Saudi budget 2024: GDP to grow at 4.4% with revenues estimated at $312.5bn

Update Saudi budget 2024: GDP to grow at 4.4% with revenues estimated at $312.5bn
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Updated 06 December 2023
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Saudi budget 2024: GDP to grow at 4.4% with revenues estimated at $312.5bn

Saudi budget 2024: GDP to grow at 4.4% with revenues estimated at $312.5bn

RIYADH: Saudi Arabia on Wednesday approved the state budget for 2024 with revenues projected at SR1.17 trillion ($312.48 billion) and expenditure at SR1.25 trillion, leading to a deficit of SR79 billion. 

In its announcement, the Finance Ministry projected the Kingdom’s gross domestic product growth at 4.4 percent in 2024 an increase from the estimated 0.03 percent in 2023. 

It predicted the Kingdom’s public debt for the next fiscal year to stand at SR1.103 trillion or 25.9 percent of GDP. This represents a 7.71 percent increase from the re-estimated 2023 figures of SR1.024 trillion, constituting 24.8 percent of the GDP. 

Saudi Crown Prince Mohammed bin Salman said the 2024 budget aims to boost growth in the non-oil economy by increasing spending and investment in infrastructure, local industry and services.

The crown prince stressed the importance of strengthening partnerships with the private sector to achieve the goal of economic diversification and increasing job opportunities for the Saudi workforce, the Saudi Press Agency reported.

According to the ministry, the Kingdom’s budget deficit arises from increased spending to expedite the implementation of key programs vital to the objectives of Saudi Vision 2030. 

Finance Minister Mohammed Al-Jaadan said the Kingdom’s annual budgets stem from “very conservative” estimates of oil revenue, meaning deficits are the product of deliberate decision to boost spending rather than (caused) from fluctuating oil prices. 

Nevertheless, the economy will remain robust according to the ministry, supported by substantial fiscal space, strong government reserves, and sustainable debt levels. Moreover, the Kingdom’s strong fiscal position and high sovereign credit rating provide spending flexibility crucial to the country’s commitment to economic development, it said in its pre-budget statement report. 

Positive indicators include sustained GDP growth, improved non-oil sector performance, a growing labor force, modest inflation rates, and a declining unemployment rate. 

The positive outlook for the Saudi economy in 2024 is attributed to favorable developments in the first half of 2023. Estimates suggest a robust 4.4 percent growth in real GDP for 2024, primarily fueled by non-oil activities. 

Revenue from taxes is estimated to be 30 percent of total non-oil income in 2024 at SR361 billion, which is 2.56 percent higher than 2023 estimates. 

In terms of sector-specific expenditures, the military sector received the largest allocation at SR269 billion, marking an 8.5 percent increase compared to the 2023 estimates.  

The health and social development sector followed with a 17 percent share amounting to SR214 billion. Nevertheless, this figure reflects a 14.4 percent decrease from the 2023 estimates. 

Education with 16 percent share of 2024 budgeted expenditures will be allocated SR 195 billion. 

The projected revenues for 2025 and 2026 are estimated at SR1.227 trillion and SR1.259 trillion, respectively. Expenditures are projected to reach SR1.3 trillion in 2025 and SR1.368 trillion in 2026.  

Consequently, the budget is expected to incur deficits of SR73 billion and SR109 billion for 2025, 2026 respectively. Public debt levels are estimated to be SR1.176 trillion in 2025 and SR1.1285 trillion in 2026. 

Addressing a press conference, Al-Jadaan said the 2024 budget is poised to continue the trajectory of success, aligning with the national strategies closely linked to the goals outlined in Saudi Vision 2030 and national priorities, reinforcing the commitment to long-term sustainable development.

Responding to a question by Arab News on Expo 2030, the minister said: “The country that is capable of receiving and building the infrastructure to accommodate 150 million individuals, can host our guests at Expo 2030 without increasing costs.”

He added: “The infrastructure and projects planned for construction in the Kingdom, particularly in Riyadh, from now until 2030 as outlined in the early stages of the vision, including the transportation and logistical services strategy, tourism strategy, expansion in hotel construction, and also the expansion of water projects, will be sufficient to provide the necessary infrastructure for hosting expo and potentially three other expos.”

The minister added: “Expo village is going to be a commercial property, built by commercial companies and will be invested in beyond the six months,” adding: “That site will be a commercial site, it will not be wasted. And it will be obviously built sustainably.”

The minister said in a statement that the government is working on continuing borrowing according to the approved annual borrowing plan to finance the expected budget deficit and repay the outstanding debt by 2024.

The minister also revealed that since the inception of Saudi Vision 2030, the country has undergone considerable economic and structural reforms, resulting in the gross domestic product an increase, reaching more than SR4.1 trillion today, with an expected growth average at a rate of 6 percent from now until 2030.

He also stated that the Kingdom’s economy created more than 1 million jobs during 2023, adding that oil price fluctuations that previously affected the budget have become much less affected thanks to non-oil revenues.


