Saudi Arabia keen to help repair US/China relationship, says finance minister 

Saudi Arabia keen to help repair US/China relationship, says finance minister 
Saudi Arabia’s Finance Minister Mohammed Al-Jadaan.
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Updated 26 October 2023

Saudi Arabia keen to help repair US/China relationship, says finance minister 

Saudi Arabia keen to help repair US/China relationship, says finance minister 

RIYADH: Saudi Arabia is willing to help improve relations between the US and China, a prominent minister from the Kingdom has insisted as he talked up the importance of trade with both nations. 

Speaking at a panel discussion during the Future Investment Initiative in Riyadh on Wednesday, Saudi Arabia’s Finance Minister Mohammed Al-Jadaan made it clear that the government seeks to build bridges in the international community and is committed to continuing to do so. 

The comments came as officials from Beijing and Washington seek to dial down tensions between their respective nations, after a string of disagreements, including over trade and Taiwan.

Al-Jaadan was keen to show that Saudi Arabia is prepared to assist in any way, and said: “If there are opportunities that we can make the relationship between US and China better, we will. We enjoy a very good strategic relationship with the US. China is our largest trading partner. So, we need to maintain that relationship.”

Addressing economic issues, the minister expressed confidence that Saudi Arabia’s growth would remain resilient in the face of global challenges. He noted that the Kingdom had achieved a substantial non-oil gross domestic product expansion of 6.1 percent in the previous quarter, and the overall growth for 2023 is projected to reach 6 percent. 

Regarding Saudi Arabia’s economic approach, Al-Jadaan explained, “As far as Saudi is concerned, we no longer concentrate on total GDP numbers because total GDP has two components: the oil GDP and the non-oil GDP. The whole Vision 2030 (initiative) is all about diversifying the economy outside the oil industry.” 

He further emphasized: “If you look at the non-oil GDP, it is actually growing and is continuing to be very healthy. We are likely to see that it will continue to grow in the medium term.”  

Saudi Arabia’s Vision 2030 is designed to reduce the Kingdom’s reliance on oil, which has been a cornerstone of its economy for decades. With national strategies focusing on tourism, logistics, and various industries, Saudi Arabia aims to boost the share of non-oil exports in non-oil GDP from 18.7 percent to 50 percent by 2030.

During the discussion, Al-Jadaan emphasized that Saudi Arabia’s economic growth would not only benefit its citizens but also have positive global implications, particularly for low-income countries.

“For countries to be able to help others, they need to be strong. And that has been our focus since the launch of Vision 2030. We tried and made sure that the Saudi economy is strong enough to support its own people and its economy, along with supporting others,” he said. 

Al-Jadaan also called on multilateral institutions, such as the International Monetary Fund, to prioritize assistance to low-income countries to boost their economies. 

The Saudi finance minister further argued that economic fragmentation is a “ very serious challenge” and emphasized that imposing strict trade restrictions would be counterproductive. 

“It does not really help with the current situation to have more restrictions on trade, which will add to inflation. I think there is a clearer realization now, that fragmentation is harmful to others that you want to harm, but it actually harms your own economy,” added Al-Jadaan.  

Regarding the ongoing crisis in Gaza, Al-Jadaan stressed the importance of respecting international laws and the need for de-escalation to restore peace in the region.

“Our sympathy goes to those who are suffering, civilian casualties wherever they are. International laws need to be respected, and without international law being respected, the world will be in chaos. We need to collaborate to bring calm,” said Al-Jadaan.  

In the panel discussion, Khalifa Al-Khalifa, Bahrain’s minister of finance and national economy, highlighted that Gulf countries have an upper hand in terms of global growth prospects. He pointed out that all nations in the region are actively pursuing economic diversification, which positions them favorably on the global stage. 

Al-Khalifa noted that the annual GDP of Gulf Cooperation Council countries has exceeded $2.3 trillion and is projected to reach $3 trillion by 2030 and $6 trillion by 2050. 

“The great thing about economies in the Gulf countries is that today we are seeing a development path that is rapidly moving toward diversification across all of the economies in the Gulf. Saudi Arabia has made huge strides in that regard. In Bahrain, 83 percent of our GDP is non-oil GDP,” the minister said.  

Al-Khalifa also pointed out that GCC countries are insulated from global economic headwinds due to the policies they have already taken to diversify their economies away from oil.   

On her part, Kristalina Georgieva, managing director of the IMF, urged countries to “relentlessly pursue reforms that bring strength in a more uncertain world we live in.”

