DUBAI: Pakistan’s relationship with Saudi Arabia and the UAE is “extremely important” for the region, Pakistan’s top military spokesman said on Thursday.
Pakistan has a history of “wonderful relationships” with the two Gulf states, Maj. Gen. Asif Ghafoor, director general of Inter Services Public Relations (ISPR), said on a visit to the Arab News Dubai bureau.
“This cooperation is increasing with every passing day, and we believe this cooperation is in the interest of not only Pakistan, but also the region,” he said.
Saudi Arabia and the UAE played an essential part in assisting Pakistan in the fight against terrorism, Gen. Ghafoor said.
In conflict areas where Pakistani forces had cleared out terrorists, development work had been “assisted phenomenally” by the UAE and Saudi Arabia, specifically in the field of social welfare, including hospitals and water supply schemes, he said.
On Pakistan’s continuing disputes with Afghanistan, Gen. Ghafoor said the Pakistani army had cleared areas that had been under terrorist influence on the Pakistan side of the border, but militants still controlled areas on the Afghan side “due to the lack of capacity of the Afghan forces, and now with the reduced footprint of the international forces.”
“So the issue now resides inside Afghanistan, where the threat is still unchecked,” he said.
Gen. Ghafoor also welcomed the new Arab News online Pakistan edition, launched this month, which he hoped would contribute to positive journalism.
“It’s a great pleasure to visit the Arab News setup here in Dubai and we are even more pleased to have the Arab News bureau in Islamabad,” he said.
Pakistan military spokesman hails Saudi, UAE role in fighting terror
Pakistan military spokesman hails Saudi, UAE role in fighting terror
French FM in Damascus calls for ‘sovereign, stable and peaceful’ Syria
- France’s Foreign Minister Jean-Noel Barrot expressed his hope on Friday for a “sovereign, stable and peaceful” Syria as he visited Damascus for talks on behalf of the European Union
DAMASCUS: France’s Foreign Minister Jean-Noel Barrot expressed his hope on Friday for a “sovereign, stable and peaceful” Syria as he visited Damascus for talks on behalf of the European Union.
“This hope is real” but also “fragile,” Barrot told journalists at the French embassy in Damascus on his first visit to Syria since longtime ruler Bashar Assad was toppled.
Saudi banks’ money supply hits $786bn, time and savings deposits share at 15-year high
RIYADH: Saudi banks money supply reached SR2.95 trillion ($785.51 billion) in November, marking a 10.3 percent rise compared to the same month last year, according to official data.
Figures released by the Saudi Central Bank, also known as SAMA, revealed that time and savings deposits have reached their highest percentage share of the money supply in over 15 years, accounting for 33.61 percent or SR989.99 billion.
These deposits also recorded the fastest growth rate among all components of the money supply, increasing by 18.10 percent.
Demand deposits accounted for the largest share at 48.76 percent, a slight decline from their 50 percent share a year earlier, though they grew by 7.69 percent during this period. The remaining components collectively made up 17.63 percent of the total money supply.
Edmond Christou, senior industry analyst at Bloomberg Intelligence told Arab News, “Local lenders’ role in financing projects requires more cash, underpinning the likes of Saudi Fransi, ANB, Rajhi and SNB issuing euro-denominated medium-term notes.”
He added: “Saudi central bank putting state funds on time deposits helped bank cash flow, along with open market operations and $31 billion of debt sales since 2022 or $25 billion excluding SNB’s CDS.”
According to the analyst, this surge in term deposits is a development driven by tighter liquidity conditions and elevated interest rates. The rise reflects strategic measures by local banks to navigate strong loan demand while attracting funds to stabilize their balance sheets.
Recent data from SAMA revealed that deposit growth is slightly behind loan issuance, putting some pressure on liquidity. Loans grew 13.33 percent year-on-year in November, outpacing the 10.52 percent increase in deposits. This imbalance has pushed banks to compete for depositors by offering attractive returns on term deposits.
Saudi Arabia has been driving substantial government projects to support its Vision 2030 ambitions, with a heavy emphasis on construction activity to transform its infrastructure, tourism, and overall economic landscape.
These projects, ranging from mega cities like NEOM to significant infrastructure developments, require vast amounts of funding, and banks have played a crucial role in financing them. To support these large-scale endeavors, the demand for credit has surged.
Interest rates in Saudi Arabia also reached elevated levels, partly due to the riyal’s peg to the US dollar, which has been influenced by the Federal Reserve’s tightening monetary policy aimed at combating inflation.
This led to a peak in interest rates, which climbed to as high as 6 percent. However, as inflation levels have moderated, there has been a shift in the monetary policy since September, with SAMA implementing three rate cuts — one of 50 basis points, followed by two additional 25 basis point reductions.
This shift signals a more accommodating policy stance, likely to ease some of the pressure on borrowing costs while maintaining financial stability.
The rise in term deposits underscores a shift in the Saudi banking sector’s approach to funding. Banks are incentivizing savers with higher returns to ensure stability, particularly as demand for credit grows due to Saudi Arabia’s ambitious Vision 2030 projects.
Term deposits provide a more predictable funding source compared to demand accounts, which can fluctuate significantly. The strategic shift helps banks align their funding structure with long-term lending requirements, particularly for infrastructure and construction projects.
Higher Saibor spread to boost funding
The elevated 115-basis point spread between the Saudi Interbank Offered Rate, known as Saibor, and the US Secured Overnight Financing Rate illustrates the tight liquidity landscape, according to Christou.
A higher Saibor compared to SOFR means that borrowing and funding costs in Saudi Arabia are relatively higher than those in the US. Historically, this spread hovered around 70 basis points, but sustained demand for credit has kept it significantly higher.
