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
A general view of the Gulf Cooperation Council's (GCC) 41st Summit, is pictured via screen at the media centre in Al-Ula, Saudi Arabia January 5, 2021. (Reuters)
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Updated 05 August 2021

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.


Bahrain to double VAT to 10%: Reports

Bahrain to double VAT to 10%: Reports
Updated 8 sec ago

Bahrain to double VAT to 10%: Reports

Bahrain to double VAT to 10%: Reports

RIYADH: Bahrain plans to increase value-added tax to 10 percent in a bid to curb budget deficits and boost state revenue, 

Bahraini media outlets reported on Sunday.

According to a report published in a section of the Bahraini press, the legislators also discussed the options of reducing wages or social welfare given to nationals to bolster the economy.

According to IMF estimates, Bahrain’s budget deficit will contract by half this year after lower oil prices and the coronavirus pandemic boosted it to a record 18 percent of economic output in 2020.


Petrofac to plead guilty to 7 counts of bribery in Mideast oil projects

Petrofac to plead guilty to 7 counts of bribery in Mideast oil projects
Updated 12 min 53 sec ago

Petrofac to plead guilty to 7 counts of bribery in Mideast oil projects

Petrofac to plead guilty to 7 counts of bribery in Mideast oil projects

LONDON: British oil services group Petrofac said on Friday it would plead guilty to seven counts of failing to prevent bribery to secure projects in Iraq, Saudi Arabia and the UAE between 2012 and 2015, calling it a “deeply regrettable period.”

The company indicated its plans at London’s Westminster Magistrates’ Court after being formally charged by the UK Serious Fraud Office, drawing a line under a four-year criminal investigation. Its shares surged 25 percent in relief.

Petrofac, which has struggled to secure key contracts in the Middle East and has seen its shares battered during the SFO investigation, will formally enter its pleas and await sentencing at London’s Southwark Crown Court on Monday.

Petrofac said offers or payments to agents to help secure projects were made between 2011 and 2017 but that all employees involved had left.

“This was a deeply regrettable period of Petrofac’s history,” said Chairman Rene Medori in a statement, adding that the company’s “comprehensive program of corporate renewal” had been acknowledged by the SFO.

“Petrofac has been living under the shadow of the past, but today it is a profoundly different business, in which stakeholders can be assured of our commitment to the highest standards of business ethics, wherever we operate,” he said.

Former executive David Lufkin, who has separately pleaded guilty to 14 charges of bribery to secure billions of dollars worth of contracts for Petrofac in the Middle East, is also expected to be sentenced on Monday.

His lawyer did not immediately respond to a request for comment.

In March, the UAE’s state-backed oil firm, ADNOC, barred Petrofac from competing for new contracts in the country.

It is the second corporate guilty plea secured by the SFO in five months.

Former Airbus subsidiary GPT Special Project Management pleaded guilty to corruption over military contracts for Saudi Arabia in April.


CFO of Russia's Novatek arrested in U.S. on tax charges of over $93m

CFO of Russia's Novatek arrested in U.S. on tax charges of over $93m
Updated 26 September 2021

CFO of Russia's Novatek arrested in U.S. on tax charges of over $93m

CFO of Russia's Novatek arrested in U.S. on tax charges of over $93m
  • Novatek has grown into a major competitor of Gazprom, produced last year, 18.8 million tons of liquefied natural gas, 5 percent of global output
  • The situation has absolutely no effect on Novatek’s operational and financial activities

RIYADH: The U.S. government has arrested Mark Gyetvay, the deputy chairman of the management board of Novatek, Russia’s second-largest natural gas producer, on federal tax charges for more than $93 million hidden in offshore accounts, according to the IRS statement.


The situation has absolutely no effect on Novatek’s operational and financial activities, adding that it isn’t involved in related litigation, the company said in WSJ about Mr. Gyetvay’s case.


Novatek has grown into a major competitor of Gazprom, produced last year, 18.8 million tons of liquefied natural gas, 5 percent of global output, WSJ said.


The arrest of Gyetvay, comes as Russia wrestles with European regulatory challenges to the Nord Stream 2 gas pipeline running along the bed of the Baltic Sea, seen by opponents as a geopolitical tool, Nord Stream 2 will deliver Russian natural gas to Germany, WSJ added.


Japan's SMBC advising on Aramco's gas pipeline deal: CNBC Arabia

Japan's SMBC advising on Aramco's gas pipeline deal: CNBC Arabia
Image: Shutterstock
Updated 26 September 2021

Japan's SMBC advising on Aramco's gas pipeline deal: CNBC Arabia

Japan's SMBC advising on Aramco's gas pipeline deal: CNBC Arabia
  • A consortium of Asian investors are leading candidates to win the deal
  • The financing structure of the deal will be similar to the $12.4 billion oil pipeline deal

RIYADH: Saudi Aramco has selected Japan's Sumitomo Mitsui Banking Corporation (SMBC) to provide financial advice to the company in a $17-20 billion gas asset sale, CNBC Arabia reported, citing sources.

A consortium of Asian investors are leading candidates to win the deal, after Asian sovereign funds, primarily sovereign wealth funds from China, South Korea, and Singapore, entered negotiations the CNBC source said.

The American Brookfield Fund, which won the Abu Dhabi National Oil Company (ADNOC) gas pipeline deal last year, is among potential investors.

The financing structure of the deal will be similar to the $12.4 billion oil pipeline deal, which was won by a coalition of investors led by EIG Global Energy, the source added.

The sources explained that the deal will be financed using $4 billion of issued shares, while the rest of the deal will be financed through loans from a group of banks.


PIF lender SRC acquires new housing portfolio from Banque Saudi Fransi

PIF lender SRC acquires new housing portfolio from Banque Saudi Fransi
A common residential area built above on the desert near the corniche park in the Dammam, Saudi Arabia (Shutterstock)
Updated 26 September 2021

PIF lender SRC acquires new housing portfolio from Banque Saudi Fransi

PIF lender SRC acquires new housing portfolio from Banque Saudi Fransi
  • It follows other partnerships with banks and real estate finance companies in the Kingdom
  • The company expects the acquisition to provide “long-term liquidity to the housing market”

DUBAI: The Saudi Real Estate Refinance Company has signed its second housing finance portfolio purchase with Banque Saudi Fransi.

The company, which is wholly owned by the Public Investment Fund, expects the acquisition to provide “long-term liquidity to the housing market.”

“We have illustrated to primary originators in the Kingdom the crucial role we play in developing the housing market and supporting their businesses through liquidity and risk management solutions,” SRC chief Fabrice Susini said.

It follows other partnerships with banks and real estate finance companies in the Kingdom, as SRC seeks to promote stability in the real estate finance market. 

“SRC has played a vital role in ensuring that the Vision 2030 housing program objectives are being met and we expect ourselves to play a significant role in this by supporting them,” Rayan Fayez, managing director and chief executive officer of BSF, said.