bitcoin ATMs, cashiers, and kiosks.”

In Argentina, two blockchain-based digital identity projects are being developed, according to a report by Bitcoin.com.

One of the projects is aimed at improving government-citizen relationships in Misiones, and the other seeks to promote financial inclusion in the Gran Chaco region. They are being organized by Project Didi, which financed by the Inter-American Development Bank.


Saudi property market adapts to new tax

Saudi property market adapts to new tax
Updated 04 August 2021

Saudi property market adapts to new tax

Saudi property market adapts to new tax

RIYADH: The Saudi Zakat, Tax and Customs Authority registered over 543,000 transactions related to the Real Estate Transaction Tax (RETT) since its implementation in October 2020, the official Saudi Press Agency (SPA) reported.

The highest number of tax transactions was reported in Riyadh with 125,110 followed by Jeddah (55,680), Buraidah (50,462), Makkah (18,955) and Madinah (18,557).

“This gives a positive impression to the property market,” Khaled Almobid, CEO of Riyadh-based Menassat Reality Co. told Arab News.

He said many thought the new tax might contribute to a decline in the demand of property but “the market started to adapt to it,” which is a positive sign for the Kingdom’s real estate sector.

Property deals in Saudi Arabia are exempted from a 15 percent value-added tax (VAT) as the government seeks to support the real estate sector.

Instead a 5 percent tax was introduced last year to boost the economy as it was hit hard by the impact of the coronavirus disease (COVID-19) pandemic and weaker oil prices.

“The buyer used to pay a value-added tax (VAT) of 15 percent, and due to the real estate conditions in the Kingdom, it was turned into a tax paid by the seller, not the buyer, called the real estate transaction tax, and it was reduced to 5 percent,” Almobid said.