KUWAIT CITY: Kuwait’s parliament Thursday passed the budget for the 2017/18 fiscal year, projecting a deficit for the third year in a row due to a slump in oil prices.
The deficit is projected to be $21.6 billion (19.3 billion euros), with revenues estimated at $43.6 billion and expenditure at $65.2 billion.
Oil income, calculated at $45 a barrel, is projected at $38.4 billion, up 36 percent from the estimated last year’s budget.
Finance Minister Anas Al-Saleh told parliament that provisional figures showed an actual shortfall of $21.3 billion in the 2016/17 fiscal year, which runs from April 1 to March 31 in Kuwait.
The OPEC member posted healthy surpluses for 16 fiscal years in a row before posting a deficit in the 2014/15 fiscal year.
Saleh said Kuwait had faced “extremely difficult challenges” in the past three years in particular, as crude prices plummeted due to a production glut.
Kuwait’s government had financed the shortfall through state reserves, which are estimated at about $600 billion, and through bond issues, Saleh said.
The government has issued domestic bonds worth $7.2 billion and international bonds worth $8 billion, according to the minister.
Despite the sharp slide in oil prices since 2014, oil income is still projected to constitute 88 percent of Kuwait’s total revenues.
Lawmakers have criticized the government’s failure to diversify income sources in Kuwait, where the budget still relies heavily on oil.
As part of efforts to reduce the deficit, the emirate in September raised petrol prices and plans to increase electricity and water charges.
Kuwait parliament passes deficit budget
Kuwait parliament passes deficit budget
Oil Updates — prices decline amid rising US crude inventories, Sino-US tariff war
SINGAPORE: Oil prices slid on Wednesday as rising stockpiles in the US and market worries about a new Sino-US trade war offset President Donald Trump’s renewed push to eliminate Iranian crude exports.
Brent crude futures were down 39 cents, or 0.51 percent, at $75.81 a barrel by 7:27 a.m. Saudi time. US West Texas Intermediate crude (WTI) lost 26 cents, or 0.36 percent, to $72.44.
Oil on Tuesday traded in a wide range, with WTI falling at one point by 3 percent, its lowest since Dec. 31, after China announced tariffs on US imports of oil, liquefied natural gas and coal in retaliation to US levies on Chinese exports.
Prices rebounded, however, after Trump restored the “maximum pressure” campaign on Iran to curtail its nuclear program he enacted in his first term that cut Iranian crude exports to zero.
Weighing down the market on Wednesday was the higher-than-expected US crude inventories data overnight, said Jun Rong Yeap, a market strategist at IG.
Crude stocks rose by 5.03 million barrels in the week ended Jan. 31, according to market sources, citing American Petroleum Institute figures.
Gasoline inventories rose by 5.43 million barrels, and distillate stocks fell by 6.98 million barrels, the API reported, according to the sources.
Official US government oil inventory data is due to be released at 6:30 p.m. Saudi time on Wednesday.
Rising crude and fuel stockpiles in the world’s biggest oil consumer signal consumption weakness, adding to investor worries about the impact of tarrifs on the global economic and energy demand outlooks.
The impact of China’s retaliatory tariffs on US energy imports will be limited “given that neither global supply nor demand of these commodities are changed by China’s tariffs,” analysts at Goldman Sachs said in a note on Tuesday.
Both countries will be able to find alternative markets, the note said.
As for Iran, Trump on Tuesday restored his “maximum pressure” campaign on Iran that includes efforts to drive its oil exports down to zero in order to stop Tehran from obtaining a nuclear weapon.
While Trump said he was open to a deal with Iran, he signed a presidential memorandum re-imposing Washington’s tough policy on Iran. The plan could impact about 1.5 million barrels per day of oil that the country exports, analysts at ANZ said on Wednesday, citing shiptracking data.
“The clampdown on Iran may be what is needed to stabilize bearish sentiments for oil prices for now and there may room for further recovery, at least in the near term,” said IG’s Yeap.
