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. 


 


Jeddah music center promotes Kingdom’s nascent entertainment sector

Jeddah music center promotes Kingdom’s nascent entertainment sector
Updated 03 December 2021

Jeddah music center promotes Kingdom’s nascent entertainment sector

Jeddah music center promotes Kingdom’s nascent entertainment sector
  • Music has become not just an integral part of daily life, but a dynamic new economic sector
  • Jeddah-based Makan Music Center has become a focal point of the Kingdom’s burgeoning music scene.

JEDDAH: Saudi Arabia’s music industry has seen rapid growth from a standing start, largely due to the Vision 2030 reform plan, which positions entertainment front and center in the diversification of the Kingdom’s economy away from oil and its derivatives.

The General Entertainment Authority was established in 2016 with a mission to “provide recreational opportunities for all segments of society...to enrich lives and to spread joy.” It is doing just that with spectacular mega-events like Riyadh Season.

And with the relaxation of social norms in the Kingdom, music has become not just an integral part of daily life, but a dynamic new economic sector.

Numerous KSA-based companies are getting in on the act, via a spectrum of platforms: TV, Internet, social media, streaming services such as Lebanon-based Anghami (focused on Middle East-origin music) and live performance.

Saudi promoters such as Benchmark and AK Events have brought major international stars to local audiences. Mariah Carey, the Black Eyed Peas and Enrique Iglesias have all performed in the Kingdom, prior to the COVID-19 epidemic putting a temporary halt on public gatherings.

Jeddah-based Makan Music Center, which offers a full range of musical services, is a focal point of the Kingdom’s burgeoning music scene.

The center’s General Manager Shaher Karkashan, 32, founded the center with his musician colleagues in 2018.

He told Arab News: “Our goal was to create a hub for musicians. And our vision is to enable an individual to go the full circle with us — from learning an instrument to recording original material and then presenting his or her music to a live audience.

“That’s the goal, for both boys and girls — and surprisingly, over 60 percent of our clients are female.”

Such activities are crucial for the incubation of Saudi musical performers in order to supply high quality content to an industry hungry for new talent.

The center was initially launched with just two rooms — a recording studio and a jamming and learning space.

Three years on, it occupies an entire 400-square meter building divided into an eight-room teaching area, a 250-capacity auditorium and a recording studio.

Clients can learn a variety of instruments, including guitar, violin and drums, along with vocals. The typical age of musicians is 15 to 40, although some are aged 50 and above.

The center also provides equipment, talent and management services for indoor and outdoor corporate events, staged in malls and other public spaces, attracting audiences of up to 2,000.

Karkashan said that as the center has grown, it has become a more professional outfit with a robust business model and several income streams: tuition, ticketed concerts, artist management, equipment hire and corporate events.

He said: “We started with five employees — and now we are 20 and growing. We have six departments, including human resources, accounting and sales, and we’re hiring more people.”

While the KSA’s music industry – specifically live performance — was negatively impacted by the COVID-19 pandemic, the future outlook appears positive. With the Kingdom’s health situation returning to normal, forthcoming live events include the appearance of Justin Bieber, A$AP Rocky and Jason Derulo, who are set to headline post-race concerts at this weekend’s inaugural Formula 1 Grand Prix in Jeddah. Industry players are hoping that this progress will not be impeded by the omicron COVID-19 variant.

Health conditions permitting, Karkashan and his associates are also planning a large new year concert as part of the port city’s Jeddah Season festivities.
Such activities were unheard of in the Kingdom even a few years ago, and Karkashan noted that the changes stemmed from the Vision 2030 reforms.

“Saudi Arabia had some major artists back in the 1980s, after which there was a huge 30-year gap,” he added.

“Then we started seeing a few Saudis performing on TV shows like ‘Star Academy’ and ‘Arab’s Got Talent’ — but they went on to work in Kuwait or the Emirates, because there was no opportunity for them to develop in Saudi Arabia.

“Now things have changed. The Ministry of Culture is involved, there’s the Entertainment Authority, even a Music Authority, and they are all helping to develop the KSA’s music industry.

“I think potentially big names will soon emerge in Saudi Arabia. They are under development now, and we will probably see them go mainstream in around 2023.”

Some of Makan’s clients have come together to form bands — one called Robin and another Bad Reception — and the center has also allowed more established acts, such as death metal outfit Wasted Land, to record and perform their own material.

Karkashan said that he is optimistic about the future of Makan as well as Saudi Arabia’s music sector as a whole.

