NEW DELHI: Indian Finance Minister Arun Jaitley said on Friday that a cash crunch following the scrapping of high-value banknotes would ease by Dec. 30 with the release of new 500 and 2,000 rupee notes.
Jaitley said, however, that the amount of new banknotes being released would not be the same as that circulating before Nov. 8, when Prime Minister Narendra Modi announced the so-called demonetization to purge the economy of illicit “black money.”
Modi, at a stroke, removed from circulation banknotes worth an estimated 17 trillion rupees ($249 billion).
Finance Ministry sources say they plan to reissue just over half of this — a task that would take months given the capacity of India’s four banknote printing presses.
Modi set a 50-day deadline that runs to Dec. 30 for people to swap or deposit their old banknotes.
He has promised the situation would stabilize by then and urged Indians to adopt cashless payment forms such as debit cards and mobile wallets.
“Obviously, one of the advantages of this exercise is going to be that you won’t have the same level of paper currency which existed,” Jaitley told the Hindustan Times Leadership Summit.
Officials expect some illicit cash never to be returned and to expire worthless, while other money that is deposited will remain in the banking system.
The government’s goal is to encourage the use of cashless forms of payment, a challenge for most Indians who live and work in the informal economy.
The dislocation resulting from the cash swap has been huge — workers seeking to collect their monthly pay have been turned away as banks ran out of cash, while car makers have reported a steep downturn in their November sales.
“It does create a disruption,” said Jaitley.
“But I don’t see the disruption lasting for very long. You may see some impact for a quarter or so.”
Jaitley also repudiated a call by the left-wing government of India’s state of West Bengal to delay a planned Goods and Services Tax (GST) to avoid inflicting another economic shock in the wake of demonetization.
He said the plan was still to launch the new tax on April 1.
Time was tight because, under a constitutional amendment that enabled the GST, India’s old system of indirect taxation would lapse next September.
“If on Sept 16, 2017, there’s no GST, then there’s no taxation,” he said.
“Our intention is to make sure it gets implemented from April 1, 2017.”
As anger mounted at the continued shortage of cash, the leader of the opposition Congress party accused Modi of experimenting “with the financial future of 1.3 billion people.”
In a speech to party supporters, Rahul Gandhi said “the results of this catastrophic experiment will soon be revealed” as a report said that there had already been a sharp fall in consumer spending.
“Every economist of any repute has already condemned it,” added Gandhi.
Some people have found themselves queuing for many hours to access their own cash while ATMs have been regularly running out of notes.
A report in The Hindustan Times said that the cash squeeze was already being felt in many sectors of the economy, including a big drop in sales of mobile phones, home appliances, cars and real estate.
Indians had been given until Dec. 15 to use the old bills at filling stations but the government rushed forward the deadline on Thursday evening, giving people barely 24 hours to spend their old notes.
Prime Minister Narendra Modi unleashed chaos with his shock announcement last month that all 500 rupee ($7.30) and 1,000 rupee notes — some 86 percent of all bills in circulation — would cease to be legal tender.
The so-called demonetization initially won widespread approval but the government has been forced onto the defensive as frustration grows at limits on withdrawing new banknotes.
Cash accounts for 90 percent of transactions in India and the government has said it would take time before new bills are distributed.
“I was using my old notes up till now for filling petrol. Now I am dreading going to the bank. The government has no clue what we are being made to go through,” said Saurav Mallik, who works in the private sector.
Frequent rule changes in response to pressure from various groups and growing disorder have made matters worse.
Those with old notes are allowed to deposit them into their bank accounts until year end but long bank queues had prompted many to use them at gas stations. This option has now been cut off.
“I worry that there is going to be more confusion and chaos in the days ahead,” Saima, who works as an attendant at a petrol filling station, said.
“Fights have already been breaking out,” Saima, who uses only one name, added.
Jaitley acknowledged it was inevitable that the move would result in queues in a country the size of India.
“If you are replacing 86 percent of a country’s cash... it is going to be a time consuming exercise,” he told the conference in Delhi.
But Jaitley insisted the decision would ultimately have a positive impact as more consumers switch to digital currency rather than cash.
“You will reduce the quantum of paper currency and take the country more toward further digitization,” he said.
“The shortage of currency itself is forcing this to happen but that’s a development which is for the better.”
India’s economy grew 7.3 percent during the last quarter, but many economists have predicted that the demonetization will make a big dent in the next set of figures.
