Standard & Poor’s confirms Saudi Arabia’s credit rating at A/A-1, stable outlook

Update Standard & Poor’s (S&P) confirmed its credit rating for Saudi Arabia in local and foreign currencies to “A/A-1” with a stable outlook on Saturday. (Shutterstock/File Photo)
Standard & Poor’s (S&P) confirmed its credit rating for Saudi Arabia in local and foreign currencies to “A/A-1” with a stable outlook on Saturday. (Shutterstock/File Photo)
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Updated 17 September 2023
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Standard & Poor’s confirms Saudi Arabia’s credit rating at A/A-1, stable outlook

Standard & Poor’s confirms Saudi Arabia’s credit rating at A/A-1, stable outlook
  • Saudi government efforts to manage public finances, maintain balanced level of public debt contributed to rating

RIYADH: Underlining Saudi Arabia’s robust economic growth, global credit rating agency Standard & Poor’s has reaffirmed its credit rating for the Kingdom in local and foreign currencies to “A/A-1,” with a stable outlook in its recently issued report. 

The agency explained the confirmation came against the backdrop of Saudi Arabia’s continued efforts in recent years and its structural improvements that supported the sustainable development of the non-oil sector. 

Furthermore, Saudi Arabia’s prudent management of public finances and maintaining a balanced public debt level have also contributed to this rating.

According to S&P, the Kingdom is expected to achieve a 0.2 percent growth in its gross domestic product for the current year, primarily due to reduced oil production. 

However, Saudi growth is anticipated to surge at a rate of 3.4 percent between 2024 and 2026. This projected growth is based on an expected increase in orders for oil and a noticeable expansion in the non-oil sector.

“Reforms in the past few years, including measures to drive non-oil economic growth and widen the non-oil tax base, alongside significant social liberalization, should continue to improve Saudi Arabia’s economic and fiscal profile,” said S&P Global in the report. 

The US-based credit rating agency noted that the Kingdom’s substantial oil output cuts may slightly dampen its GDP growth in 2023. 

The Organization of the Petroleum Exporting Countries and its allies initiated supply restrictions in November 2022 to stabilize the oil market. Saudi Arabia voluntarily reduced output by 500,000 barrels per day in April 2022. 

Building on this commitment, Saudi Arabia implemented an additional 1 million bpd cut in June, a decision which was later extended until December 2023.

S&P Global, however, expects strong non-oil growth from 2024 onward to drive the Saudi economy’s rebound, resulting in fiscal surpluses.

“The stable outlook balances our expectation that the government’s reform agenda will continue to underpin the development of the non-oil sector and support non-oil growth and fiscal receipts against the cyclicality of a still hydrocarbon-focused economy, with fiscal and societal pressures tied to a growing population,” added S&P Global. 

Furthermore, the credit rating agency said it would consider upgrading Saudi Arabia’s ratings over the next two years if reforms progress further, accompanied by robust real per capita economic growth and fiscal discipline.

Earlier this month, the International Monetary Fund expressed optimism about the Kingdom’s fiscal prospects in the near term, driven by its economic diversification efforts in line with the objectives outlined in Vision 2030. 

The IMF also highlighted Saudi Arabia’s ample currency reserves and the stability of its exchange rate peg to the US dollar, which continues to serve the Kingdom’s economy effectively.


The UAE holds annual oil and gas conference ahead of UN COP28 climate talks

The UAE holds annual oil and gas conference ahead of UN COP28 climate talks
Updated 6 sec ago
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The UAE holds annual oil and gas conference ahead of UN COP28 climate talks

The UAE holds annual oil and gas conference ahead of UN COP28 climate talks

ABU DHABI: The Emirati president-designate of the upcoming United Nations COP28 climate talks called on oil and gas companies on Monday to be “central to the solution” to fighting climate change, even as the industry boosts its production to enjoy rising global energy prices.

The call by Sultan Al-Jaber highlights the gap between climate activists suspicious of his industry ties and his calls to drastically slash the world’s emissions by nearly half in seven years to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) compared with pre-industrial times.

“That is our North Star. It is in fact our only destination,” Al-Jaber said. “It is simply acknowledging and respecting the science.”

However, he added: “We must do this while also ensuring human prosperity by meeting the energy needs of the planet’s growing population.”

