As business activity picks up after the summer, we offer a summary of some of the stories we're following at the Arab Bankers Association.
Al-Tuwaijri provides details on bonds, privatisation and budget plans
Mohammed al-Tuwaijri was appointed as Vice Minister for Economy and Planning in May 2016 as part of broader changes to economic portfolios in the Saudi government. He had previously been CEO of HSBC's MENA operations and head of JP Morgan's operations in Saudi Arabia.
Highlights of the interview he gave to Bloomberg, which was published on 10 May, include:
The Kingdom may come to the market again during the fourth quarter of 2017. The government also plans to raise about SR70bn ($18.7bn) from local banks during the course of the year. Mr. Tuwaijri commented that, "We believe actually the banks are pretty liquid and their ability to invest in government bonds is good."
(The Kingdom issued $9bn in sukuk n April this year. It raised $17.5bn in a conventional bonds in October 2016 and $10bn in loans in April 2016.)
The government has a list of 16 entities that are "prime for privatisation." There are four companies that Mr. Tuwaijri describes as "low hanging fruit": the Saline Water Conversion Corporation; a power generation company that is operating under the Saudi Electricity Company; grain silos; and sports clubs. Mr. Tuwaijri said that plans for the privatisations are "very, very advanced" and that the privatisation of the desalination plant and the power generation company would each raise billions of dollars.
The Government Budget:
Mr. Tuwaijri said that the government is committed to balancing the budget in 2020, in line with the 2017 budget statement issued at the beginning of this year. This budget commitment is based on oil prices stabilising at current levels. The government's decision, in April, to reverse cuts to civil service allowances that had been announced in September 2016, will not affect plans to balance the budget, Mr. Tuwaijri said.
A 'Citizens' Account' that will pay cash to low and middle income Saudis who are affected by cuts to subsidies, will start in July. Mr. Tuwaijri said that more than 11 million have applied for support under the programme and eligibility is now being determined.
More in News
Fitch downgraded the Republic of Lebanon to CCC on 23 August, the same day that S&P affirmed its B- rating and negative outlook. The ABA's Editor, Andrew Cunningham, considers the different views on Lebanon's financial health. The views are his own, not necessarily those of the ABA.
This is an important report, and one of its findings is that those who use Islamic finance say that they have a good experience.
A change in Jersey's tax legislation has clarified that commodity murabaha contracts that are used to strcuture Shari'ah-compliant transactions will not be subject to Jersey tax.
The Directors and staff of the Arab Bankers Association send best wishes to members and their families on the occassion of Eid el-Adha. The holiday was due to begin in most countries on 12 August and will last for four days.