Saudi Arabia’s Debt Capital Market set to reach $500bn by end of 2025: Fitch Ratings
RIYADH: Saudi Arabia’s Debt Capital Market is expected to hit $500 billion by the end of 2025, fueled by the Kingdom's economic diversification efforts under Vision 2030, according to Fitch Ratings.
In its latest report, Fitch highlighted several factors contributing to this growth, including the government’s need for deficit funding, maturing obligations, and continued reforms.
The DCM, which involves the trading of securities like bonds and promissory notes, serves as a key mechanism for raising long-term capital for both businesses and governments.
Fitch also noted that the DCM in the Gulf Cooperation Council region had surpassed the $1 trillion mark by November 2024, bolstered by strong oil revenues. The agency predicts continued growth, with the GCC region expected to remain one of the largest emerging-market issuers of dollar-denominated debt through 2025.
“Saudi Arabia’s sukuk market maintains a strong credit profile, with 97.4 percent of Fitch-rated Saudi sukuk rated investment-grade and 98 percent of issuers holding a stable outlook. Notably, no Fitch-rated Saudi sukuk or bonds defaulted in 2024,” said Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings.
He added: “2025 has started strong, with a growing pipeline of issuances. We expect the market to surpass $500 billion by year end, driven by Vision 2030 initiatives, robust government support, and favorable funding conditions.”
Fitch’s analysis further said that Saudi Arabia became the largest dollar-denominated debt issuer in emerging markets (outside of China) and the world’s largest sukuk issuer in 2024. The Kingdom’s DCM grew by 20 percent year on year in 2024, reaching $432.5 billion in outstanding debt.
The report also emphasized the increasing importance of environmental, social, and governance debt in the region, with $18.6 billion in outstanding ESG-related bonds in 2024.
Saudi banks have significantly expanded their international DCM activities since 2020, aligning with their growth strategies and foreign-currency requirements. Additionally, corporates are diversifying their funding sources, moving beyond traditional bank loans, according to Fitch.
In another report, Fitch projected that global ESG sukuk issuances will exceed $50 billion in outstanding debt by 2025, driven by major Islamic finance markets like Saudi Arabia and Indonesia. The agency noted a 23 percent year-on-year growth in global ESG sukuk, which reached $45.2 billion in 2024, outpacing the 16 percent growth in global ESG bonds.
Saudi Cabinet approves cooperation agreement with WEF to secure minerals for development
RIYADH: Saudi Arabia’s Cabinet has authorized the Ministry of Industry and Mineral Resources to sign a cooperation agreement with the World Economic Forum to secure critical materials for global development.
According to the Saudi Press Agency, the Cabinet — chaired by Crown Prince Mohammed bin Salman — gave the green light for the deal among a host of decisions.
Strengthening the mining sector is a crucial goal outlined in the Kingdom’s Vision 2030 agenda, as the nation is steadily spearheading its economic diversification journey by reducing its reliance on crude revenues.
Speaking at the Future Minerals Forum in Riyadh in January, Alkhorayef said that Saudi Arabia seeks to promote exploration opportunities across 5,000 sq. km of mineralized belts in 2025, aligned with the Kingdom’s plans to establish mining as the third pillar of its industrial economy.
At that time, the minister added that Saudi Arabia’s mining sector is the fastest growing globally, with the country holding an estimated mineral potential worth $2.5 trillion.
New International Retail Council launched in Riyadh
RIYADH: An International Retail Council designed to unite top experts, decision-makers, and industry stakeholders has been launched at an industry event in Riyadh.
Announced at the Retail Leaders Circle Global Forum, event chairman Panos Linardos said the new body will tackle upcoming challenges and opportunities facing the sector across the globe.
This year’s gathering, taking place from Feb. 4 to 5, comes as the Kingdom’s retail sector continues to show strong resilience and sustained growth, with total sales reaching SR37.4 billion ($9.97 billion) in the third quarter of 2024, despite ongoing global economic uncertainties.
Retail sales in the Kingdom are forecast to reach $161.4 billion by 2028, according to data platform Statista, while the e-commerce sector is projected to surpass $13.2 billion by 2025.
Setting out the importance of the new council, Linardos said: “The IRC is not just another industry initiative — it is a forward-thinking response to an evolving global landscape.”