Al-Jaber serves as the CEO of the state-run Abu Dhabi Oil Co., which has the capacity to pump 4 million barrels of crude oil a day and hopes to reach 5 million barrels a day. He also made the call to the annual Abu Dhabi International Petroleum Exhibition and Conference, which brings together the largest players in the oil and gas industries.

While this year’s conference has been described as focusing on “decarbonizing faster together,” the event is primarily about the drilling, processing and sale of the same carbon-belching fuels driving climate change — which cause more-intense and more-frequent extreme events such as storms, droughts, floods and wildfires. And Al-Jaber himself has repeatedly said the world must rely on oil and gas for the near-term to bridge that gap.

“A phase-down of fossil fuels is inevitable. In fact, it’s essential,” Al-Jaber said. “Yet, this must be part of a comprehensive energy transition plan that is fair, that is fast, just, orderly, equitable and responsible.”

But on the business side, the oil industry is on the rebound. After prices briefly went negative during the lockdowns of the coronavirus pandemic, benchmark Brent crude now trades around $92 a barrel. Diesel prices also are expected to rise as Russia has stopped its exports of the fuel, which likely will worsen global inflation through boosting transportation prices that will get passed onto consumers.

The conference highlights the challenge the United Arab Emirates has faced in trying to convince already-critical climate scientists, activists and others that it can host the UN Conference of the Parties — where COP gets its name.

Though all smiles at Monday’s conference, Al-Jaber has acknowledged the withering criticism he’s faced. On Saturday, he offered a full-throated defense of his country hosting the talks he’s slated to lead, dismissing critics who “just go on the attack without knowing anything, without knowing who we are.”

“For too long, this industry has been viewed as part of the problem, that it’s not doing enough and in some cases even blocking progress,” Al-Jaber told the conference. “This is your opportunity to show the world that, in fact, you are central to the solution.”

Following immediately after Al-Jaber, OPEC Secretary-General Haitham Al-Ghais praised his speech and defended the oil industry.

“We see calls to stop investing in oil. We believe this is counterproductive,” Al-Ghais said. “The cornerstone of global economic prosperity today is energy security.”

Al-Jaber said 20 oil and gas companies had pledged to be “net zero” by or before 2050 and eliminate routine gas flaring by 2030. However, the industry would still be producing the oil and gas that release the carbon dioxide that traps heat in the atmosphere.

Al-Jaber, a 50-year-old longtime climate envoy, has been behind tens of billions of dollars spent or pledged toward renewable energy by this federation of seven sheikhdoms on the Arabian Peninsula. Al-Jaber and his supporters — including US climate envoy and former Secretary of State John Kerry, who is on a trip to the UAE this week — say that’s a sign he can lead the COP28 talks.

Meanwhile, Turkish Energy Minister Alparslan Bayraktar said at the Abu Dhabi conference that an Iraqi-Turkish oil pipeline that had been halted for months would see its flow restart this week.

“As of today, the pipeline is ready to operate,” he said. “And within this week we will start operating the Iraqi-Turkiye pipeline, which after the resuming of oil operations, will be able to supply half a million barrels to the oil market.”

He did not elaborate on what the terms would be for the 970-kilometer (600-mile) pipeline, which is Iraq’s largest. In March, Iraqi officials won an international arbitration case to halt oil exports from the semiautonomous Kurdish region to Ceyhan, Turkiye, on the Mediterranean Sea.

Iraqi and regional Kurdish government officials did not immediately acknowledge the pipeline reopening, though Iraq’s oil minister has said it was anticipated, without elaborating.

Bayraktar said the pipeline also sustained damage in the recent earthquake and flooding in Turkiye that had been repaired.


Saudi Arabia to establish special desk to facilitate tech firm registration process for Pakistan – minister

Saudi Arabia to establish special desk to facilitate tech firm registration process for Pakistan – minister
Updated 30 min 53 sec ago
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Saudi Arabia to establish special desk to facilitate tech firm registration process for Pakistan – minister

Saudi Arabia to establish special desk to facilitate tech firm registration process for Pakistan – minister
  • Pakistan’s IT minister describes the development as ‘the number one demand’ of his country’s tech companies
  • The two countries have also signed an MoU to accelerate bilateral digital transformation and promote innovation

ISLAMABAD: Caretaker Information Technology Minister Umar Saif on Sunday announced the Saudi decision to set up a special desk to facilitate Pakistani IT firms seeking to register themselves in the kingdom before launching their business operations.

