LONDON: Qatar pumped about $43 billion into banks last year after a boycott by some of its neighbors caused a drop in deposits, according to a top ratings agency.
The government and state-controlled companies injected the cash into the financial system after about $22 billion of deposits flowed out of the country between June and December, said Mohamed Damak, S&P’s senior director for financial services, Bloomberg reported.
Qatar is in a standoff with neighboring states, who accuse it of supporting terrorism. Doha denies that it supports terror groups.
The government intervened “quite strongly” to help banks and allow them to increase lending and finance government projects, Damak told Bloomberg.
He expects outflows from the Gulf countries involved in the standoff to continue this year and said the banks can withstand the withdrawals because they hold between 20 percent to 40 percent of their assets in liquid securities, the newswire reported.
Qatar propped up banks with $43bn lifeline following boycott, says ratings agency
Qatar propped up banks with $43bn lifeline following boycott, says ratings agency
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.
Aramco secures prime ratings for $10bn commercial paper program from Moody’s and Fitch
- Moody’s assigned a Prime-1 short-term issuer rating to the energy giant
- Fitch Ratings awarded an F1+ short-term rating
RIYADH: Saudi Aramco’s robust financial standing has been reaffirmed by Moody’s and Fitch, with the agencies assigning strong ratings to the energy giant’s newly established $10 billion US Commercial Paper Program.
Moody’s assigned a Prime-1 short-term issuer rating to the energy giant and reaffirmed its Aa3 long-term issuer rating with a stable outlook, reflecting the company’s ability to meet financial obligations.
Meanwhile, Fitch Ratings awarded an F1+ short-term rating, highlighting Aramco’s strong intrinsic capacity for timely payments and financial resilience.
Aramco has established a $10 billion US Commercial Paper Program to issue notes with maturities of up to 270 days.
Commercial paper is an unsecured, short-term debt instrument issued by corporations, typically used to cover receivables or meet short-term financial obligations, such as funding new projects.
“Aramco has excellent liquidity. Its consolidated cash balance and operational cash flow are more than sufficient to meet the group’s debt maturities, investment commitments and dividends over the next 12 to 18 months,” said Moody’s.
As of Sept. 30, the company had $69 billion of cash and cash equivalents.
The credit rating agency also projected that Aramco is expected to generate $180 billion in funds from operations through March 2026, sufficient to cover $16 billion in debt maturities, $85 billion in capital spending, and $140 billion in dividends over the same period.
The report also noted that the energy company maintains undrawn $10 billion multi-tranche revolving credit facilities, set to expire in April 2029.
Fitch echoed similar confidence, noting that Aramco’s financial profile is bolstered by its conservative financial policies, low production costs, and strong pre-dividend free cash flow.
“Its business profile is characterized by large-scale production, vast reserves, low production costs and expansion into downstream and petrochemicals,” said Fitch Ratings.
It added: “We expect state support to be forthcoming, although historically the company’s robust financial position has not necessitated government support. Saudi Arabia has provided support to other government-related entities in the past.”
Assigning an Aa3 baseline credit assessment rating to Aramco, Moody’s stated that the positive rating reflects the company’s proven track record in executing large-scale projects, significant downstream integration, conservative financial policy, and strong financial flexibility, supported by its low production costs.
“These characteristics provide resilience through oil price cycles and also help balance carbon transition risk, which is a material credit consideration for oil and gas companies,” added Moody’s.
Both agencies emphasized the strong link between Aramco’s ratings and those of the Saudi government.
Moody’s highlighted that Aramco’s Aa3 rating reflects the Kingdom’s solid credit standing, recently upgraded to Aa3 by Moody’s in November. The agency added that any changes in the sovereign rating would directly impact Aramco’s ratings.
Moody’s gives Aa3 ratings to countries which have a very low credit risk and hold the best ability to repay short-term debt.
“An upgrade of the sovereign rating would likely lead to an upgrade of Aramco’s rating if it maintains prudent financial policies and robust credit metrics. Negative pressure on the sovereign rating will lead to negative pressure on Aramco’s rating,” said Moody’s in the latest report.
Similarly, Fitch noted that Saudi Arabia’s A+ sovereign rating, affirmed in February, underscores the Kingdom’s strong capacity for financial commitments and its ability to provide support to Aramco if needed.
Both agencies acknowledged Aramco’s capacity to adapt to market conditions, particularly its ability to adjust dividend commitments in response to oil price fluctuations. In 2024, Aramco delivered a base dividend of $81.2 billion, supported by its strong operating cash flow.