He pointed out that he was focused on three main areas of growth: artist management, staging bigger outdoor events and opening new centers in Riyadh and other cities in the Kingdom.

“Five years ago, it was all very different. But now aspiring musicians have our full support as well as support from the media and the government.

“And social media really opens up huge possibilities. Many young people are passionate about learning music or starting a band or a career in music, and this is definitely the right time to do it.”

The Saudi music industry is slated to see exponential growth over the next decade and the Makan Music Center will surely play a part in that, both artistically and commercially.


Elon Musk’s Tesla share sales pass $10bn

Elon Musk’s Tesla share sales pass $10bn
Updated 03 December 2021

Elon Musk’s Tesla share sales pass $10bn

Elon Musk’s Tesla share sales pass $10bn
  • Musk sold a further $1.01 billion according to a regulatory filing on Thursday

RIYADH: Elon Musk offloaded $1.01 billion worth of Tesla shares, surpassing $10 billion in over the past month, as he seeks to sell 10 percent of his stake in the electric-car maker.

Musk got rid of about 934,000 shares in the latest transaction, according to regulatory filings dated Thursday.

The world’s richest person is aiming to offset taxes on the exercise of about 2.1 million options, Bloomberg reported.

Musk is the richest person in the world with a $284.1 billion fortune, according to the Bloomberg Billionaires Index.

His wealth has surged by $128.1 billion this year with Tesla shares having climbed 54 percent.


UAE financial literacy app raises $400,000 in pre-seed, prepares for $1.5m seed round

UAE financial literacy app raises $400,000 in pre-seed, prepares for $1.5m seed round
Updated 03 December 2021

UAE financial literacy app raises $400,000 in pre-seed, prepares for $1.5m seed round

UAE financial literacy app raises $400,000 in pre-seed, prepares for $1.5m seed round
  • Edfundo is set to launch in the UAE in 2022

RIYADH: UAE-based Edfundo, a children’s financial literacy app, looks to raise $1.5 million in seed funding to grow its team, bolster its growth in its home market, and expand across the MENA region.

This follows the closing of the initial friends and family funding round that was 12.5 percent over-subscribed and raised $400,000, Edfundo said on its website.

The co-founders of Edfundo, the world’s first teacher-curated smart money management app for tweens and teens, which is due for launch in the UAE in 2022, have opened the next $1.5 million funding round with a target to close it during the next year.

Founded by CEO Simon Wing and COO Andrew Toward, Edfundo allows children to manage their finances through its money management platform app.

The first-round funding means Edfundo can connect swiftly with youngsters and parents and engage in crucial conversations around smart money management, Toward said.


Saudi Competition Authority approves joint venture to sell, distribute Gucci products

Saudi Competition Authority approves joint venture to sell, distribute Gucci products
Updated 03 December 2021

Saudi Competition Authority approves joint venture to sell, distribute Gucci products

Saudi Competition Authority approves joint venture to sell, distribute Gucci products
  • G Distribution will own 75 percent of the shares in the company, while Al Rubaiyat Company will own 25 percent

RIYADH: Saudi Arabia’s General Authority for Competition gave the green light for a joint venture between G Distribution B.V and Al Rubaiyat Co. for Industry & Trade Holding to sell and distribute Gucci products in the Kingdom.

G Distribution Company will own 75 percent of the shares in the company, while Al Rubaiyat Company will own 25 percent, Argaam reported.

The Kingdom’s competition authority has approved 13 joint projects since the beginning of this year.


Saudi Arabia hosts first National Forum for Islamic Banking on Dec. 6

Saudi Arabia hosts first National Forum for Islamic Banking on Dec. 6
Updated 03 December 2021

Saudi Arabia hosts first National Forum for Islamic Banking on Dec. 6

Saudi Arabia hosts first National Forum for Islamic Banking on Dec. 6

RIYADH: Saudi Arabia is hosting its first National Forum for Islamic Banking on Dec. 6 and 7 in Riyadh, titled "Kingdom's Leadership in Islamic Banking.”

Participants in the forum will discuss the impact of Islamic banking on economic development, the Kingdom’s regulations in Islamic banking, Islamic digital banking in Saudi Arabia and the role of Islamic banks in entrepreneurship, among other discussions.

This comes in light of the rapid growth of the Islamic financial industry since its inception at the global level.

Islamic banking assets in the Kingdom reached more than $565 billion by the first quarter of 2021, SPA reported.