India cash crunch to ease by year-end, says finance minister
India cash crunch to ease by year-end, says finance minister
Saudi, Nigerian ministers hold talks to strengthen economic relations
RIYADH: Saudi Arabia and Nigeria held high-level talks to discuss financial and economic developments, focusing on regional and global challenges, as well as opportunities for collaboration.
The meeting, led by the kingdom’s Minister of Finance Mohammed Al-Jadaan, included a delegation from the African country headed by Finance Minister Wale Edun and Budget and Economic Planning Minister Abubakar Atiku Bagudu.
The discussions aimed to strengthen economic ties and explore joint strategies to navigate evolving financial landscapes.
This comes as trade between Nigeria and Saudi Arabia showed a significant imbalance in 2023, with Nigeria exporting goods worth $76.29 million to the Kingdom, while imports from Saudi Arabia amounted to $1.51 billion, according to the UN COMTRADE database on international trade.
Closing Bell: Saudi main index closes in red at 11,914
- Parallel market dropped by 0.11% to 30,920.40
- MSCI Tadawul Index shed 3.17 points to close at 1,496.90
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Tuesday, as it shed 34.84 points, or 0.29 percent, to close at 11,913.95.
The Kingdom’s parallel market also dropped by 0.11 percent to 30,920.40, while the MSCI Tadawul Index shed 3.17 points to close at 1,496.90.
The total trading turnover of the benchmark index was SR3.83 billion ($1.02 billion), with 64 of the listed stocks advancing, while 168 declining.
The best-performing stock of the day was Al-Baha Investment and Development Co., as its share price surged by 9.09 percent to SR0.48.
Other top performers were Saudi Chemical Co., increasing 4.66 percent to SR9.66, and Shatirah House Restaurant Co., rising 4.44 percent to SR21.30.
The share price of United Electronics Co. slipped by 6.77 percent to close at SR92.20.
First Milling Co. announced the successful expansion of its Mill A, boosting production capacity from 300 tons to 550 tons per day.
In a Tadawul filing, the company, which produces flour, feed, and bran, said that the financial impact of the expansion will be reflected in the fourth quarter of this year.
The company’s share price gained 1.35 percent, closing at SR59.90.
Banque Saudi Fransi announced that its shareholders approved a 107.4 percent capital increase, raising its capital from SR12.05 billion to SR25 billion.
The bank said that the decision was finalized during an extraordinary general meeting held on Dec. 23.
Banque Saudi Fransi’s share price dropped 0.62 percent to close at SR15.94.
Meanwhile, retail investors began subscribing to 3.47 million shares of Saudi-based online beauty brand Nice One on the main market.
The company announced on Dec. 16 that it set the final offer price for its initial public offering at SR35 per share, aiming to raise SR1.2 billion.
The retail subscription period, which started on Dec. 24, will run through Dec. 25.
Saudi Arabia’s Capital Market Authority approved Ejada Systems Co.’s request to float 20.05 million shares, representing 45 percent of its share capital.
In a statement on Tadawul, the company said that its prospectus will be published well ahead of the subscription period.
It will provide investors with key information, including financial statements, business activities, and management details to support informed investment decisions.
EBRD supports Africa’s largest onshore wind project in Egypt with $275m loan
- 1.1 GW wind farm in Egypt will reduce annual CO2 emissions by more than 2.2 million tonnes
- Loan to Suez Wind consists of $200 million A loan from the EBRD and $75 million in B loans from Arab Bank and Standard Chartered
JEDDAH: The European Bank for Reconstruction and Development is supporting Egypt in launching Africa’s largest wind farm, backed by a $275 million syndicated loan.
The loan to Suez Wind consists of a $ 200 million A loan from the EBRD and $ 75 million in B loans from Arab Bank and Standard Chartered, the international financial institution said in a press release.
It added that the initiative is being co-financed by the African Development Bank, British International Investment, and Deutsche Investitions- und Entwicklungsgesellschaft, as well as the OPEC Fund for International Development and the Arab Petroleum Investments Corporation.
The wind farm in the Gulf of Suez will have an installed capacity of 1.1 gigawatts, delivering clean, renewable energy at a lower cost than conventional power generation. It is expected to produce over 4,300 GWh of electricity annually and reduce CO2 emissions by more than 2.2 million tons per year, supporting Egypt’s energy sector alignment with its commitments under the Paris Agreement.
