Saudi oilfield attacks ‘had zero impact on economy,’ says finance minister

Time: September 19, 2019  

Saudi Finance Minister Mohammed Al-Jadaan. (SPA)
  • Weekend strikes failed to interrupt market supply or revenue flow, Kingdom’s finance minister says

LONDON: Saudi Finance Minister Mohammed Al-Jadaan said that the weekend attacks on the Kingdom’s oil infrastructure would have “zero” impact on the country’s economy as concerns about global oil supplies eased.

“In terms of revenues there is zero impact,” Saudi Finance Minister Mohammed Al-Jadaan told Reuters in an interview on the sidelines of an investor conference in Riyadh.

“Aramco continued to supply the markets without interruption and therefore revenues should continue as they are.”

In a separate interview with Bloomberg, Al-Jadaan said that after a boost to state spending, the government was “seeing momentum” in the non-oil economy and that he expected the sector to hit the 2.9 percent expansion forecast by the International Monetary Fund. Oil prices retreated after the comments, having jumped more than 20 percent at one point on Monday — the biggest spike since the 1990-91 Gulf War.

The International Energy Agency (IEA) said on Wednesday it remained in regular contact with authorities in Saudi Arabia and that for now, markets remain well supplied with ample stocks available.

IEA member countries hold about 1.55 billion barrels of emergency stocks in government-controlled agencies, which amount to 15 days of total world oil demand.

In addition, IEA member countries also hold 2.9 billion barrels of industry stocks as of the end of July, a two-year high that can cover more than a month of world
oil demand, the Paris-based agency said.

These stocks include about 650 million barrels of obligated emergency stocks, which can be made immediately available to the market when governments lower their holding requirements.

“Recent events are a reminder that oil security cannot be taken for granted, even at times when markets are well supplied, and that energy security remains an indispensable pillar of the global economy,” said Fatih Birol, the IEA’s executive director.

“This is why the IEA remains vigilant about the risk of disruptions to global oil supplies.”

The Saudi stock market gained 0.6 percent on Wednesday and Saudi dollar-denominated bonds also recovered after retreating on Monday. Earlier Commerzbank said that the oil price rally that followed the attacks was not sustainable and, despite rising regional tensions, lowered its 2020 price forecasts because of slowing demand growth.

The bank cut its Brent forecast for next year by $5 to $60 per barrel and kept its 2019 outlook unchanged at $65.

It also reduced its 2020 forecast for WTI to $57 from $62. Commerzbank forecast WTI to average $58 this year, Reuters reported.

While the attacks had “painfully demonstrated the risks to oil supply,” raising the possibility of short-term price spikes, prices should fall again in the coming weeks as long as there is no “total escalation of the situation,” analysts said.

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Saudi Arabia’s King Salman receives 55th monetary authority’s annual report

September 04, 2019

The report was presented to the king at Al-Salam Palace in Jeddah by Finance Minister Mohammed Al-Jadaan and SAMA Gov. Dr. Ahmed Alkholifey. (SPA)

  • The report reviewed economic and financial developments in the country during 2018
  • The king noted SAMA’s important role in serving the national economy

JEDDAH: King Salman on Wednesday received the 55th annual report of the Saudi Arabian Monetary Authority (SAMA), which reviewed economic and financial developments in the country during 2018.

The report was presented to the king at Al-Salam Palace in Jeddah by Finance Minister Mohammed Al-Jadaan and SAMA Gov. Dr. Ahmed Alkholifey. The king noted SAMA’s important role in serving the national economy.

Alkholifey reviewed key indicators in SAMA’s report, and said due to the state following balanced economic policies, the Saudi economy saw positive developments in most of its sectors in 2018.

Gross domestic product (GDP) at constant prices grew 2.4 percent against a 0.7 percent contraction in 2017.

The GDP of the oil sector increased by 3.1 percent, non-oil GDP grew by 2.2 percent, and prices remained stable with inflation at 2.5 percent.