She also urged world countries to stay united instead of being fragmented.  

Georgieva emphasized that international cooperation in a divided world is essential, to combat a phase of slow global growth that would persist for years along with high interest rates.  

“Inflation is still high and that requires interest rates to remain high, throwing more cold water on growth. Cooperation is truly a matter of the highest priority,” she emphasized, adding, “We have not done our job properly to secure opportunities for people on the losing side.”  

Mehmet Şimşek, Turkiye’s minister of finance said that de-escalation of war is very much necessary, as it will create long-term implications in the region.  

“Our heart goes to those innocent people who are suffering. We are doing our best to de-escalate and put an end to this violence. The direct implications are limited, but we are more worried about long-term implications,” said Şimşek.  

He added: “I think we all have to work very hard to contain, and de-escalate. The long-term solution is really a peaceful coexistence. Our region has seen enough suffering and bloodshed. It is time to rebuild together.”  

The seventh edition of the FII is being held under the theme “The New Compass,” where attendees are engaging in discussions on crucial topics related to climate change, the economy, and technology. 

This year’s conference also focuses on the role of governments and the transformative potential of technology, education, and healthcare in shaping a more prosperous future.

Saudi banks’ money supply surges 10% to reach $726bn in January

Saudi banks’ money supply surges 10% to reach $726bn in January
Updated 10 sec ago

Saudi banks’ money supply surges 10% to reach $726bn in January

Saudi banks’ money supply surges 10% to reach $726bn in January

RIYADH: Saudi Arabia’s money supply surged 10 percent in January to reach SR2.72 trillion ($726 billion), the central bank data showed.

The growth was primarily driven by a substantial rise in banks’ term and savings accounts, which recorded a rise of 31 percent to reach SR864.32 billion. The overall figure, however, also includes currency outside banks, demand deposits, and other quasi-money deposits.

Since the Saudi riyal is pegged to the US dollar, the rise in interest rates is also seen as a source of motivation for depositors who want to pursue more profitable avenues particularly term deposits known for their higher-yielding nature.

Fitch Ratings also noted that the liquidity boost in Saudi Arabia could be linked to a significant rise in funds from government-related entities.

According to the agency, the rise in these GRE accounts suggests that these entities chose to invest their surplus liquidity in higher income-generating deposits with commercial banks, rather than with the Saudi Central Bank, also known as SAMA.

It highlighted that these deposits serve as an expensive source of funding for banks, which has significantly increased the average cost of funding due to heightened competition in the financial market.

Reflecting on the changes, demand deposits, which constituted a 53 percent share of the money supply a year ago, now stand at 48.42 percent, with a growth rate of only 1 percent during this period.

Despite the elevated cost of funding for Saudi banks, the increase in interest rates also bolstered profits on their asset side, as higher borrowing rates resulted in greater income.

Based on data from Bloomberg compiled by Arab News, the net income of listed Saudi banks surged by 12 percent annually in 2023, reaching SR69.96 billion.

Among these, the Saudi National Bank held the largest share at 29 percent, equivalent to SR20 billion. Notably, the most significant growth in net income was observed in Saudi Awwal Bank, with profits soaring by 45 percent to reach SR7 billion.

During 2022, SAMA increased key policy rates seven times followed by an additional four times in 2023. In its July 2023 meeting, the central bank last raised its repo rate by 25 basis points to 6 percent, reaching its highest level since 2001. This move was in line with the measures taken by the US Federal Reserve as part of its efforts to combat inflation.

Saudi Arabia has nevertheless demonstrated exceptional resilience and stability in managing inflation. This success can be attributed to the steadfast implementation of robust government policies designed to safeguard the economy.

Central to this stability is the Saudi Consumer Protection Association, a vigilant guardian of fair pricing practices for essential goods and services. The Kingdom’s strong regulatory framework ensures that consumers are shielded from unwarranted price escalations, fostering an environment conducive to business.

Furthermore, Saudi Arabia’s commitment to social welfare is evident in its comprehensive policies. The Kingdom has strategically invested in initiatives such as subsidies on essential goods, affordable housing schemes, quality education programs, and accessible healthcare services.

A prime example of this commitment is the Citizen Account Program, a cornerstone of support for low- and mid-income families. Through this program, the government provides crucial cash transfers, alleviating the financial strains caused by the rising cost of living.

In January, Saudi Arabia maintained stable inflation at 1.6 percent, holding steady from December 2023, as reported by the General Authority of Statistics.

