Saudi Arabia applies spending cap despite oil revenues, says Minister

Saudi Arabia applies spending cap despite oil revenues, says Minister
Minister of Finance Mohammed Al-Jadaan (File/AFP)
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Updated 25 November 2021

Saudi Arabia applies spending cap despite oil revenues, says Minister

Saudi Arabia applies spending cap despite oil revenues, says Minister

RIYADH: Saudi Arabia, which reported last month a surplus in its first quarterly budget surplus since the first quarter of 2019, is applying restraints on spending even as oil prices are trading near multiyear high.

The Saudi Ministry of Finance has started to apply the spending cap regardless of the oil price and revenues, Minister Mohammed Al-Jadaan said at the Financial Stability Conference on Thursday.

The government is working through the financial sustainability program to reduce exposure to external factors, including fluctuations in the oil markets, by adopting financial rules that achieve financial sustainability and sustainable development, which reflects on financial stability, Al-Jadaan said.

These rules adopt new methodologies to determine spending ceilings in the medium term, he said.

The financial rules are based on the estimation of the structural oil revenues that do not only depend on the future expectations, but also on the average real historical revenues for a long period, and the estimation of non-oil revenues as a percentage of non-oil GDP to form together spending ceilings, the minister explained.

These rules will limit the fluctuation of spending and its multiple negative results, he said. 

The rules also include minimum and maximum limits for government reserves, so that surpluses are dealt with to enhance government reserves and support development funds and the Public Investment Fund, or pay part of the public debt.

Saudi Arabia has faced no challenges in issuing debt even at the worst time of the COVID-19 pandemic, he said.

The credit rating was important not only for government and government debt, but also for cost reduction, the Saudi Minister said.

Credit rating agency Moody’s has changed early this month the outlook on the Saudi government from negative to stable. The agency predicted the Saudi economy will return to positive growth in 2021, and the current account level will return to a surplus as the fiscal deficit shrinks in 2021, accompanied by a reduction in the level of debt in the medium term.

The Kingdom’s budget turned to a surplus of SR6.68 billion ($1.78 billion) in the third quarter of this year, up from a deficit of SR4.61 billion in the previous quarter, and a deficit of SR41 billion in the third quarter of 2020, the Saudi Ministry of Finance revealed in its latest quarterly report.

Oil revenues went up by 60 percent in the three months ending Sept. from a year ago reaching SR148 billion, according to the ministry’s report.

Social spending fell down by 41 percent over the same period, while subsidies fell down by almost half, the data showed.

PIF, Private Sector

Al Jadaan said that the purpose of having reserves and investments with the Public Investment Fund was to give fiscal stability to government spending.There is a negative impact on the sovereign credit rating affecting the private sector, so the government is keen to ensure that these effects are avoided, Al Jadaan added.

Talking about the KIngdom's other goals, he said that Saudi Arabia's direction is clear about being a global logistics hub including rail and port networks, the minister said.

Ports are growing significantly, previously wasted opportunities have been activated and a large number of ports have been allocated to different types of services, according to Al Jadaan.

“There are very big opportunities for the private sector,” he said. 


 


Pandemic to cost global tourism $2.0 trillion in 2021: UN

A flight crew walk through the terminal at Sydney Airport, Monday, Nov. 29, 2021. (AP)
A flight crew walk through the terminal at Sydney Airport, Monday, Nov. 29, 2021. (AP)
Updated 29 November 2021

Pandemic to cost global tourism $2.0 trillion in 2021: UN

A flight crew walk through the terminal at Sydney Airport, Monday, Nov. 29, 2021. (AP)
  • A total of 46 destinations — 21 percent of all destinations worldwide — currently have their borders completely closed to tourists, according to the UNWTO

