Red Sea attacks force shipping firms to reroute vessels

While freight rates will likely increase on these longer voyages too, carriers at the moment are seeking ways to utilize excess capacity. File
While freight rates will likely increase on these longer voyages too, carriers at the moment are seeking ways to utilize excess capacity. File
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Updated 18 December 2023
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Red Sea attacks force shipping firms to reroute vessels

Red Sea attacks force shipping firms to reroute vessels

DUBAI: Mounting attacks by Yemen’s Houthis on ships in the Red Sea are disrupting maritime trade as leading global freight firms reroute around the Cape of Good Hope to avoid the Suez canal.

Multiple “projectiles” were fired from Houthi-controlled territory on Monday at a vessel in the southern Red Sea, US officials said.

The Houthis have launched a series of missile and drone attacks on ships in the area, which it says are a response to Israel’s assault on the Gaza Strip.

However, there was no immediate claim of responsibility for the latest attack.

Several major freight companies — including MSC and Maersk— have begun to sail around Africa, adding costs and delays which are expected to be compounded over the coming weeks, according to industry analysts. About 15 percent of world shipping traffic transits via the Suez Canal, the shortest shipping route between Europe and Asia.

Combined, the companies that have diverted vessels “control around half of the global container shipping market,” ABN Amro analyst Albert Jan Swart told Reuters. “Avoiding the Red Sea will lead to higher cost due to longer travel time,” Swart said.

Oil major BP has also temporarily paused all transits through the Red Sea following the attacks over the weekend.

The shipping attacks have prompted the US and its allies to discuss a task force that would protect Red Sea routes.

US Defense Secretary Lloyd Austin on Monday arrived for talks in the region.

Rico Luman, an analyst at ING, said the diversions were adding at least a week of sailing time for container liners. Typically, shipping goods from Shanghai to Rotterdam takes around 27 days via the Suez Canal.

“This will at least lead to delays in late December, with knock-on effects in January and probably February as the next round will also be delayed,” Luman said.

While freight rates will likely increase on these longer voyages too, carriers at the moment are seeking ways to utilize excess capacity, said Zvi Schreiber, CEO of global freight platform Freightos.

“It is unlikely that rates will spike to levels experienced during the pandemic,” said Schreiber, referring to the economic effects of COVID-19 from 2020.

Shipping stocks rose across European exchanges in morning trading on Monday after a jump on Friday on bets the shift away from the Suez Canal could boost rates. Maersk rose 3.5 percent in early trade in Copenhagen, before paring some of those gains.

The Suez Canal is an important source of foreign currency for Egypt. Some 90 percent of world trade is transported by sea.

The International Chamber of Shipping association said on Friday that the Houthi assault on shipping lanes, which began last month, was an “extremely serious threat to international trade” and urged naval forces in the area to do all they can to stop the attacks.

Taiwanese container shipping line Evergreen said on Monday that it has decided to temporarily stop accepting Israeli cargo with immediate effect and instructed its container ships to suspend navigation through the Red Sea until further notice.

Evergreen added that ships on regional services to Red Sea ports will sail to safe waters nearby and wait for further notification, while container ships which are scheduled to pass through the Red Sea will be rerouted around the Cape of Good Hope to continue their voyages to destination ports.

France’s CMA CGM said it had ordered all its vessels to leave the area and stay there until further notice.

“The situation continues to deteriorate and there are increasing concerns about security,” it said.

As per Hapag-Lloyd, which controls about 7 percent of the global container ship fleet, it will “pause all container ship traffic through the Red Sea until Monday. Then we will decide for the period thereafter.”


IMF concerned about debt, fiscal challenges facing low-income countries 

IMF concerned about debt, fiscal challenges facing low-income countries 
Updated 5 sec ago
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IMF concerned about debt, fiscal challenges facing low-income countries 

IMF concerned about debt, fiscal challenges facing low-income countries 

WASHINGTON: Shareholders of the International Monetary Fund agreed this week on the importance of addressing challenges faced by low-income countries, many of which are facing unsustainable debt burdens, IMF Managing Director Kristalina Georgieva said on Friday. 

Multiple reports from the IMF and the World Bank this week sounded the alarm about economic developments and prospects in low-income developing countries, which are still grappling with the aftermath of the COVID-19 pandemic and other shocks. 

