COLOMBO: Sri Lanka has ordered a corruption investigation at its national carrier, including the controversial termination of a management deal with Emirates airline, the government said Saturday.
President Maithripala Sirisena has appointed a five-member panel to investigate the financial transactions of Sri Lankan airlines from 2006 to 2008, when the deal with Emirates was ended, a statement from his office said.
Sri Lankan, founded in 1979 as Air Lanka, was profitable until the government of strongman president Mahinda Rajapaksa, who ran the country from 2005 to 2015, kicked out the Emirates management team.
The deal was canceled in 2008 after Emirates refused to bump fare-paying business class passengers to give the seats to Rajapaksa’s family, who were returning to Colombo from London.
A furious Rajapaksa removed the Emirates-appointed CEO of Sri Lankan from his post and put his brother-in-law, who had no aviation industry experience, in charge of the airline.
Since then, Sri Lankan airlines has sunk into the red, with an estimated loss of more than a billion dollars and debts of $3.2 billion.
Sirisena’s office said he ordered the five-member panel to focus on the “termination of agreements between Sri Lankan airlines and Emirates, including reasons and ramifications thereof.”
Emirates paid $70 million to buy a 43.6 percent stake in Sri Lanka’s national carrier when it was privatised in 1998 and had a contract to fully manage the airline till it was forced to leave.
Emirates’ share of the company was eventually bought by the Sri Lankan government.
A criminal investigation is already underway into the airline’s purchase of new Airbus aircraft at a cost of over two billion dollars during Rajapaksa’s decade in power.
The mounting debt crisis at Sri Lankan airlines has forced the new government to seek international partners to inject capital and manage the airline, but there have been no takers so far.
The move comes amid allegations that Sri Lanka’s new government, which came to power January 2015, has been slow to crack down on corruption under Rajapaksa.
The government last week set up special courts to investigate charges of corruption amounting to billions of dollars under the former regime.
Sri Lanka probes corruption at national carrier
Sri Lanka probes corruption at national carrier
Saudi-South African Business Forum sees $25m credit agreement signed to help exporters
RIYADH: A $25 million credit agreement involving the Saudi Export-Import Bank and a major South African financial institution was among the deals struck at a special business forum in Johannesburg.
The arrangement with Standard Bank Group will see companies in the Kingdom given extra funding support to trade with the African country.
The deal was signed during the Saudi-South African Business Forum, which saw 420 business leaders and officials discuss how to boost economic ties between the nations – with an emphasis on the mining sector, the Saudi Press Agency reported.
Bloomberg cited Naif Al-Shammari, Saudi EXIM’s deputy chief executive officer, as saying that the agreement with Standard Bank Group will bolster trade links between the two countries.
Another memorandum of cooperation was signed between the Saudi Export Development Authority and Skytower Development Co.
Commerce between Saudi Arabia and South Africa was estimated at about $3.5 billion in 2023.
The high-level Saudi delegation attending the forum was led by the Minister of Commerce and Chairman of the National Competitiveness Center, Majid bin Abdullah Al-Qasabi, and was organized by the NCC in collaboration with the Federation of Saudi Chambers and the South African Ministry of Trade and Industry, according to SPA.
One panel at the event addressed cooperation in the mining sector, while the another discussed expanding the economic partnership between the Kingdom and South Africa in light of promising opportunities.
It also introduced the mechanisms used by relevant authorities to resolve challenges facing the business sector.
The forum also falls in line with the Kingdom’s commitment to strengthening its trade and economic relations with the African continent, which was announced by the Crown Prince and Prime Minister of Saudi Arabia at the Saudi-African Summit held in Riyadh last November.
Egypt’s external debt drops to $152.9bn by end of June
- Long-term external debt decrease to $126.9 billion by the end of June
- External debt decreased to $80.2 billion from $84.8 billion in December
RIYADH: Egypt’s external debt decreased to $152.9 billion by the end of June, a significant reduction from $160.6 billion at the end of March and $168 billion at the close of December 2023, official data showed.
The country, which has a fiscal year running from July 1 to June 30, saw long-term external debt decrease to $126.9 billion by the end of June, down from $138.6 billion the previous year. Short-term debt also dropped to $26.02 billion, compared to $29.5 billion before, according to the Central Bank of Egypt.
The Egyptian government’s external debt decreased to $80.2 billion from $84.8 billion in December. The CBE’s own debt also saw a significant reduction, falling to $34.67 billion from $45.3 billion at the end of 2023. However, debt owed by Egyptian banks rose slightly to $20.67 billion by the end of June, up from $20.1 billion at the close of last year.
The overall decline in external debt highlights the Egyptian government’s ongoing efforts to manage its financial obligations amid a challenging global economic environment.
The country’s economic challenges, including inflation and fiscal deficits, have necessitated a careful balance between managing external obligations and sustaining growth.
The reduction in overall external debt is viewed as a positive signal to international markets and may bolster future creditworthiness, particularly as Egypt seeks international assistance and investment.