The current account surplus in the Kingdom’s balance of payments increased significantly to SR265 billion ($70.6 billion), compared to a surplus of SR39 billion in 2017. Non-oil exports increased by 22 percent to reach SR236 billion.

The meeting was attended by Interior Minister Prince Abdul Aziz bin Saud bin Naif, Foreign Minister Ibrahim Al-Assaf and Tamim bin Abdul Aziz Al-Salem, assistant special secretary to the king.

Also on Wednesday, King Salman received Nasser Hamdy, who bid farewell to the monarch on the occasion of the end of his tenure as Egypt’s ambassador to Saudi Arabia.

This article was first published in Arab News

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Saudi ICT plan delivers $13 billion boost for economy

Time: August 28, 2019  

IT Minister Abdullah Al-Sawaha said the strategy will draw a roadmap for the future of the Kingdom in innovation and the digital economy. (SPA)
  • Al-Sawaha: The strategy will draw a roadmap for the future of the Kingdom in innovation and the digital economy

RIYADH: Saudi Arabia’s information and communications technology (ICT) sector will increase its contribution to the national economy by SR50 billion ($13.3 billion) in the next five years, thanks to a major digital development strategy.
Minister of Communications and Information Technology Abdullah Al-Sawaha said that the five-year strategy will expand the Kingdom’s digital capabilities in ICT, allowing the sector to pursue optimal growth in future projects as part of Vision 2030 economic reforms.
The plan will also help the sector keep pace with national requirements and global developments, and attract more foreign technology investment.
Al-Sawaha said the strategy “will draw a roadmap for the future of the Kingdom in innovation and the digital economy.”
As part of the plan the level of Saudi manpower in the sector will be raised to 50 percent by 2030. It also aims to promote and create opportunities for women and boost foreign investment in the sector.

FASTFACT

• The five-year strategy will expand the Kingdom’s digital capabilities in ICT, allowing the sector to pursue optimal growth in future projects.

• The plan will help the sector keep pace with national requirements and global developments, and attract more foreign technology investment.

The Saudi minister said that the ICT strategy will strengthen development activities, and raise the effectiveness and performance of the public and private sectors by enabling digital transformation.
“It will make the Kingdom one of the world’s leading countries in the field of ICT,” he said.
The strategy is part of the ministry’s efforts to establish a robust and sophisticated digital structure that will enhance the role of the ICT sector in building a digital community, digital government, a thriving digital economy and an innovative future for the Kingdom.

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IMF gives strong assessment of KSA economic reforms

Time: August 04, 2019  

The executive board of the International Monetary Fund (IMF) has commended the Saudi authorities for the progress in implementing their economic and social reform agenda, including the introduction of the value-added tax and energy price reforms.
In their assessment report completed on July 10, the executive board affirmed that reforms taken by the Saudi government have started to yield positive results and that the outlook for the economy is positive.
The board emphasized the importance of the Kingdom’s commitment to prudent macroeconomic policies and appropriate prioritization of reforms, which will lead to promoting non-oil growth, creating jobs for nationals, and achieving the objectives of Vision 2030 reform plan.
It has underscored the importance of fiscal consolidation, key to rebuilding fiscal buffers and reducing medium-term fiscal vulnerabilities. It also encouraged the Saudi authorities to build on their fiscal reforms by continuing with planned energy and water price adjustments and increases in expatriate labor fees.
It encouraged the Saudi government to continue its efforts in connection with improving expenditure management and strengthening the country’s fiscal framework, noting that, despite the important reforms, spending has increased. The board welcomed reforms to strengthen public procurement, which will help to improve the efficiency of government spending and reduce the risks of corruption.
The IMF, however, considered that publishing more detailed budgets and spending execution data would enhance fiscal transparency, and viewed a robust asset-liability management framework as essential to guide analysis of the public sector balance sheet, cash flows and risk versus return trade-offs.
The statement issued by the board welcomed the ambitious reforms taken by the Saudi government in connection with developing the non-oil economy by strengthening the business environment and implementing effective industrial policies that could encourage the development of new sectors of the economy.
It said that the policies taken by the government to develop new economic sectors would be successful if Saudi workers posses the necessary skills for the labor market. Therefore, wages and productivity must be well aligned and labor market policies should focus on setting clear expectations by strengthening education and training and increasing female employment.
The board welcomed the review of social assistance programs to ensure they provide adequate support to those in need and are well-targeted. They also welcomed the continued resilience of the financial sector and ongoing capital market reforms.
Lastly, the board commended Saudi Arabia’s ongoing strengthening of the AML/CFT framework and its recent membership of the Financial Action Task Force.
The IMF Executive Board Assessment (2) of the Saudi government economic, financial and social reforms is fair, especially when it is linked to the expected positive result of the national economy stated in the statement released by the IMF mission last May upon conducting the 2019 Article IV (1) consultations.
Talat Zaki Hafiz is an economist and financial analyst.