The IMF lowered its 2024 growth forecast for low-income countries as a group to 4.7 percent from an estimate of 4.9 percent in January. In a separate report, the World Bank said half of the world’s 75 poorest countries were experiencing a widening income gap with the wealthiest economies for the first time this century in a historical reversal of development. 

Georgieva said the IMF was working to reinforce its ability to support low-income countries hit hardest by recent shocks, including through a 50 percent quota share increase and by adding resources to its Poverty Reduction and Growth Trust. 

Georgieva and Saudi Arabia’s Finance Minister Mohammed Al-Jadaan, who chairs the IMF’s steering committee, both said internal reforms adopted by the IMF this week should help make the debt restructuring process speedier and smoother. 

Georgieva said a meeting of the Global Sovereign Debt Roundtable hosted by the IMF and the World Bank this week had made progress on setting timelines for debt restructurings and ensuring comparability of treatment for various creditors. 

She said high debt levels posed a huge burden for low-income countries, including many in Sub-Saharan Africa, where countries are now facing debt service payments of 12 percent on average, compared to 5 percent a decade ago. High interest rates in advanced economies have lured away investments, and raised the cost of borrowing. 

“What is heartbreaking is that in some countries debt payments are up to 20 percent of revenues,” Georgieva said, adding that this meant those countries had far fewer resources to invest in education, health, infrastructure and jobs. 

Affected countries needed to increase their domestic revenues by raising taxes, continuing to fight inflation, paring back spending and developing local capital markets, she said. 

The Bulgarian economist said it was vital for these countries to make themselves more attractive to investors, and said the IMF was engaging with countries to help them do that. 

Iolanda Fresnillo, with the non-profit European Network on Debt and Development, said the UN should implement a new multilateral legal framework to deal with sovereign debt, in a similar way that is currently being done for a new framework to govern tax cooperation. 

The current approach is too piecemeal and a broader framework should take into account climate change, environmental degradation and human rights, she said. 

US Treasury Undersecretary Jay Shambaugh raised concerns about the situation facing low-income countries last week, warning China and other emerging official creditors against free-riding by curtailing loans to low-income countries just as the IMF or multilateral development banks were pouring funds in. 

Almost 40 countries saw external public debt outflows in 2022, and the flows likely worsened in 2023, he said.


Saudi Arabia leading region’s transformative journey 

Saudi Arabia leading region’s transformative journey 
Updated 20 April 2024
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Saudi Arabia leading region’s transformative journey 

Saudi Arabia leading region’s transformative journey 
  • SVC makes significant strides in shaping private investment landscape

CAIRO: A wave of venture capital funding has washed over the Middle East and North Africa region, prompting transformative change in the entrepreneurial landscape.

Saudi Arabia’s government is leading the shift through a subsidiary of the SME Bank, part of the National Development Fund.  

The Kingdom’s Saudi Venture Capital has made significant strides in shaping the private investment landscape, deploying finance across 40 investment funds and over 700 startups and small and medium-sized enterprises.  

This was highlighted in the latest Impact Report issued by SVC, which detailed its contributions since its inception in 2018. 

The document revealed that SVC’s total investments have reached SR2.6 billion ($693.1 million), with the overall impact of these, including partner commitments, estimated at around SR13.6 billion.  

These investments span various sectors critical to economic diversification, such as e-commerce, fintech, healthcare, educational technologies, transportation, and logistics. 

“SVC plays a crucial part in stimulating the private VC investment to sustain and foster the steady growth of the VC ecosystem in the Kingdom,” Nabeel Koshak, CEO of SVC, said.  

“SVC’s strategy, since its inception in 2018, contributed to increasing the number of investors in Saudi startups, encouraging existing and new financial companies to establish VC funds, and motivating regional and global funds to invest in Saudi startups,” Koshak stated. 

“Accordingly, the funding deployed into Saudi Arabian startups grew 21 times to a record-high of $1.4 billion in 2023 versus $65 million in 2018, the year SVC was launched,” he added. 

Significantly, SVC’s strategic initiatives have positioned Saudi Arabia as a leader in venture investments within the MENA for the first time in 2023.  

This milestone reflects the broader economic and financial sector evolution under Saudi Vision 2030, aimed at enhancing the national economy. 