Saudi Arabia’s global pension index score rises amid ongoing reforms: Mercer
RIYADH: Saudi Arabia’s Global Pension Index score improved to 60.5 in 2024, up from 59.5 last year, driven by ongoing reforms, a new analysis showed.
According to the latest Mercer CFA Institute Global Pension Index, the Kingdom’s pension system rating upgraded to C+ from C, placing it alongside the US, the UAE, and Spain.
The index defines C+ as a system with good features but significant risks that need addressing.
Saudi Arabia’s retirement system includes an earnings-based pension and lump-sum award – while those who do not qualify for monthly payouts receive just the one-off benefit.
In July, the Kingdom raised the retirement age from 60 to 65 for both public and private sector employees, as part of a key Vision 2030 reform aimed at ensuring sustainability and improving retirees’ living conditions.
The reform also raised the required contribution period for early retirement from 25 to 30 years, a move aimed at encouraging longer workforce participation, thereby reducing the financial strain on the pension system.
Tarek Lofty, president of Mercer in India, the Middle East and Africa, said: “Saudi Arabia continues to make steady progress in reforming and enhancing its pension system and stands to benefit as more private pension options are provided to complement existing retirement programs.”
He added: “As these reforms are rolled-out, they will provide an important tool to retain talent in the Kingdom’s buoyant job market and support the wider aims of the Vision 2030 strategy by contributing to the financial well-being of its citizens.”
Saudi Arabia held its position at 28th in the index, which compares 48 pension systems globally. Its sustainability score rose to 58 from 54.9, driven by factors like increased female workforce participation, updated demographic data, and clarity on retirement arrangements.
The Kingdom ranked 20th in the sustainability sub-index but was lower in adequacy at 32nd and integrity at 42nd. Mercer highlighted that the Kingdom could improve its score by increasing support for low-income retirees and boosting labor participation among older workers.
Mercer’s ranking analyzes factors such as system design, government support, and home ownership to calculate scores in the adequacy sub-index, while the sustainability index considers elements like pension coverage, government debt, and economic growth.
The integrity sub-index evaluates regulation, governance, protection, along with communication and operating costs.
“With a youthful population and increasing labor force participation, Saudi Arabia is in an ideal position to observe the challenges that many of its global peers are facing and guide the development of its pension system accordingly,” said Claudia Maldonado, head of savings and pensions at Mercer Middle East.
Mercer also outlined several measures the Kingdom could implement to improve its overall index score, including increasing the minimum support provided to low-income seniors and raising the labor force participation rate among older individuals as life expectancies rise.
The report further noted that enhancing communication with members regarding private pension arrangements could also play a crucial role in boosting the Kingdom’s overall index score in the coming years.
A report released by the World Bank in July also lauded Saudi Arabia’s pension reforms and called it a groundbreaking development for the Middle East and North Africa region.
The international financial institution added that achieving a robust system also requires further measures including diversifying pension funds, designing adjustment mechanisms, and enhancing private savings options.
“These measures can offer greater flexibility and security, addressing the diverse needs of the population. By adopting a holistic approach that balances fiscal sustainability with social equity, countries can better protect against economic, demographic, and political risks,” said the World Bank’s blog.
It added: “Such initiatives set a precedent for forward-thinking policies that other nations can follow to enhance their social security frameworks, and Saudi Arabia, with its most recent reform, sets a great example for the rest of the region.”
Emerging trends
The Mercer report revealed that most retirement systems worldwide are increasingly moving away from defined benefit plans and shifting toward defined contribution arrangements.
“The ongoing shift to defined contribution pension plans introduces many financial planning challenges, which are falling squarely on the shoulders of tomorrow’s retirees,” said Margaret Franklin, president and CEO of CFA Institute.
She added: “DC plans require individuals to make complex financial planning decisions that may significantly impact their financial circumstances, and yet many individuals are not well prepared to manage the required decisions.”
Despite these challenges, the report noted that as people live longer, the increased flexibility and personalization offered by DC programs will be critical.
Mercer also highlighted that the concept of retirement is evolving, with many individuals gradually transitioning into retirement or rejoining the workforce in different capacities after their initial retirement.
The report pointed out that these plans also offer essential benefits to gig and contract workers, who are often excluded from traditional DB schemes.
“Significant retirement income system reforms are needed to meet the financial needs of retirees and their evolving work expectations. There is no single solution to getting retirement systems onto more solid ground,” said David Knox, lead author of the study and senior partner at Mercer.
He added: “Now is the time for governments, policymakers, the pension industry and employers to work together to ensure that older populations are treated with dignity and can maintain a lifestyle similar to what they experienced through their working years.”
The analysis noted that increasing longevity, high interest rates, and rising costs of care have placed additional pressure on government budgets to support pension programs, leading to slightly lower overall scores this year.