The primary driver of the inflation rate was the cost of rent, given their significant weight of 21 percent in the Saudi consumer basket.

Nevertheless, according to data from Trading Economics, the Kingdom ranked the second-lowest among G20 countries in terms of inflation, following Switzerland, which recorded a rate of 1.3 percent.

Looking ahead, Fitch Ratings anticipates that the cost of funding will continue to be sensitive to shifts in the Fed rate. However, the agency expects the average net interest margin, a crucial measure of banks’ core profitability, to stay at approximately 3 percent.

Fitch also projects a 10 percent growth in deposits for 2024, driven primarily by term accounts. The proportion of demand deposits will likely decrease, falling below 50 percent of total deposits.

The agency’s predicted Saudi banking sector financing growth stood at 10 percent in 2024, well above the Gulf Cooperation Council average of 5 percent but down from an estimated 12 percent in 2023 and 14 percent in 2022.

RSG partners with Amazon Payment Services to introduce online transactions

RSG partners with Amazon Payment Services to introduce online transactions
Updated 36 min 38 sec ago

RSG partners with Amazon Payment Services to introduce online transactions

RSG partners with Amazon Payment Services to introduce online transactions

RIYADH: Saudi tourist destinations, The Red Sea and AMAALA, will soon offer online transaction options through a recent partnership with Amazon Payment Services. 

Initiated by its developer Red Sea Global, the deal aims to provide a comprehensive suite of payment solutions tailored to meet the needs of RSG’s customers, according to a statement. 

This aligns with RSG’s vision of providing exceptional experiences for its travelers, as stated by Ahmed Ali Al-Sohaily, group head of technology at RSG. 

He said: “By collaborating with Amazon Payment Services, its best-in-class technology ensures convenient, secure, and efficient payment processes for our guests.”  

RSG said it seeks to collaborate with partners who share similar values in making a positive impact on both people and the planet. Currently, more than 90 percent of Amazon Payment Services’ electricity comes from renewables, with a goal to reach 100 percent by 2025, the release added. 

“We are excited to support Red Sea Global and its customers through this new partnership that allows us to enhance the payment experience for luxury travelers through our innovative and tailor-made payment solutions,” said Peter George, managing director at Amazon Payments Services.

Australia’s University of Wollongong joins top global institutes in Riyadh expansion 

Australia’s University of Wollongong joins top global institutes in Riyadh expansion 
Updated 3 min 21 sec ago

Australia’s University of Wollongong joins top global institutes in Riyadh expansion 

Australia’s University of Wollongong joins top global institutes in Riyadh expansion 

RIYADH: Saudi students will gain increased access to high-quality higher education as reputable institutes, including Australia’s University of Wollongong, secure licenses for branches within the Kingdom. 

The Saudi Ministry of Education and its investment counterpart announced the issuance of an approval to the Australian public research university during the recently concluded Human Capability Initiative Conference in Riyadh, the Saudi Press Agency reported.  

This move is a part of the preparations to establish its branch in the Kingdom, in collaboration with the Digital Knowledge Co., to provide innovative, globally recognized education for international and local students across various higher schooling levels. 

The collaboration with Digital Knowledge Co., known for its high-quality expertise in schooling and training, aligns with Saudi Vision 2030, aiming to attract foreign university branches and increase private sector involvement in higher education by 2030. 

The University of Wollongong holds the 14th position among the best modern universities worldwide, ranking in the top 1 percent of institutes according to the 2024 QS World Index. 

The SPA report added that, during the same event, the two ministries also signed a memorandum of understanding with Arizona State University and Cintana Education to establish a new institute and an affiliated school in Riyadh. 

The MoU with ASU and Cintana Education outlines the framework for these institutions, emphasizing high-quality education, research, and innovative programs to contribute to economic success and influence future generations in the Kingdom. 

The tailored programs aim to meet the increasing demand for international education in Riyadh, aligning with the priorities of Saudi Vision 2030. This includes specializations in science, technology, engineering, and mathematics, as well as economics, along with the training of educational staff. 

SPA added that the launch is scheduled after the completion of the required studies by the signing parties of the MoU. 

In 2005, ASU had 20 undergraduate and four graduate students from Saudi Arabia. By 2017, these numbers surged to 682 undergraduate and 103 graduate students, according to its website. 

The university emphasizes 13 areas of study, with engineering being the most popular among half of the students, while one in five are pursuing degrees in business. Other fields of study include liberal arts, global management, public service, and education. 