Saudi Arabia’s Penny Software closes undisclosed pre-series A round 

Closing its pre-series A funding round, Saudi Arabia’s Penny Software raised an undisclosed sum from Iliad Partners, joined by GSI and US-based Knollwood Investments, alongside existing investors such as Dallah Investment, Hambro Perks Oryx Fund, Class 5 Global, Altuwajiri family fund, and strategic angel investors.  

Founded in 2020 by Iyad Al-Dalooj, Majid Al-Dalooj, and Mohamad Ibrahim, Penny Software is a business to business Software-as-a-Service procurement startup that digitizes the entire source-to-pay process, thereby enhancing spend efficiency, governance, and compliance. 

“This investment from Iliad Partners, alongside the continued support from our existing and new investors, represents a significant vote of confidence in Penny Software’s vision and our team’s ability to execute,” Iyad Al-Dalooj, the CEO, said. 

“We are excited to leverage this partnership to scale our operations, enhance our product offering, and solidify our position as a leader in the procurement software industry. The future of procurement is here, and Penny Software is at the forefront of this transformation,” he added. 

This new capital infusion is poised to fuel Penny’s ambitions for regional and global expansion.  

This follows a successful $5 million seed funding round in 2021, led by Outliers Venture Capital with participation from Wamda, Shorooq Partners, Hambro Perks ORYX Fund, Class 5 Global, and strategic angel investors.  

Penny Software aims to leverage this investment to further enhance its platform capabilities and broaden its market reach, reinforcing its position in the competitive SaaS industry. 

The company claims that it is set to manage a gross transaction value of over $1 billion this year, and ease procurement for thousands of companies globally. 

“Saudi Arabia is an economy that is undergoing a major transformation in which technology is playing a key role. This is our first investment in the Kingdom, and we plan to invest a significant portion of our fund in this market, supporting strong founders on their journey from the pre-series A stage and onwards,” Christos Mastoras, founder and managing partner of Iliad Partners, stated   

UAE’s DocsInBox closes $500k in a funding round 

UAE’s e-invoicing and procurement startup DocsInBox closed a $500,000 funding round from angel investors to boost its presence. 

Founded by serial entrepreneurs Leonid Dovbenko and Stanislav Seleznev,  DocsInBox significantly streamlines invoicing and procurement processes, saving up to 1 million hours each month, the company claimed.  

The platform enables purchasing agents to place orders in just three clicks, while accountants can complete tasks in 13 seconds that previously took 300 seconds.  

By automating procurement, DocsInBox reduces manual labor by 15 percent, operational costs by 5 percent, and food costs by 8 percent.  

UAE’s U-topia secures $850k in funding round 

UAE-based Web3 services provider U-topia has secured $850,000 in funding from GDA Capital. 

Established in 2021 by Jérémy Mahieu and Nicolas Prévost, U-topia operates as a Web3 entertainment company that merges global intellectual property licensing in GameFi, artificial intelligence music, and video entertainment supported by non-fungible token provenance.  

The newly acquired investment is earmarked for the development of advanced features and technologies on the U-topia platform, aiming to enhance its offerings in the dynamic Web3 landscape. 

Nigeria’s VC firm Verod-Kepple Africa Ventures closes $60m fund 

Nigeria-based VC firm Verod-Kepple Africa Ventures has concluded a final close of $60 million for its pan-African VC fund, led by existing investors and new investors, including SCM Capital from Nigeria and institutional investors from Japan, including Taiyo Holdings and C2C Global Education Japan. 

Formed in 2021 as a joint venture between Kepple Africa Ventures and Verod Holdings, VKAV is led by partners Satoshi Shinada, Ryosuke Yamawaki, and Ory Okolloh. 

The fund aims to bridge the funding gap for African startups, especially for companies moving to series A and B stages. 

Egypt’s VC firm Beltone teams up with UAE’s CI Venture to manage a $30m fund 

Egypt’s Beltone Venture Capital, under Beltone Holding, has teamed up with CI Venture Capital from UAE’s Citadel International Holdings to manage a $30 million fund aimed at nurturing fast-growing startups.  

This collaborative fund is set to invest in pre-seed and seed funding rounds of innovative tech startups across the MENA region while also continuing to support standout performers within its existing portfolio. 

In recent months, the fund has actively begun deploying capital, finalizing investments in several startups, including Bosta, Trella, Qlub, and ariika.  
 