Rania Al-Mashat, Egypt’s minister of planning, economic development, and international cooperation, said that her country is committed to advancing its renewable energy ambitions, aiming to derive 42 percent of its energy mix from renewable sources by 2030, in line with their nationally determined contributions.
“Through our partnership with the EBRD, a key development partner within the energy sector of Egypt’s country platform for the NWFE program, we are mobilizing blended finance to attract private-sector investments in renewable energy,” said Al-Mashat, who also serves as governor of the north African country to the EBRD
The minister added: “So far, funding has been secured for projects with a capacity of 4.7 gigawatts, and we are working collaboratively to meet the program’s targets to reduce Egypt’s fuel consumption and expand clean energy projects.”
Managing Director of the EBRD’s Sustainable Infrastructure Group, Nandita Parshad, expressed pride in the bank’s role as the largest financier of the landmark 1,100-megawatt wind farm in the Gulf of Suez, which is also the largest onshore wind farm in EBRD’s operational countries to date.
“Egypt continues to be a trailblazer for large-scale renewables in Africa: first with the largest solar farm and now the largest windfarm on the continent. Great to partner on both with ACWA power and to bring new partners in this project, Hassan Allam Utilities and Meridiam,” she said.
Suez Wind is a special project company jointly owned by Saudi energy giant ACWA Power and HAU Energy, a recently established renewable energy equity platform that the EBRD is investing in alongside Hassan Allam Utilities and Meridiam Africa Investments.
The EBRD, of which Egypt is a founding member, is the principal development partner in the republic’s energy sector under the Nexus of Water, Food, and Energy program, launched at COP27. This wind farm is one of the first projects within NWFE’s energy pillar, advancing progress toward the country’s 10-gigawatt renewable energy goal.
It plays a vital role in supporting Egypt’s efforts to decarbonize its fossil fuel-dependent power sector and achieve its ambitious renewable energy targets.
Since the EBRD began operations in Egypt in 2012, the bank has invested nearly €13.3 billion in 194 projects across the country. These investments span various sectors, including finance, transport, and agribusiness, as well as manufacturing, services, and infrastructure, with a particular emphasis on power, municipal water, and wastewater projects, according to the same source.
Last month, EBRD announced it was supporting the development and sustainability of Egypt’s renewable-energy sector by extending a $21.3 million loan to Red Sea Wind Energy.
The loan was established to fund the development and construction of a 150-megawatt expansion to the 500-megawatt wind farm currently being constructed in the same region.
UAE non-oil sectors push GDP growth to 4% in 2024: CBUAE
- Growth is projected to accelerate to 4.5% in 2025 and 5.5% in 2026
- Non-oil GDP growth is forecast to remain robust, expanding by 4.9% in 2024 and 5% in 2025
RIYADH: The UAE economy is expected to grow by 4 percent in 2024, driven by robust performance across key non-oil sectors, according to official projections.
The Central Bank of the UAE’s Quarterly Economic Review for December indicates that growth will be supported by sectors including tourism, transportation and financial services, as well as insurance, construction, real estate, and communications.
Looking ahead, growth is projected to accelerate to 4.5 percent in 2025 and 5.5 percent in 2026, as the country continues to benefit from economic diversification policies aimed at reducing its dependence on oil revenues.
Non-oil GDP growth is forecast to remain robust, expanding by 4.9 percent in 2024 and 5 percent in 2025.
The report attributed this growth to strategic government policies aimed at attracting foreign investment and promoting economic diversification.
In the second quarter, non-oil GDP grew by 4.8 percent year on year, compared to 4.0 percent in the first quarter, supported by manufacturing, trade, transportation and storage, and real estate activities.
In September, the CBUAE revised its GDP growth forecast for the year upward by 0.1 percentage points, citing expected improvements in the oil sector.
Initially projecting a 3.9 percent growth for 2024, the central bank adjusted the figure to 4 percent. In its second-quarter economic report, the CBUAE forecasted a growth rate of 6 percent for 2025.
The UAE’s 16 non-oil sectors continued their steady growth in the third quarter of the year, with wholesale and retail trade, manufacturing, and construction being key contributors.
The manufacturing sector has benefited from increased foreign direct investment, aligning with both federal and emirate-level strategies.
The first nine months of the year also saw strong performance in the construction sector, reflecting significant investment in infrastructure and development projects.
Non-oil trade exceeded 1.3 trillion dirhams ($353.9 billion) in the first half of the year, representing 134 percent of the country’s GDP, a 10.6 percent year-on-year increase.