He added: “Retail is more interconnected than ever, yet faces growing complexity in regulation, technology, and consumer behavior. The IRC will unite leaders, visionaries, and experts to facilitate global dialogue, drive innovation, and shape policies that will define the industry’s next era.”
During his speech, the chairman highlighted that the IRC will initially focus on four key pillars shaping the future of commerce: luxury goods, retail real estate, cross-border trade, and grocery businesses.
Linardos also shed light on how geopolitical changes, economic volatility, supply chain challenges, and the rapid growth of artificial intelligence, as well as digital commerce, are transforming the retail industry at an unprecedented rate.
“The rules of global trade are being rewritten, cross-border commerce is evolving, and consumer expectations are shifting faster than ever before. In this moment of transformation, the need for collaborative leadership, innovation, and a strategic vision for the future of retail has never been greater,” he said.
The chairman added that the discussions at the forum will reflect shared goals and help lay the groundwork for actionable solutions.
Held under the theme “Rebuilding a Shared Future,” the event commenced with the “Business Outlook: Navigating A New Global Order” session.
It explored how geopolitical tensions, economic instability, and fast-paced technological advancements are affecting global commerce, with international business leaders sharing strategies to turn volatility into opportunity while fostering resilience and innovation.
Another session titled “A New Leadership Order: Building Growth in Turbulent Times” followed, highlighting the importance of leadership in overcoming economic challenges, boosting productivity, and promoting sustainable growth.
Industry experts shared strategies during the session for navigating complex business environments and using strategic adaptability to succeed in a constantly changing marketplace.
Discussions also centered on the transformative impact of social commerce, which is changing how consumers shop, engage with brands, and interact online.
With e-commerce in the Middle East expected to reach $57 billion by 2026, the importance of marketplaces in meeting shifting consumer expectations is crucial.
Chief Content Officer at EMARKETER Zia Daniell Wigder presented a report created in collaboration with the RLC Global Forum which offered a data-driven roadmap for the future of e-commerce in the Gulf Cooperation Council, providing valuable insights into consumer trends, market dynamics, and opportunities for sustainable growth in the region.
AI was another key focus of the day, with several sessions exploring its transformative impact on the retail sector.
Industry leaders discussed how the technology is being leveraged to enhance personalization, optimize supply chains, and improve operational efficiencies at scale.
According to a new report released by Knight Frank, Riyadh and Jeddah are driving a major transformation in Saudi Arabia’s lifestyle retail sector, reshaping the retail scene with 394,900 sq. meters of upcoming developments, all scheduled for completion by 2027.
The report further disclosed that the planned developments include food and beverage outlets, entertainment options, and lively public spaces.
Both major Saudi cities currently provide 670,500 sq. meters of lifestyle retail space, reflecting a 12 percent surge over the past year.
In Riyadh, the average lease rate for retail spaces is SR2,360 per sq. meter, with a 96 percent occupancy rate, while in Jeddah, lease rates average SR2,030 per sq. meter, with an occupancy rate of 70 percent.
E-commerce share in Saudi Arabia’s retail sector to hit 46% by 2030: Visa official
RIYADH: Saudi Arabia’s consumer retail spending is projected to experience significant growth in the coming years, with e-commerce expected to account for 46 percent of the overall retail sector by 2030, according to a Visa executive.
Speaking to Arab News at the Retail Leaders Circle in Riyadh on Feb. 4, Ali Bailoun, regional general manager of Visa, highlighted that Saudi Arabia currently represents 44 percent of the total retail spending in the Gulf Cooperation Council region.
Bailoun’s remarks reflect Saudi Arabia’s ongoing shift toward a more diversified, digitally-driven economy, where e-commerce plays a pivotal role.
E-commerce in Saudi Arabia
Earlier this month, data from the Ministry of Commerce revealed that Saudi Arabia’s e-commerce sector continues to show strong growth. As of the fourth quarter of 2024, the Kingdom now has 40,953 registered e-commerce businesses, marking a 10 percent year-on-year increase.