World Bank chooses Saudi Arabia as location for new knowledge hub

World Bank chooses Saudi Arabia as location for new knowledge hub
Updated 20 April 2024
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World Bank chooses Saudi Arabia as location for new knowledge hub

World Bank chooses Saudi Arabia as location for new knowledge hub
  • Hub will enable Kingdom to assist other countries looking to boost economic standings

WASHINGTON DC: A knowledge hub will be established in Saudi Arabia in a partnership between the Kingdom’s National Competitiveness Center and the World Bank Group, it was announced in Washington DC on Friday.

The new knowledge center will serve as a hub for sharing Saudi Arabia’s experience of economic reform and enhancing regional and global competitiveness collaborations with other countries looking to boost their economic standings, a statement released by the NCC said.

Saudi Minister of Commerce Majid Al-Qasabi, who is also chairman of the NCC board of directors, said the deal was testament to the significant progress made by the Kingdom in global competitiveness reports and indicators, which had been made possible by the leadership of Crown Prince Mohammed bin Salman.

Saudi ambassador to the US, Princess Reema bint Bandar, the President of the World Bank Group Ajay Banga and the Chief Economist of the World Bank Group Intermit Gill also attended the announcement event.

The hub, currently in the preparatory stage, will be overseen by a founding committee including the ministries of finance, economy, and planning, alongside several relevant government agencies.


Investment opportunities in Saudi Arabia abound beyond major cities 

Investment opportunities in Saudi Arabia abound beyond major cities 
Updated 20 April 2024
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Investment opportunities in Saudi Arabia abound beyond major cities 

Investment opportunities in Saudi Arabia abound beyond major cities 
  • Decentralized development shifts attention away from the cities to the lesser-explored corners of the Kingdom

JEDDAH: In the heart of Saudi Arabia, amidst the towering skylines of Riyadh, Jeddah and Dammam that have long symbolized the nation’s economic strength, a new narrative is taking shape. It is a story of decentralized development, where attention is shifting away from the bright lights of the cities to the lesser-explored corners of the Kingdom.
In recent years, there has been a noticeable pull towards the untapped potential of smaller towns and regional municipalities, captivating the interest of investors, entrepreneurs, and policymakers alike.
This shift marks a departure from the traditional belief that growth is solely concentrated in urban centers, signaling a fresh era of exploration and diversification.
As Saudi Arabia steers towards a more resilient and inclusive economy, the growing fascination with these areas, which had not received much attention before Saudi Vision 2030 was announced, underscores the evolving priorities and ambitions guiding the Kingdom’s economic trajectory.
Talat Hafiz, a renowned economist, told Arab News that the focus on developing small towns, helps to limit internal movement of people to urban and large cities to seek job opportunities and look for better living.
“It also supports the government efforts in reaching comprehensive sustainable economic development,” he said.

Economist Talat Hafiz

Commenting on what sectors or industries within these smaller towns are experiencing the most significant growth, Hafiz said that the case differs from one place to another as each city has its own economic characteristics and competitive advantages.
“In some towns, tourism is the most competitive advantage while the industrial sector is more competitive and advantageous in the others,” he pointed out.
The economist noted that Saudi Vision 2030 has fostered the capabilities of local planning decentralization, which would allow municipalities to undertake tasks that boost the city in collaboration with the private sector.
He added that that, as a result, several small towns and cities have been upgraded to the level of urban cities which in turn has improved the infrastructure and public services.
“Boosting the capability of small towns is coupled with the development of universities and medical and educational facilities, which in turn has attracted investment, created job opportunities and limited internal immigration,” Hafiz said.
Nasser Al-Qaraawi, another economist, said that Saudi Vision 2030 took into consideration the need to alleviate congestion within major cities due to the excessive focus on them.


He added that the excessive population density in these major cities, compared to other cities, has made life difficult, noting that ineffective urban planning strategies contributed to the overcrowding, especially by young people seeking job opportunities and education.
“This was followed by the aftermath of the stock market crisis in 2006,” he told Arab News.
Al-Qaraawi added that when the 2030 plan was announced, developing areas surrounding the larger cities and less developed regions were given the opportunity for growth.
However, he further said, these regions unfortunately vary in success as some municipalities are unable to perform to their full potential due to bureaucratic hurdles.
Al-Qaraawi recommended restructuring the municipalities, as development indicators highlight the pressing need to catch up and enact meaningful change within these local governments to fulfill the state’s goals and meet the citizens’ aspirations.
Investment opportunities in smaller municipalities include the following:

Diverse investment opportunities in EP municipality 

Eastern Province’s urban administration has unveiled 362 diverse investment opportunities, spanning cities and governorates.