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Saudi Arabia boosts spending in second quarter as business reforms quicken

Time: July 30, 2019  

The Finance Ministry reported a widening budget gap of about SR33.5 billion. (Shutterstock)
  • The Finance Ministry reported a widening budget gap of about SR33.5 billion

LONDON: Saudi Arabia increased spending in the second quarter as the government boosted stimulus measures to spur growth.

The Finance Ministry reported a widening budget gap of about SR33.5 billion ($8.9 billion) for the period.
“A key positive trend is the pickup in capital expenditure, which points to some progress with investment activity and is likely to be in line with a wider trend,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, told Bloomberg.
A weaker oil price is encouraging Gulf states to quicken economic reforms aimed at reducing reliance on hydrocarbons while boosting job-creating capital expenditure on major projects.
“The results reflect the progress made in the realization of developmental projects according to the Kingdom’s 2030 Vision and confirm the efficiency of the financial and structural reforms implemented by the government,” said Finance Minister Mohammed Al-Jadaan in a statement carried by the Saudi Press Agency.
“These reforms include the diversification of government revenue sources by increasing non-oil revenues, reforming and developing the Public Financial Management to raise the efficiency and effectiveness of spending through many measures including the adoption of a government procurement system,” added Al-Jadaan.
Social protection expenditures were increased in programs such as the Citizen Account Program along with Social Security, cost of living allowance and student rewards.

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Saudi Finance Ministry welcomes positive IMF report on Kingdom’s economic health

Time: July 24, 2019  

Main entrance to the Saudi Ministry of Finance headquarters in Riyadh. (MOF photo)
  • The IMF said it expects non-oil real growth in Saudi Arabia to rise to 2.9 percent in 2019

RIYADH: The Saudi Ministry of Finance on Tuesday welcomed a statement issued by the executive board of the International Monetary Fund in which it commended the progress made by the Kingdom in the implementation of financial, economic and social reforms.

It followed the IMF’s latest Article IV consultations with Saudi Arabia, which concluded on July 10. These regular, usually annual, consultations are carried out to assess a nation’s economic health and development, and identify any potential problems that could cause instability.

The IMF said it expects non-oil real growth in Saudi Arabia to rise to 2.9 percent in 2019 thanks to increased government spending and growing confidence in the economy. The organization said the government’s continued commitment to prudent economic policies and structural reforms will be key factors in promoting non-oil growth, job creation and achieving the goals set out in Vision 2030.

The board in particular welcomed reforms aimed at improving the management of public finances, including a new government procurement system that will help to make government spending more efficient and reduce the risk of corruption. It also praised the efforts being made to enhance the transparency of public finances, and the reforms adopted by the government to develop the non-oil economy. It stressed the need to rebuild fiscal surpluses and reduce the risks to public finances in the medium term, and emphasized that containment of the government wage bill and an increase in capital expenditure in a systematic manner could help to generate financial savings for this year.