“In line with Vision 2030, we see Saudi growing or doubling the payment volume by 2030. Even if you look at e-commerce, we expect e-commerce to grow to 46 percent by 2030. So, we see growth and we see potential. And you can see this on the ground,” said Bailoun.
He added: “Today, you can go anywhere in Saudi Arabia, and you can use your card and make any payments in any retail shop.”
Bailoun noted that e-commerce in Saudi Arabia currently accounts for 29 percent of all consumer retail payments in 2024, and is projected to rise to 46 percent by the end of this decade.
He also highlighted that cross-border transactions represent 15 percent of consumer retail payments in Saudi Arabia for 2024.
Supporting these insights, a September 2024 report from Saudi Arabia’s Small and Medium Enterprises Authority indicated that the Kingdom’s retail sector is poised to double between 2020 and 2025, with an annual compound growth rate of 15 percent.
Furthermore, a December report from Statista projected that credit card penetration in Saudi Arabia will reach 46.83 percent, continuing a trend of growth observed over the past 15 years.
Technological advancements
Bailoun suggested that data should be used wisely by retailers to enhance the growth of cross-border business.
“My recommendation always to retailers is data. You need to find a way to collect and optimize your data and then customize these solutions,” said Bailoun.
He added: “You need to work with data, not only yourself. You need to look at the market. You need to look at the region and start building up on the data you have to customize the solutions or build up these solutions.”
The Visa official further said that the implementation of advanced technologies like Artificial Intelligence is also crucial to elevate the growth of both physical and e-commerce retail sectors.
“Today when you look at social media, sometimes you like something and you read more about it. Then it becomes it pops up in different areas. It is all AI,” he said.
A recent report by market research firm IMARC echoed similar sentiments, emphasizing the growing role of technology in shaping the e-commerce retail sector.
According to the report, the increasing use of data analytics and AI algorithms to personalize shopping experiences is a key driver of the market. “The expanding use of data to recommend products based on a user’s browsing and purchase history is making it easier for customers to discover items they may be interested in,” the report stated.
IMARC also highlighted that Saudi Arabia’s e-commerce market was valued at $22.9 billion in 2024, with projections indicating it will reach $708.7 billion by 2033, reflecting a compound annual growth rate of 12.8 percent.
Visa’s Saudi operations
He also talked about Visa’s close cooperation with STC Bank, which recently received a non-objection certificate from the Saudi Central Bank to commence its banking operations in the Kingdom.
“We are a payment technology network. We work and we enable all players in the ecosystem; be it a traditional bank, digital bank, a wallet, a merchant, or maybe a telco provider. We work and we operate and enable the whole ecosystem,” said Bailoun.
He added: “STC was a wallet. They’ve converted to become a digital bank. We’ve been working with them when they were a wallet, we will continue working with them when they become a bank again. We enable them to do payment credentials, which means they can issue a card under the Visa brand, and they go and do payments anywhere and everywhere in the world.”
Calling Saudi Arabia one of the strategic markets of Visa, Bailoun also outlined some of the major initiatives taken by the payment card services company in the Kingdom.
In October 2024, Visa opened its fifth innovation center globally in Riyadh in the King Abdullah Financial District.
“Today, if you have a problem statement. If you have anything you want to solve or cater for, we sit down together with many partners, we co-create and come up with a solution in that innovation center,” said Bailoun.
He added: “In addition, we have some best practices and some experiences that we’ve taken from around the world; be it on the gaming, on AI or gen AI. We have something on urbanization. In the innovation center, we have also added something that will cater for the new cities the likes of Neom, the likes of Qiddiyah.”
Bailoun also detailed Visa’s major partnerships in the Kingdom with retailers including Cenomi Retail and Marriot Bonvoy.
“With Cenomi, we have signed a deal to work on two parts; the loyalty platform and we have also worked on something called co-brand. So, Cenomi will have a co-brand credit card. The more you spend on their card, the more loyalty you get, and then you can redeem within the group,” said the Visa official.
He added: “Marriott Bonvoy is a group of hotels. It’s a loyalty platform, one of the big platforms globally. The card is issued in partnership with Visa and Bonvoy. So, the more you spend, the more you will get points to redeem in Bonvoy hotels.”