MADRID: The coronavirus pandemic will cost the global tourism sector $2.0 trillion in lost revenue in 2021, the UN’s tourism body said Monday, calling the sector’s recovery “fragile” and “slow.”
The forecast from the Madrid-based World Tourism Organization comes as Europe is grappling with a surge in infections and as a new heavily mutated Covid-19 variant, dubbed Omicron, spreads across the globe.
International tourist arrivals will this year remain 70-75 percent below the 1.5 billion arrivals recorded in 2019 before the pandemic hit, a similar decline as in 2020, according to the body.
The global tourism sector already lost $2.0 trillion (1.78 trillion euros) in revenues last year due to the pandemic, according to the UNWTO, making it one of sectors hit hardest by the health crisis.
While the UN body charged with promoting tourism does not have an estimate for how the sector will perform next year, its medium-term outlook is not encouraging.
“Despite the recent improvements, uneven vaccination rates around the world and new Covid-19 strains” such as the Delta variant and Omicron “could impact the already slow and fragile recovery,” it said in a statement.
The introduction of fresh virus restrictions and lockdowns in several nations in recent weeks shows how “it’s a very unpredictable situation,” UNWTO head Zurab Pololikashvili told AFP.
“It’s a historical crisis in the tourism industry but again tourism has the power to recover quite fast,” he added ahead of the start of the WTO’s annual general assembly in Madrid on Tuesday.
“I really hope that 2022 will be much better than 2021.”

While international tourism has taken a hit from the outbreak of disease in the past, the coronavirus is unprecedented in its geographical spread.
In addition to virus-related travel restrictions, the sector is also grappling with the economic strain caused by the pandemic, the spike in oils prices and the disruption of supply chains, the UNWTO said.
Pololikashvili urged nations to harmonize their virus protocols and restrictions because tourists “are confused and they don’t know how to travel.”
International tourist arrivals “rebounded” during the summer season in the Northern Hemisphere thanks to increased travel confidence, rapid vaccination and the easing of entry restrictions in many nations, the UNWTO said.
“Despite the improvement in the third quarter, the pace of recovery remains uneven across world regions due to varying degrees of mobility restrictions, vaccination rates and traveler confidence,” it added.
Arrivals in some islands in the Caribbean and South Asia, and well as some destinations in southern Europe, came close to, or sometimes exceeded pre-pandemic levels in the third quarter.
Other countries however hardly saw any tourists at all, particularly in Asia and the Pacific, where arrivals were down 95 percent compared to 2019 as many destinations remained closed to non-essential travel.

A total of 46 destinations — 21 percent of all destinations worldwide — currently have their borders completely closed to tourists, according to the UNWTO.
A further 55 have their borders partially closed to foreign visitors, while just four nations have lifted all virus-related restrictions — Colombia, Costa Rica, Dominican Republic and Mexico.
The future of the travel sector will be in focus at the WTO annual general assembly, which will run until Friday.
The event — which brings together representatives from 159 members states of the UN body — was original scheduled to be held in Marrakesh.
But Morocco in late October decided not to host the event due to the rise in Covid-19 cases in many countries.
Before the pandemic, the tourism sector accounted for about 10 percent of the world’s gross domestic product and jobs.


Saudi Arabia’s point-of-sale transactions increase by 1.2% in October 

Saudi Arabia’s point-of-sale transactions increase by 1.2% in October 
Updated 28 November 2021

Saudi Arabia’s point-of-sale transactions increase by 1.2% in October 

Saudi Arabia’s point-of-sale transactions increase by 1.2% in October 

RIYADH: The value of point-of-sale transactions in Saudi Arabia reached SR40.5 billion ($10.8 billion) in October, up by 1.2 percent compared to the previous month, the Saudi Central Bank reported.

Some of the sectors that helped drive the increase were restaurants and cafes, hotels, food and beverages, clothing and footwear. 

For example, sales in restaurants and cafes reached their highest level since at least January 2016.

The number of transactions rose markedly to over 495 million in October from the previous month’s 469 million transactions.

Some of the point-of-sale transactions could be conducted using mobile phones and cards, otherwise referred to as near-field communication technology.

The number of mobile phone transactions continued its expansionary trend, recording a monthly increase of 1.9 percent to hit 179 million transactions in October. Meanwhile, the number of transactions using cards was up by 8 percent to stand at 293 million transactions.

The value of transactions using mobile phones witnessed a 2.5 percent drop to SR11.5 billion in October while those performed using cards recorded an increase of 3.2 percent with the value reaching SR25.7 billion.


Saudi Tadawul Group sets IPO offer price at SR105 per share

Saudi Tadawul Group sets IPO offer price at SR105 per share
Updated 28 November 2021

Saudi Tadawul Group sets IPO offer price at SR105 per share

Saudi Tadawul Group sets IPO offer price at SR105 per share

RIYADH: Saudi Tadawul Group Holding Co. on Sunday set the final offer price for its initial public offering at the top of the range i.e. SR105 per share. 