The development took place on the same day the two countries signed a memorandum of understanding (MoU) in Riyadh to enhance bilateral cooperation in the field of information technology “by accelerating digital transformation, promoting innovation, and developing digital infrastructure,” according to the Saudi Press Agency (SPA).

The Pakistani minister is currently visiting the kingdom where he has met several high-profile officials.

He specifically mentioned his “incredibly productive meeting” with Saudi Minister of Investment Khalid Al-Falih on social media platform X, thanking him for his warmth and support.

“He [al-Filah] has instructed [the Ministry of Investment] to establish a special desk for Pakistani IT companies to get registered in KSA [Kingdom of Saudi Arabia] and to grant [them] licenses to operate in KSA,” he said.

“This desk will also work with our IT industry to offer business [opportunities] in the public and private sector” of the kingdom, he continued.

The Pakistani minister described this as “the number one demand of our IT companies.”

Meanwhile, Saudi news agency reported the MoU signed by Saif and the Saudi communications minister, Eng. Abdullah Alswaha, to increase bilateral cooperation between the tech industries of both countries would strengthen their start-up ecosystems and lead to the establishment of a task force “to promote Saudi-Pakistan Digital Cooperation.”

“The two countries will create and explore how entrepreneurs and enterprises can benefit from tech investments and venture capital under the MoU,” the report added. “They aim to deepen their digital economy ties by evaluating and qualifying companies for collaborative opportunities in their ICT markets.”

Additionally, the MoU will help Pakistan and Saudi Arabia cooperate in e-governance, smart infrastructure, e-health, e-education, and emerging technologies, such as artificial intelligence, robotics, and blockchain.

“The two counties will develop their digital infrastructure by enhancing the connectivity of their fiber optic networks, data centers, and cloud computing,” SPA said. “The MoU will encourage participation in each other’s international events and the exchange of information between their private and public enterprises in IT development and electronics.”


Saudi-Portuguese committee seeks to bolster economic ties

Saudi-Portuguese committee seeks to bolster economic ties
Updated 01 October 2023
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Saudi-Portuguese committee seeks to bolster economic ties

Saudi-Portuguese committee seeks to bolster economic ties

RIYADH: Economic relations between Saudi Arabia and Portugal are on track to further strengthen as a top-level delegation heads to Lisbon for a meeting to enhance cooperation between the two countries.

Saudi Minister of Economy and Planning Faisal Al-Ibrahim will lead the delegation at the sixth session of the Saudi-Portuguese Joint Committee which begins on Monday, the Saudi Press Agency reported.

The two-day meeting will review investment opportunities between the two countries and explore venues for further collaboration across different sectors.

Al-Ibrahim is scheduled to deliver both the opening and closing speeches at the meeting alongside Portuguese Minister of Economy and Maritime Affairs Antonio Costa Silva.

The Saudi minister is also expected to deliver the opening speech at the Saudi-Portuguese Investment Forum.

He will also hold several meetings with senior government officials in Portugal and sign agreements aimed at boosting economic cooperation.

Saudi delegation includes representatives of different ministries and top officials of various government agencies.

In August, Al-Ibrahim met in Riyadh with the Ambassador of Portugal to the Kingdom of Saudi Arabia, Nuno Mathias, SPA reported at the time. They both discussed ways to enhance cooperation.


Saudia reveals bold rebranding for a tech-infused future

Saudia reveals bold rebranding for a tech-infused future
Updated 01 October 2023
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Saudia reveals bold rebranding for a tech-infused future

Saudia reveals bold rebranding for a tech-infused future
  • Top official says it is more than a change in logo or colors

RIYADH: The unveiling of a new brand identity for Saudi Arabian Airlines is more than a change in its appearance, as according to a top official it is but a part of a huge transformation in the company’s approach in line with the ongoing digital transformation.

Khaled Tash, group chief marketing officer at Saudia, told Arab News on Sunday the new look represented the airline’s commitment to digital advancement and an array of new services and products in the pipeline.

He said the rebranding signifies the company’s embrace of the developing tech industry, reflecting the Kingdom’s broader ambitions.

The official said: “This is not about changing our logo or changing our colors.” It is, he added, more about improving our services and introducing new products.

“We are very keen to accelerate the transition…the overall reaction from the market” has been overwhelming, Tash said.