This growth underscores the success of the UAE’s economic diversification agenda and its comprehensive economic partnership agreements with various countries, which have strengthened trade relationships and driven exports.
The UAE has set ambitious economic targets to diversify its economy and reduce dependence on oil revenues.
Under the We the UAE 2031 vision, the country aims to double its GDP from 1.49 trillion dirhams to 3 trillion dirhams, generate 800 billion dirhams in non-oil exports, and raise the value of foreign trade to 4 trillion dirhams.
Additionally, the UAE plans to increase the tourism sector’s contribution to GDP to 450 billion dirhams.
Oil production averaged 2.9 million barrels per day in the first 10 months of the year and is forecasted to grow by 1.3 percent for the year, with further acceleration to 2.9 percent in 2025.
The fiscal sector also performed strongly in the first half of the year, with government revenue rising 6.9 percent on a yearly basis to 263.9 billion dirhams, equivalent to 26.9 percent of GDP.
This increase was fueled by a significant 22.4 percent rise in tax revenues. Meanwhile, the fiscal surplus reached 65.7 billion dirhams, or 6.7 percent of GDP, marking a 38.8 percent increase from the 47.4 billion dirhams surplus, or 5.1 percent of GDP, recorded in the first half of 2023.
Government capital expenditure surged by 51.7 percent year on year to 11 billion dirhams, reflecting the UAE’s commitment to advancing large-scale infrastructure projects and enhancing the country’s economic and investment landscape.
In the private sector, economic activity remained robust, with the UAE’s Purchasing Managers’ Index reaching 54.1 in October this year, signaling continued optimism among businesses driven by sustained demand and sales growth.
Dubai’s PMI stood at 53.2 in October, closely aligning with the national average, indicating consistent growth in the emirate’s non-oil private sector.
Employment and wages also showed strong performance, with the number of employees covered by the CBUAE’s Wages Protection System rising by 4 percent year-on-year in September.
Average salaries increased by 7.2 percent yearly during the same period, reflecting strong domestic consumption and sustainable GDP growth.
Saudi Arabia, Iraq to propel digital cooperation amid top ministerial meeting
- Discussions focused on exploring new opportunities for joint investments in the field
- Two parties shed light on importance of integrating efforts to develop the digital environment, empower capabilities, and raise the level of collaborations
RIYADH: Digital partnerships between Saudi Arabia and Iraq are on track to prosper after a top ministerial meeting between the two countries.
Saudi Arabia’s Minister of Communications and Information Technology, Abdullah Al-Swaha, met with his Iraqi counterpart, Hayam Al-Yasiri, during her visit to Saudi Arabia. The discussions focused on exploring new opportunities for joint investments in the field, according to the Saudi Press Agency.
The meeting also tackled ways to further stimulate entrepreneurship that supports innovation and encourages the growth of the digital economy.
This falls in line with the Kingdom’s objective to position itself as a global leader in artificial intelligence and digital transformation under Vision 2030. Goals include increasing the digital economy’s gross domestic product contribution from 14 percent in 2022 to 19.2 percent by 2025, digitizing 92 percent of government services, and raising the information and communication technology sector’s GDP share to 4 percent.
It also aligns with Iraq’s ongoing efforts to develop a digital transformation strategy to support the private and public sectors and drive economic growth.
During the meeting, the two parties also shed light on the importance of integrating efforts to develop the digital environment, empower capabilities, and raise the level of collaborations in priority areas such as AI as well as infrastructure development.
Earlier this month, as officials convened in Riyadh during the 19th Internet Governance Forum, Saudi Arabia also explored partnership opportunities with Germany, Japan, and France in emerging technologies, AI, and digital infrastructure.
Held from Dec. 15 to 19 at the King Abdulaziz International Conference Center, the UN-organized forum assembled global leaders to endorse global digital cooperation and address emerging challenges related to Internet governance.
At the forum’s opening at the time, the Kingdom revealed the Riyadh Declaration, a commitment to developing inclusive and responsible AI technologies in an attempt to address global challenges and drive economic value.
In November, Saudi senior tech diplomat Deemah Al-Yahya, the secretary-general of the multilateral Digital Cooperation Organization, held talks with Iraq’s prime minister, Mohammed Shia’ Al-Sudani, about support for Baghdad’s plans to develop its digital business and AI sectors.
The two sides discussed Iraq’s digital transformation strategy and the need to create and develop a workforce with the tech skills required to help grow the Iraqi economy effectively, SPA said at the time.