AUS adds that the Saudi Arabian Cultural Mission and Aramco have sent multiple delegations to the educational institution to explore how the university accommodates sponsored Saudi students. Such cultural missions have resulted in 126 Aramco-sponsored scholars currently enrolled at ASU.

WTO’s Abu Dhabi Declaration to empower least developed nations  

WTO’s Abu Dhabi Declaration to empower least developed nations  
Updated 58 min 50 sec ago

WTO’s Abu Dhabi Declaration to empower least developed nations  

WTO’s Abu Dhabi Declaration to empower least developed nations  

RIYADH: The least developed countries are set to benefit from the Abu Dhabi Declaration at the 13th WTO Ministerial Conference, improving global supply chain access. 

Trade deals, aimed at fostering new agreements, will extend international trading system benefits to more nations, following intensive negotiations, as reported by the UAE’s official news agency, WAM. 

Members have agreed to implement Special and Preferential Treatment for Sanitary and Phytosanitary Measures and Technical Barriers to Trade. This effort supports producers in the least developed countries, facilitating their global supply chain access, the WAM report stated. 

The report added that the current measures of SPS constitute a staggering 90 percent of non-tariff trade barriers, posing a significant obstacle for smaller nations and being viewed as discriminatory. 

In a significant development for developing countries, ministers approved a decision responding to a 23-year-old mandate. The aim is to revamp special and differential treatment provisions for improved precision, effectiveness, and operational functionality. 

The UAE Minister of State for Foreign Trade and MC13 Chair, Thani Al-Zeyoudi, described the declaration as a significant milestone for the UAE and global trade. 

“It has been a momentous week for Abu Dhabi, for the UAE, and for global trade. I would like to thank the delegations from every member for their diligence and dedication to the negotiation and for their ceaseless efforts in making the global trading system more robust, more efficient and, most importantly, more accessible,” he said. 

The minister added that even in areas where final agreements have not been reached, issues that previously seemed unsolvable can now be unlocked — clearing the way for further progress in the coming months.  

Substantial progress has also been achieved in dispute resolution, as there is now an agreement to fulfill the MC12 mandate by establishing a comprehensive and efficient Dispute Settlement system by the end of 2024. This entails the adoption of various reform pathways by the participating members. 

Regarding e-commerce, members have agreed to extend the moratorium on customs duties for electronic transmissions for an additional two years. This decision implies that trade involving purely digital products and services will remain tariff-free until MC14 in Cameroon. 

Ministers also adopted a ministerial decision to extend the moratorium on non-violation and situation complaints related to the agreement on Trade-related Aspects of Intellectual Property Rights until MC14. 

“Delivering the Abu Dhabi Declaration of outcomes is a true testament to the value that members continue to attach to the WTO and its pivotal role in ensuring an orderly global system of trade rules,” said Al-Zeyoudi. 

“With the adopted Abu Dhabi Declaration, we have demonstrated that we can deliver to ensure the global trading system remains a vital engine of growth and development for nations around the world. We must build on these significant achievements and remain united for global trade,” he added.  

The WAM report quoted Ngozi Okonjo-Iweala, director-general of the World Trade Organization, stating that the global body serves as a foundation of stability and resilience in an economic and geopolitical landscape filled with uncertainties and exogenous shocks. 

“Trade remains a vital force for improving people’s lives, and for helping businesses and countries cope with the impact of these shocks. Let us get some rest, then regroup and resume,” she said. 

MC13, hosted by the UAE’s Ministry of Economy and the Abu Dhabi Department of Economic Development, took place at the Abu Dhabi National Exhibition Center from Feb. 26 to March 2. 

Larger declines in oil prices or extended OPEC+ cuts could weigh on Iraq’s fiscal account, IMF says 

Larger declines in oil prices or extended OPEC+ cuts could weigh on Iraq’s fiscal account, IMF says 
Updated 03 March 2024

Larger declines in oil prices or extended OPEC+ cuts could weigh on Iraq’s fiscal account, IMF says 

Larger declines in oil prices or extended OPEC+ cuts could weigh on Iraq’s fiscal account, IMF says 

CAIRO: The International Monetary Fund said on Sunday that larger declines in oil prices or extended OPEC+ cuts could weigh on Iraq’s fiscal and external accounts. 

“Iraq needs to increase non-oil exports and government revenue, and reduce the economy’s vulnerability to oil price shocks,” they said in a concluding statement.