Covering over 20,000 assets across 116 million sq. m., the initiative includes sectors like infrastructure, transportation and tourism. Investors were urged to capitalize on incentives like contractual extensions and exemption periods.

These investment portfolios serve as a database for significant investment growth in the region, according to the Saudi Press Agency.

Jazan as key investment hub, coffee capital
With its significant port and refinery, Jazan has experienced a surge in investment, driven by rapid infrastructure expansion. The economic zone aims to attract SR11 billion ($2.93 billion) in foreign investments by 2040, leveraging its untapped mining reserves. The region is poised to become a hub for the mining sector, projected to be Saudi Arabia's third pillar of industry.
Additionally, Jazan’s integrated economic center is expected to generate 17,000 direct jobs by 2040 and contribute significantly to the gross domestic product.
During the Cityscape Global Exhibition, held in Riyadh from Sept. 12-13 last year, Jazan Municipality announced 5,000 investment opportunities to be launched from 2023 to 2027, with a total value exceeding SR5 billion.
Among the most prominent developmental and investment projects presented were the Jazan Gateway, Water Park City, Al-Wadi Park, and Jazan Private University as well as Jazan Private Medical City.
On the other hand, the region’s renowned coffee industry adds to its cultural heritage, with plans for the International Saudi Coffee Exhibition to support local farming initiatives and transform Jazan into a global trade center.
The Sustainable Rural Agricultural Development Program has provided more than SR155 million in support to the coffee sector, benefiting over 3,000 farmers. The Ministry of Environment, Water, and Agriculture, in collaboration with the private sector, is implementing various projects, including opportunities for coffee cultivation.

Northern Borders region attracts more investors 

The Kingdom seeks to establish a logistics zone in Arar, where investors will be granted land plots, according to Minister of Commerce Majid Al-Qasabi, who made the statement during his speech at the Northern Borders Investment Forum, held in November 2023.  
According to a release issued by the Arar Municipality in January 2024, Saudi Arabia’s Northern Borders region saw a 58.3 percent growth in factory numbers in the third quarter of 2023, with total investment hitting SR74.3 billion. 
The statement added that the area, driven by a strategic regional development office, attracted increased corporate spending for business setups during that period, rising from SR73.9 billion in the third quarter of 2023.
In February 2023, Crown Prince Mohammed bin Salman announced the establishment of the Strategic Office for the Development of the Northern Borders region to enhance the quality of life in the area. 

Asir region to exploit huge tourism potential

In September 2021, the crown prince unveiled a SR50 billion tourism strategy for Asir, aiming to attract over 10 million visitors by 2030. Dubbed “The Arabian Highland,” the plan entails comprehensive development, focusing on cultural and natural assets to establish Asir as a year-round destination.

Projects include enhancing tourist attractions on Asir’s mountains, leveraging the region’s rich culture and heritage for social and economic growth. The strategy taps into Asir’s tourism potential, emphasizing geographical diversity and modernizing infrastructure.
In October 2023, the crown prince announced a master plan for the new Abha International Airport, increasing capacity to accommodate 13 million passengers annually and enhancing air connectivity to 250 destinations, aligning with Saudi Vision 2030.
In the same month, he launched Ardara Co. to develop the Abha Valley project, contributing to Saudi Arabia’s National Tourism Strategy to position the Kingdom as a global tourism hub by 2030. These initiatives create opportunities across sectors like hospitality, agriculture, and entertainment, bolstering private sector growth. 

Taif attracts investments of over SR11 billion

Investment agreements exceeding SR11 billion were announced on the first day of the Taif Investment Forum, held in November 2023, according to the Saudi Press Agency. 
Under the theme “Invest in Taif,” the three-day forum saw active participation from industry leaders in the UK, China and South Korea. Several high-ranking officials from Saudi government agencies and the private sector also attended. 
Sultan Al-Saadoun, the general supervisor of the forum, emphasized that the investment agreements are the result of partnerships between the public and private sectors in over 27 projects.
He added that these projects will create more than 10,000 job opportunities for the people of Taif of both genders.  
Ghazi Al-Quthami, president of the city’s Chamber of Commerce and Industry, underscored Taif’s potential for investments in various sectors, such as tourism, agriculture, industry, and healthcare.
He added that the chamber is actively collaborating with relevant entities to expand investment opportunities in the city. 