 

Elaborating on how the update reinforces the airline’s digital transformation, Tash noted that Saudia stands out as one of the pioneering airlines in Europe, the Middle East, and Africa to integrate artificial intelligence into its customer experience.

“The Travel Companion is an AI-driven personal aide. When users access the Saudia app, it intuitively recognizes them without requiring manual data input and promptly aids with all travel-related queries,” elaborated Tash.

Highlighting its capabilities, he mentioned that users can ask Saudia’s travel companion bot for holiday recommendations, which will engage in an interactive dialogue to understand preferences before offering tailored suggestions.

Additionally, users can seamlessly book their flights directly within the chat interface when conversing with the travel companion, eliminating the need to navigate away from the conversation.

The AI-driven bot is slated for launch by the end of this year, coinciding with an enhanced version of the airline’s application.

“Digital transformation is not just a buzzword that we use, we aim to improve the customer experience using new innovations,” Tash stated.

He elaborated that, guided by that motto, the company has pinpointed 260 features and services for introduction or enhancement if they already exist.

The airline has also launched a VIP meet-and-greet service. Tash expects this addition to boost revenue from booking services by 10 percent.

In alignment with Arab culture, the airline has introduced an option for female passengers to request seating next to other female passengers on specific, long-duration flights.

Tash said the unprecedented growth in the Kingdom’s tourism sector is also proving to be fruitful for the airline and it is part of the ongoing transformation. He specifically mentioned the fact that Saudia is the first airline to begin operations to and from the Red Sea International Airport.

The marketing head also revealed that the airline has ambitious goals to more than triple its passenger count over the next seven years.

Clarifying the shift in Saudia’s vision, Tash mentioned that historically, the airline’s objective was to connect the Kingdom’s citizens to the world. However, the current goal emphasizes bringing the world to Saudi Arabia.


Closing bell: Saudi main index closes lower at 11,040  

Closing bell: Saudi main index closes lower at 11,040  
Updated 01 October 2023
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Closing bell: Saudi main index closes lower at 11,040  

Closing bell: Saudi main index closes lower at 11,040  

RIYADH: Saudi Arabia’s Tadawul All Share Index closed lower on Sunday, slipping 15.79 points or 0.14 percent to finish at 11,040.17. The benchmark index saw a total trading turnover of SR4.08 billion ($1.08 billion) with 79 listed stocks advancing and 135 retreating. 

In contrast, the Kingdom’s parallel market Nomu inched up 8.33 points, or 0.04 percent, to close at 22,698.64, with 24 listed stocks advancing and 30 retreating. 

The MSCI Tadawul Index declined 0.55 points, or 0.04 percent, closing at 1,415.12. 

The best-performing stock of the day was Middle East Healthcare Co., with its share price surging 8.35 percent to SR59.70. Other top performers included Electrical Industries Co. and Development Works Food Co., with their share prices soaring 5.37 percent and 4.90 percent, respectively, to stand at SR2.16 and SR111.40. 

Development Works Food Co. and the Mediterranean and Gulf Insurance and Reinsurance Co. were also among the top performers of the day. 

The worst performer was Raydan Food Co., as its share price dropped 3.80 percent to SR26.60. Other decliners included National Agricultural Development Co. and Naseej International Trading Co., with their share prices dropping 3.05 percent and 2.63 percent, respectively, to SR46.05 and SR44.50. 

Fawaz Abdulaziz Alhokair Co. and Thimar Development Holding Co. were also among the poor performers of the day. 

Meanwhile, Alqemam for Computer Systems Co. was the top performer on Nomu, while Academy of Learning Co. was the worst performer. 

In announcements, Al-Babtain Power and Telecommunication Co. disclosed the results of the third extraordinary general assembly meeting, which included the approval of around a SR213 million increase in the firm’s capital.

The company’s capital has surged from SR426 million to an estimated SR639 million, and the number of shares has increased to 63 million from the previous 42 million. This capital increase aligns with the company’s plan to support its financial position and explore new investments in available untapped opportunities, according to a bourse filing. 

In another development, Saudi Awwal Bank announced its intention to offer first-tier capital sukuk denominated in riyals through private placement within the Kingdom. HSBC Saudi Arabia has been appointed as the organizer and distributor of the program, with the offering value to be determined based on market conditions at a later time.