Central Bank of Jordan introduces new Shariah-compliant monetary policy tools 

Central Bank of Jordan introduces new Shariah-compliant monetary policy tools 
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Central Bank of Jordan introduces new Shariah-compliant monetary policy tools 

Central Bank of Jordan introduces new Shariah-compliant monetary policy tools 

RIYADH: Liquidity management in Jordan’s cash market is set to undergo a significant transformation as the country’s central bank introduces new tools for monetary policy. 

Aligned with Shariah laws, the Central Bank of Jordan has introduced these instruments in collaboration with Islamic banks operating within the country. The goal is to enhance the effectiveness and efficiency of liquidity management in the cash market, the Jordan News Agency reported. 

These new measures will not only assist Islamic banks in achieving more flexible liquidity management but also contribute to the establishment of an effective interbank market among them. 

Under the framework of these tools, the central bank will be able to provide Islamic banks with daytime liquidity, overnight liquidity, and liquidity extending up to one week.

This will be done based on the banks’ requests or at the apex bank’s initiative, allowing flexibility in terms of timing, amount, and duration. The Central Bank of Jordan will determine these parameters to align with its operational objectives in implementing monetary policy.  

This move by the central bank comes as part of its efforts to develop the operational framework of monetary policy and diversify the tools at its disposal. The decision is in line with the best practices of central banks and addresses the specific needs of the local cash and banking market, as reported by PETRA. 

In a related development, earlier in January, 16 Jordanian banks jointly launched the first private sector investment fund, committing $388 million to foster the growth of local businesses. 

The Jordan Capital and Investment Fund, established in 2021 with a capital commitment of 275 million dinars ($387.6 million), was officially registered under the 2022 Investment Environment Law, the state news agency reported. 

The instrument aims to inject money into emerging firms with growth, development, and expansion prospects, providing financing to enhance job opportunities and propel nationwide growth, as stated in an official statement reported by the Jordan News Agency. 

As the country’s first and largest private sector investment fund, it is designed to allocate funds to vital and promising sectors, such as food and health security, manufacturing, and information and communication technology. The objective is to harness Jordan’s potential in building the future, it added. 

At that time, Hani Al-Qadi, the chairman of the Jordan Capital and Investment Fund, had said the fund is crucial for achieving “accelerated growth” by fully leveraging Jordan’s economic potential. 


Oil Updates – prices ease as Fed caution, stock build outweigh OPEC+ news

Oil Updates – prices ease as Fed caution, stock build outweigh OPEC+ news
Updated 28 February 2024
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Oil Updates – prices ease as Fed caution, stock build outweigh OPEC+ news

Oil Updates – prices ease as Fed caution, stock build outweigh OPEC+ news

NEW DELHI: Oil prices pulled back in Asia on Wednesday as the prospect of a delay in Washington’s rate-cutting cycle and a rise in US crude stocks offset a boost on Tuesday from news OPEC and its allies might extend its output cuts, according to Reuters.

Brent crude futures fell 30 cents, or 0.36 percent, to $83.35 a barrel by 6:02 a.m. Saudi time, while US West Texas Intermediate futures dropped 28 cents to $78.59 a barrel.

On Tuesday, Federal Reserve Governor Michelle Bowman signalled she is in no rush to cut US interest rates, particularly given upside risks to inflation that could stall progress on controlling price pressures or even lead to their resurgence.

Kansas City Federal Reserve Bank President Jeffrey Schmid made similar remarks on Monday. Their remarks underlined concern in financial markets that the potential economic benefits of lower rates will be pushed back.

“There is some profit-taking this morning after the past two sessions recouped the $2 per barrel of Mideast risk premium that crude shed on Friday,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

“It’s a combined response to the weekly US crude stock surge in the API data this morning and continuing hope that a Gaza ceasefire deal will be reached in the next few days,” Hari added.

On Tuesday, US President Biden said Israel has agreed to halt military activities in Gaza for the Muslim holy month of Ramadan. However, Israel and Hamas as well as Qatari mediators all sounded notes of caution about progress toward a truce in Gaza.

US crude stocks rose 8.43 million barrels in the week ended Feb. 23, according to market sources citing American Petroleum Institute figures on Tuesday.

Gasoline inventories fell by 3.27 million barrels, and distillate stocks fell by 523,000 barrels, the data showed.

Brent and WTO futures rose more than $1 per barrel on Tuesday after Reuters reported the Organization of the Petroleum Exporting Countries and allies, including Russia, will consider extending voluntary oil output cuts into the second quarter.

Extending the output cuts into the second quarter is “likely,” one of the OPEC+ sources said. Two said a longer extension to the end of 2024 was possible.

Last November, OPEC+ agreed to voluntary cuts totalling about 2.2 million barrels per day for the first quarter this year, led by Saudi Arabia rolling over its own voluntary cut.

Analysts at ANZ Research wrote in a note that such a move by the OPEC+ alliance would likely tighten the market.

Russian authorities announced on Tuesday a six-month ban on gasoline exports from March 1 to compensate for rising demand from consumers and farmers and to allow for planned maintenance of refineries.