The board also highlighted the Kingdom’s strong financial sector and ongoing reforms in the Saudi financial markets. It praised the ongoing efforts to strengthen the Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) framework, and its recent accession to full membership of the anti-money laundering watchdog the Financial Action Task Force. The Saudi Government’s commitment to joining the IMF Standards for Data Dissemination by the end of this year was also commended.

“The statement affirms that Saudi Arabia has made good progress in implementing economic and structural reforms and that these reforms are bearing fruit and are reflected in economic performance,” said Minister of Finance Mohammed Al-Jadaan. “The Board sees that the outlook for the Saudi economy is positive.”

He added that the IMF board’s assessment reflects the ambitious reform efforts being made by the Kingdom at all levels, and stressed that the government is working to achieve financial and economic targets in accordance with the aims of Vision 2030 to maintain financial stability, achieve high economic-growth rates and support economic diversification through special initiatives, programs and projects that contribute to these objectives.

Al-Jadaan also welcomed the board’s endorsement of the government’s reforms, including measures to support financial sustainability, the financial markets, the expansion of financial services and the implementation of AML/CFT legislation and procedures at all levels in institutions.

He added that the new competition and procurement system will help to improve transparency, regulation and governance of procedures related to government procurement, in accordance with the best global practices.

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Saudi economy expands by 1.7 percent in first quarter

Time: July 16, 2019  

Saudi Arabia’s non-oil private sector growth was the big winner, climbing to an 18-month high in June. (Reuters)
  • WTI futures gained 30 per cent in the first three months of the year while Brent crude was up 25 percent over the quarter

RIYADH: Saudi Arabia’s economy grew at 1.7 percent in the first quarter of 2019, the Kingdom’s media ministry said on Monday.
The expansion reflects ongoing economic reforms and the modernization of the financial sector, analysts said.
The Kingdom’s non-oil private sector growth rose to an 18-month high in June, according to PMI data released earlier this month.
Financial analyst Talat Zaki Hafiz told Arab News the positive economic growth trend, especially in the non-oil economy, showed that ongoing reforms were producing results.
“The commitment of the Saudi government is to diversify the economy and move it from dependence on oil, and this is what we see — the mix of non-oil and oil revenue,” he said.
A recovery in the oil price in the first three months of the year has also spurred growth.
WTI futures gained 30 per cent in the first three months of the year while Brent crude was up 25 percent over the quarter.

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Saudi economy measure hits 19-month high despite geopolitical worries

Time: July 04, 2019  

Caught in the middle of a global trade war and regional political tensions with Iran, Gulf economies such as Saudi Arabia and the UAE are seeking to introduce rapid economic reforms as their oil revenues come under pressure. (Shutterstock)
  • Purchasing managers’ index reveals that inflows of new orders from abroad rose for the fourth month running

LONDON: A key business output measure has hit a 19-month high in Saudi Arabia driven by new business growth but tempered by geopolitical worries.

The Emirates NBD Purchasing Managers’ Index revealed that inflows of new orders from abroad rose for the fourth month running.

However, overall business confidence in Saudi Arabia and neighboring UAE has suffered from rising regional geopolitical tensions, which has increased in recent months following attacks on shipping.

“While both output and new work increased at a solid rate in June, there was almost no change in private sector employment,”  said Khatija Haque, head of regional research at Emirates NBD. “Firms remained optimistic about future output, although this component of the survey declined to the lowest level since August 2018, possibly reflecting heightened geopolitical tension in the region.”

Caught in the middle of a global trade war and regional political tensions with Iran, Gulf economies such as Saudi Arabia and the UAE are also seeking to introduce rapid economic reforms as their oil revenues come under pressure amid rising shale production in the US and faltering global demand.

The headline seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index rose to 57.4 in June, up from 57.3 in May and the highest since November 2017. A reading above 50 indicates expansion.