Global outlook
According to Mercer, the Netherlands retained the top spot in the index with an overall score of 84.8 and a grade of A, followed by Iceland and Denmark in second and third place, with scores of 83.4 and 81.6, respectively.
“The Netherlands’ pension system has continued to be the best system, as it moves from a DB structure to a more individual DC approach. The system also features strong regulations and offers participants guidance regarding their pensions,” said Mercer.
Israel secured the fourth position, while Singapore, Australia, and Finland ranked fifth, sixth, and seventh, respectively.
Norway placed eighth, followed by Chile in ninth and Sweden in tenth.
China ranked 31st on the list, while India and Japan were positioned at 48th and 36th, respectively.
IsDB to finance $3bn in 20 socio-economic projects across 17 countries
- Initiatives target key sectors such as agriculture, water resources, and energy, as well as health care and infrastructure
RIYADH: The Islamic Development Bank is set to finance over $3 billion for 20 socio-economic development projects across 17 member nations, following its 357th board meeting chaired by President Muhammad Al-Jasser.
These initiatives target key sectors such as agriculture, water resources, and energy, as well as health care and infrastructure to strengthen resilience and promote sustainable growth.
In Kazakhstan, $1.15 billion will support water resources development, improving agricultural output and ensuring food and water security.
Jordan has been allocated $200.3 million to bolster food security by expanding strategic reserves.
Kyrgyzstan will receive $45.11 million for agricultural mechanization to aid smallholder farmers, along with an additional $58.25 million to enhance energy infrastructure in the Issyk-Kul region.
Senegal is set to receive €65.1 million ($70.96 million) to accelerate agricultural industrialization.
Togo has been granted €55.23 million to foster income-generating activities and improve the livelihoods of vulnerable populations.
Azerbaijan has been allocated $96.73 million for water resource management to support agriculture and food security, and the Maldives has been allotted $64.65 million to expand its fishing industry.
Morocco was allocated €441.82 million for a hydropower project to meet peak demand with renewable energy.
Gambia will receive $40 million to improve its transport sector, and Sierra Leone has been assigned €70.32 million to enhance infrastructure through soil stabilization technology.
Comoros will benefit from $15 million to improve maritime connectivity and safety. Uzbekistan will acquire $138.8 million to expand a key road, improving traffic flow and safety, while Cameroon has been awarded $176.3 million to upgrade its transport infrastructure.
In Turkiye, €246.4 million will support the Eastern Turkiye Middle Corridor Railway Project, with an extra $100 million allocated to post-earthquake recovery efforts to enhance productivity.
Pakistan will receive $118.4 million to reduce poverty and improve food security in vulnerable communities.
Mozambique has been allocated $19.8 million to strengthen health care access, while Cote d’Ivoire has been granted €260 million ($278.2 million) to support highway construction for regional integration and agriculture.
Al-Jasser said that these initiatives align with the IsDB’s goal of fostering sustainable economic growth, enhancing infrastructure, and integrating regional economies.
The bank also approved a $10 million grant in collaboration with the World Health Organization to support global health care initiatives.
The projects reflect IsDB’s commitment to inclusive development, aimed at strengthening resource management and promoting shared prosperity across member countries.
Global public debt expected to exceed $100tn this year: IMF
- Global public debt to hit 93% of global GDP this year, and to approach 100% of GDP by 2030
WASHINGTON: Global public debt is expected to reach a record $100 trillion this year, the IMF said Tuesday, warning that the fiscal outlook for many countries may be even “worse than expected.”
In its latest report on fiscal policy, the International Monetary Fund said it expects global public debt to hit 93 percent of global gross domestic product (GDP) this year, and to approach 100 percent of GDP by 2030 — 10 percentage points higher than in 2019, before the Covid-19 pandemic hit.
“Global public debt is very high,” Era Dabla-Norris, the deputy director of the IMF’s Fiscal Affairs Department, told reporters ahead of the report’s publication.
“There are very good reasons to believe that the debt burden — or the debt outlook — could be worse than expected,” she said, pointing to current spending pressures to address issues like climate change, overly-optimistic debt projections, and the possibility of large amounts of unidentified debt.
“So the bottom line is that it’s time for countries to get their fiscal house in order,” she said.
The IMF report introduced a new “debt-at-risk” approach to assessing the risks to debt projections.
It estimated that, in a worst-case scenario, global public debt could hit 115 percent of GDP by 2026 — almost 20 percentage points higher than the Fund’s baseline estimate.
The report found that “global factors increasingly drive the fluctuations in government borrowing costs across countries,” suggesting that elevated levels of debt in key countries could “increase the volatility of sovereign yields and debt risks” for others.
Moderating inflation and interest rate cuts in many economies meant now was an “opportune” time for countries to rebuild their fiscal buffers, the IMF said, adding that they were “better placed” than before to absorb the effect of fiscal tightening.
The size of the fiscal adjustment needed to bring global public debt back under control was between 3.0 and 4.5 percent of GDP, on average, the IMF said — almost twice the size of past adjustments.