Saudi PIF sets 7-year sukuk yield at 85 basis points above US Treasuries: Reuters

Saudi PIF sets 7-year sukuk yield at 85 basis points above US Treasuries: Reuters
Updated 28 February 2024
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Saudi PIF sets 7-year sukuk yield at 85 basis points above US Treasuries: Reuters

Saudi PIF sets 7-year sukuk yield at 85 basis points above US Treasuries: Reuters
RIYADH: Saudi Arabia’s Public Investment Fund has set the yield for its seven-year dollar-denominated sukuk at 85 basis points above US Treasuries, according to a banking document reported by Reuters on Tuesday. The Kingdom’s sovereign wealth fund adjusted the yield from its initial guidance of 115 basis points earlier in the day, following strong demand that led to orders surpassing $17 billion. (With inputs from Reuters)

Saudi Arabia introduces clean diesel and gasoline fuels in Kingdom’s market

Saudi Arabia introduces clean diesel and gasoline fuels in Kingdom’s market
Updated 27 February 2024
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Saudi Arabia introduces clean diesel and gasoline fuels in Kingdom’s market

Saudi Arabia introduces clean diesel and gasoline fuels in Kingdom’s market

RIYADH: Saudi Arabia’s sustainability drive is gaining momentum with the Ministry of Energy announcing the launch of clean diesel and Euro-5 compliant gasoline in the Kingdom’s market. 

According to a Saudi Press Agency report, these newly introduced fuels offer lower emissions than traditional diesel and gasoline.

Like their predecessors, these energy sources are suitable for all means of transportation, and are also expected to contribute to preserving the environment and achieving the goals of the Kingdom’s Vision 2030, the report added. 

Euro-5 is a standard set by the EU to regulate the emissions of vehicles. 

Saudi Arabia is leading the Middle East and North Africa region in sustainable efforts through various undertakings, including the Saudi Green Initiative. 

The Ministry of Energy said that the introduction of these two fuels comes as part of the Kingdom’s efforts to reduce emissions and reach net zero in 2060 through the application of the circular carbon economy approach. 

The report added that the launch of these resources would encourage car manufacturers to introduce the latest energy-efficient vehicle technologies to the Kingdom. 

In January, multi-project developer Red Sea Global announced that it has become the first company in Saudi Arabia to use low-carbon biofuel in all its delivery trucks.

In a press statement, RSG revealed that the entire fleet of land vehicles is now powered by electricity or biofuel. 

The biofuel is produced from used cooking oil sourced within Saudi Arabia. The type of fuel RSG has adopted emits only 0.17 kilograms of carbon dioxide equivalent per liter, compared with 2.7kg CO2e per liter from regular diesel usage.


Johnson & Johnson MedTech begins direct operations in Saudi Arabia 

Johnson & Johnson MedTech begins direct operations in Saudi Arabia 
Updated 27 February 2024
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Johnson & Johnson MedTech begins direct operations in Saudi Arabia 

Johnson & Johnson MedTech begins direct operations in Saudi Arabia 

RIYADH: Saudi healthcare is poised to benefit from advanced medical interventions after Johnson & Johnson’s technology firm, J&J MedTech KSA, announced the launching of its direct operations in the Kingdom.  

The company provides high-tech medical and surgical equipment and aims to bring customers closer to a more streamlined experience, according to a statement.   

This move not only aligns with the firm’s commitment to enhancing medical interventions and improving clinical outcomes but also reflects the company’s ongoing investment in the future of Saudi healthcare, it added.   

Marzena Kulis, managing director of Johnson & Johnson MedTech for Middle East & Africa, said: “We remain deeply vested in Saudi Arabia and in contributing to the Vision 2030 to support in developing the healthcare sector, driving economic growth, nurturing local talent, and fostering innovation.”    

She added: “As an entity, Johnson & Johnson has been present in Saudi Arabia for nearly 40 years, putting the needs of patients, families, physicians, and nurses first, and functioning as advocates for the health of the Saudi community.”   

The senior executive added that as the company transitions into this new direct model, its esteemed partners will have fewer obstacles in providing the best care for their patients.

Moreover, Trad Al-Khelaiwi general manager of J&J MedTech KSA, highlighted: “As a company that is dedicated to fostering local talent, our direct operations are also aimed at creating more opportunities within the Kingdom and supporting the government’s Saudization efforts.”

He added: “In fact, since the start of the project, we’ve made 76 new hires — with our priority and majority being KSA nationals.” 

Furthermore, Al-Khelaiwi emphasized that this transformative shift would bring the customers closer to Johnson & Johnson’s quality standards and help develop the local healthcare market with international know-how.

“By taking this bold step, we are not only embracing the health goals of Vision 2030 and aligning with the National Health Transformation Program but also spotlighting the immense potential of local talent in driving innovation and progress,” Transformation Director at Johnson & Johnson MedTech Peter Lane underscored. 

In November 2022, Johnson & Johnson announced providing digital solutions that will shorten the time patients spend in hospitals.  

According to Marzena Kulis, managing director of Johnson & Johnson MedTech Middle East, the move was crucial in countries with lower bed capacity.  

“The digital solutions that we currently offer help to shorten the time of patients’ stay, so the capacity can absorb more patients, especially in the geographies where capacity is limited,” Kulis said in an exclusive interview with Arab News at the time.