Al-Jouf provides 700 investment opportunities in 2023

The municipality of the northern region of Al-Jouf, which is home to the Sakaka solar power plant, announced in February 2024 it had introduced more than 700 opportunities in the municipal sector of the region during 2023 through the ‘Furas’ municipal investment portal.
The region’s mayor, Atef Al-Shara’an, emphasized the municipality’s commitment to presenting the available investment opportunities to investors in accordance with the plans of the Ministry of Municipal and Rural Affairs and Housing, and the goals of Vision 2030 of the Kingdom, according to SPA.

Al-Shara’an added that the investment opportunities presented during the past year varied between major, medium, small, and temporary opportunities in all commercial, recreational and tourist as well as sports, service, seasonal events, and other fields.
Recently, the region’s mayoralty announced the bid opening for eight commercial and residential investment opportunities for national investors and institutions at Al-Esawia sub-municipality. The bid evaluation meeting is scheduled for April 15.

Yanbu emerges as entertainment hub 
A contract worth SR1.1 billion has been granted to build a new entertainment hub in Yanbu to boost economic diversification in Saudi Arabia.
The contract was awarded by Public Investment Fund subsidiary Saudi Entertainment Ventures, also known as SEVEN, to a joint venture between Al Bawani Co. and UCC Saudi, according to a press release.
The statement emphasized that the entertainment hub will be located along the seafront promenade on Al Nawras Island, aiming to greatly enhance the city’s local entertainment scene.
In a press statement, issued in September 2023, SEVEN said that the company is investing more than SR50 billion to build 21 entertainment destinations across Saudi Arabia.  
The company has earlier announced that it had already begun construction works on its entertainment destinations in the Al Hamra district of Riyadh and Tabuk. 

Buraidah Municipality unveils 28 investments opportunities

The Qassim region, home to Buraidah city, stands as a province abundant in natural and agricultural resources. Notably, it hosts the Middle East’s only bauxite mine, yielding approximately 5 million tonnes of ore and contributing to the Kingdom’s aluminum production of 1.8 million tonnes in 2020.
The Buraidah Municipality has recently unveiled 28 investment opportunities for the first quarter of 2024.
These opportunities encompass a wide range of sectors, from commercial, health, and tourism activities to transportation, construction, and entertainment projects. Additionally, investors can explore prospects in agriculture, education, and other sectors, promising diverse avenues for growth and development.

It is apparent that, by tapping into regional potential and spreading development initiatives, the Kingdom aims to reduce reliance on oil revenues, stimulate job creation, and foster widespread prosperity, in line with the goals of Saudi Vision 2030.
 


IMF, World Bank steering committee stresses accountability as reforms advance

IMF, World Bank steering committee stresses accountability as reforms advance
Updated 20 April 2024
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IMF, World Bank steering committee stresses accountability as reforms advance

IMF, World Bank steering committee stresses accountability as reforms advance
  • Governors of the institutions urged the World Bank to continue to bolster global and regional partnerships

WASHINGTON DC: The steering committee for both International Monetary Fund and the World Bank on Saturday emphasized the need for broader accountability as the institutions implemented reforms to help countries grapple with climate change and other shocks.

“We must hold ourselves accountable more broadly as we become a better and bigger bank,” said Mohammed bin Hadi Al Husseini, the United Arab Emirates’ minister of state for finance, who heads the joint Development Committee this year.

Al-Husseini issued a chair’s statement, rather than a communique, amid disagreements over wars in the Middle East and Ukraine, but referenced economic risks posed by the conflicts. The statement came as this week’s meetings of the IMF and World Bank drew to a close.

Governors of the institutions urged the World Bank to continue to bolster global and regional partnerships, and asked its management to push ahead with country engagement reforms and enhanced country diagnostics.

They also encouraged further collaboration between the World Bank and IMF to help countries mobilize more revenues at home, and on issues such as climate change and pandemic preparedness, as well as debt sustainability.