FASTFACT

The Saudi Purchasing Managers’ Index rose to 57.4 in June, up from 57.3 in May.

“In contrast to the headline PMI, output growth in Saudi Arabia’s non-oil private sector slowed to a three-month low during June. That said, the rate of expansion remained sharp and was broadly in line with the long-run series average,” Emirates NBD said.

June also saw a second consecutive monthly rise in average cost burdens faced by non-oil private sector businesses in the Kingdom. Despite this, the rate of inflation was fractional and eased from May.

Business confidence towards future growth prospects was strongly optimistic during June, Emirates NBD said.

Sami Al-Obaidi, chairman of the Council of Saudi Chambers.

The Kingdom is seeking to grow foreign direct investment as part of a broader economic reform push.

Sami Al-Obaidi, chairman of the Council of Saudi Chambers, told the Arab British Economic Summit in London yesterday that it was important to boost economic cooperation and investment ties with the UK.

PMI data also released yesterday for the UAE reported a decline from 59.4 in May to 57.7 in June.

Backlogs of work increased amid reports of delays in receiving payments from customers, the bank noted.

Non-oil companies remained strongly optimistic that business activity will increase over the coming year, although sentiment eased again from April’s record high.

Next year’s Expo 2020 was highlighted as a key factor behind overall business optimism.

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Women’s participation in Saudi labor force at highest growth rate among G20

29/06/19

Saudi women make up 23 percent of Saudi Arabia’s labor force. (File/AFP)
  • The Kingdom’s labor force comprised of 23 percent female in 2018
  • our countries – Argentina, US, India and China – saw a decrease in women’s participation in their labor forces

DUBAI: Saudi Arabia recorded the highest growth rate of women joining the labor force over the past 20 years among the G20 countries, Pew Research Center data revealed, as the group steps up efforts to promote women empowerment.

According to the research, the Kingdom’s labor force comprised of 23 percent female in 2018, an increase of seven percent from 1998 figures, owing to an ongoing national push to empower locals as part of the Saudi Vision 2030.

This represents the highest increase among the G20 member states, followed by Australia and Germany, both recording a six percent increase.

Four countries – Argentina, US, India and China – saw a decrease in women’s participation in their labor forces, with economic giant China recording an 11 percent decrease over the past two decades.

These numbers come as more people in the G20 nations “are strongly in favor of increased gender equality in their country,” according to the US research center.

The G20 countries previously committed to a 25 percent reduction in the gap between the shares of men and women participating in their countries’ labor forces by 2025.

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Labor, Islamic Affairs ministries discuss ways to further develop Saudi nonprofit sector

Time: June 18, 2019  

Saudi Islamic Affairs Minister Sheikh Abdullatif Al-Asheikh receives Dr. Tamader bint Youssef Al-Rammah, deputy minister of labor and social development, at his office in Riyadh. (SPA)

RIYADH: Saudi Islamic Affairs Minister Sheikh Abdullatif Al-Asheikh held a meeting with Dr. Tamader bint Youssef Al-Rammah, deputy minister of labor and social development at his office in Riyadh during which they discussed aspects of joint cooperation between their respective ministries to further develop the nonprofit sector in line with Saudi Vision 2030.

Al-Rammah said that the two ministries could jointly work to promote moderate values in society.

Recently, the Islamic Affairs Ministry successfully carried out a project in 35 countries around the world to promote Islamic values of moderation and tolerance.

The program included scientific activities, preaching, advocacy, awareness lectures and training sessions.

The Saudi Labor Ministry is also taking steps for the empowerment of all citizens, including women and those with disabilities, to ensure a prosperous future for the country and achieve sustainable development.

It also aims to increase the nonprofit sector’s sustainable economic contribution to the gross domestic product from 0.3 to 0.6 percent, and the percentage of workers in the sector from 0.13 to 0.32 percent of the total workforce.

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