The market capitalization of the exchange stands at SR 12.6 billion as on the listing date, a statement issued by Tadawul said. 

The IPO order book was 121 times oversubscribed with the book-building process generating an order book of SR458 billion. 

The individual investor subscription period is scheduled to commence on Nov. 30 and ends on Dec. 2. 


Jordan’s draft 2022 budget forecasts $15 billion in state spending

Jordan’s draft 2022 budget forecasts $15 billion in state spending
Updated 28 November 2021

Jordan’s draft 2022 budget forecasts $15 billion in state spending

Jordan’s draft 2022 budget forecasts $15 billion in state spending
  • The government foresaw total revenues next year at 8.9 billion dinars, with 848 million in foreign grants
  • It has raised capital spending to 1.5 billion dinars, a 43 percent rise from the previous year

AMMAN: Jordan’s Finance Minister Mohamad Al-Ississ said on Sunday that the draft 2022 budget forecasts 10.6 billion dinars ($15 billion) in state expenditure and paves the way for a rebound in growth to 2.7 percent after the impact of the coronavirus pandemic.
Al-Ississ told a media briefing that Jordan had also last week successfully concluded the third review of a four-year program of International Monetary Fund (IMF) backed reforms to help it restore fiscal prudence for a sustained recovery.
Al-Ississ said that the government had increased its local revenues last year without raising taxes through a rare campaign to combat tax evasion and by a major restructuring of the tax and customs administration that ended exemptions.
It foresaw total revenues next year at 8.9 billion dinars, with 848 million in foreign grants.
Jordan’s economy was particularly hard hit last year by the shutdowns aimed at containing the virus, with unemployment at a record 24 percent amid the worst contraction in decades.
Inflation was, however, expected to rise to 2.5 percent next year from a projected 1.6 percent this year, Al-Ississ said.
Most state expenditure goes on salaries and pensions in a country which has among the highest government spending relative to the size of its $45 billion economy.
The government has raised capital spending to 1.5 billion dinars, a 43 percent rise from the previous year to help spur growth and improve infrastructure to help attract more investment, the finance minister said
Jordan’s commitment to IMF reforms and investor confidence in the country’s improved outlook helped it to maintain stable sovereign ratings at a time when other emerging markets were being downgraded, Al-Ississ said.
Al-Ississ said debt servicing on 29.4 billion dinars of public debt would drop next year with a push to expand preferential loans and grants away from more expensive commercial lending.


Saudi Arabia registers the new Bahri-owned oil tanker Rayah

Saudi Public Transport Authority raises the Kingdom’s flag on the new Rayah marine tanker in Dammam in the Eastern Province. (SPA)
Saudi Public Transport Authority raises the Kingdom’s flag on the new Rayah marine tanker in Dammam in the Eastern Province. (SPA)
Updated 28 November 2021

Saudi Arabia registers the new Bahri-owned oil tanker Rayah

Saudi Public Transport Authority raises the Kingdom’s flag on the new Rayah marine tanker in Dammam in the Eastern Province. (SPA)
  • The Rayah raises the total number of oil tankers owned by Bahri to 57
  • The tanker is made by Hyundai with a tonnage of 110,706 metric tons

RIYADH: Saudi Arabia’s transport authority raised the Kingdom’s flag on a new marine tanker in Dammam in the Eastern Province.
The Rayah tanker, which has been registered under the Saudi flag, is one of the national carriers owned and operated by Bahri, the Saudi National Shipping Company.
It raises the total number of national ships carrying the Saudi flag to 408 ships to date, with a tonnage exceeding 100 tons, increasing the carrying capacity of the Saudi merchant marine fleet.
The Kingdom’s fleet is experiencing rapid growth, and the addition of the new tanker is an important step in supporting business growth through developing marine capabilities and expanding shipping lanes in energy supplies to global markets.

The Rayah, made by Hyundai with a tonnage of 110,706 metric tons, raises the total number of oil tankers owned by Bahri to 57, and was registered by the regulatory and legislative authority for the Kingdom’s maritime transport sector.
Saudi Arabia’s marine fleet was ranked first regionally and 21st globally in terms of tonnage, according to the annual report of the UN Conference on Trade and Development last year.
“The Public Transport Authority will continue its endeavors and exert more efforts to enhance the logistics sector and national transport, especially maritime, and contribute to consolidating the Kingdom’s leading position on the map of shipping and global marine supply chains,” the body said in a statement.