“The 115-bp Saibor spread over the secured overnight financing rate versus the normalized 70-bp historical range -nevertheless an improvement against the 2022 liquidity crisis – shows liquidity remains tight,” the analyst said.
In an environment where deposit inflows remain moderate, banks have also turned to external borrowing, including issuing euro-denominated bonds, to bridge funding gaps.
Local lenders like Al Rajhi Bank, Saudi National Bank, and Banque Saudi Fransi have leveraged such instruments to support their liquidity needs, according to the analyst.
While liquidity remains constrained, the current environment is an improvement over 2022 according to the analyst, when Saudi banks faced acute pressures due to surging credit demand.
SAMA’s debt issuance of over $31 billion since 2022, combined with other supportive measures, has alleviated some of the strain. However, the banking sector must continue to address systemic challenges to sustain long-term growth, Christou said.
Loan-to-Deposit ratio below limit
The loan-to-deposit ratio in Saudi banks has remained steady at 82.16 percent in November, despite the fact that loans grew by over 13 percent annually, which outpaced the deposits growth over the same period.
The LDR is a key indicator used by banks to measure the proportion of loans granted compared to the deposits they hold. In this case, even though the demand for loans has increased at a faster pace than deposit growth, the ratio has stayed below the regulatory limit of 90 percent.
The stability in the LDR is likely due to support from other sources of funding, such as debt issuance and private placements. These alternative funding methods have helped banks maintain their liquidity and ensure they can continue to lend without being overly reliant on deposits, according to Christou.
According to a June report by the International Monetary Fund, the Saudi banking sector is resilient, with stress tests indicating that both banks and non-financial businesses can withstand shocks, even in challenging scenarios.
However, close attention is needed to balance credit growth, funding, and systemic risks, especially as large-scale government projects under Vision 2030 accelerate.
While banks are well-capitalized, profitable, and maintain high liquidity with low nonperforming loans, there are potential risks tied to fast credit growth and the increasing reliance on non-deposit funding sources.
To manage these risks, SAMA may need to adjust its policies, such as revisiting loan-to-value limits, debt burden guidelines, and loan-to-deposit ratios.
Enhanced tools, like a countercyclical capital buffer, can also help prepare for future challenges. Moreover, better monitoring — such as tracking house prices and bank exposures to large projects — would provide a clearer picture of risks.
Pakistan province makes arrangements for safe travel to violence-hit Kurram district
- More than 130 people have died in the remote district since Nov. 21 in clashes over land, sectarian disputes
- On Wednesday, a council of tribal elders brokered a peace deal between warring tribes after weeks of efforts
ISLAMABAD: The government in Pakistan’s northwestern Khyber Pakhtunkhwa (KP) province is making arrangements to facilitate people in safely traveling to a remote district where sectarian violence has killed more than 130 people in recent weeks, a government spokesperson said on Friday.
Kurram, a northwestern district of around 600,000 people in KP, has been rocked by tribal and sectarian clashes since Nov. 21 when gunmen attacked a convoy of Shia passengers, killing 52.
The attack sparked further violence and road closures in the district and its capital Parachinar, restricting access to medicine, food and fuel in the area as casualties surged to 136.
A grand jirga, or council of political and tribal elders formed by the KP government, on Wednesday brokered a peace agreement between the warring Shia and Sunni tribes after weeks of efforts.
“Travel and security arrangements are being made for the convoy [of passengers] leaving on Saturday,” Muhammad Ali Saif, who speaks for the KP government, said in a statement.
The clashes had resulted in the closure of the only road connecting Parachinar with the provincial capital of Peshawar. Local media reported that the convoy would leave on Saturday amid stringent security by police and Frontier Constabulary (FC).
Under the peace agreement, both sides have agreed on the demolition of bunkers and the handover of heavy weapons to the authorities.
“Both sides will give a coordinated plan of action within 15 days for the collection of weapons,” Saif said. “The bunkers already existing in the area will be dismantled within a month.”
After the demolition of bunkers, according to the official, any party that launches an attack will be considered a “terrorist” and action will be taken against it.
Another point of the peace agreement said that a fine of Rs10 million ($35,933) would be imposed on those who violate the terms of the deal by using weapons against each other. It said that families who had been displaced due to the clashes in recent weeks would be rehabilitated.
Land disputes in the volatile district would be settled on a priority basis with the cooperation of local tribes and the district administration, according to the peace agreement. Opening of banned outfits’ offices would be prohibited in the district, while social media accounts spreading hate would be discouraged via collective efforts backed by the government.
Israel army says intercepted missile, drone launched from Yemen
- Israel’s emergency service provider, Magen David Adom, reported that it had treated several people who were injured or experienced panic attacks on their way to shelters
Jerusalem: Israel’s military reported that it shot down a missile and a drone launched from Yemen on Friday, the latest in a series of attacks from the country targeting Israel in recent weeks.
“A missile that was launched from Yemen and crossed into Israeli territory was intercepted,” the military said in a statement posted to its Telegram channel.
“A report was received regarding shrapnel from the interception that fell in the area of Modi’in in central Israel. The details are under review.”
Israel’s emergency service provider, Magen David Adom, reported that it had treated several people who were injured or experienced panic attacks on their way to shelters after air raid sirens sounded in the center and south of the country.
Hours later the military announced that it had also shot down a drone launched from Yemen.
The drone was intercepted before it entered Israel, the military added.
On Tuesday, Israel also said it had intercepted a missile launched from Yemen.
Much of Yemen is controlled by Iran-backed Houthi rebels, who have been firing missiles and drones at Israel — as well as at ships in the Red Sea and Gulf of Aden — in what they say is solidarity with Palestinians during the Israel-Hamas war in Gaza.
The Houthis have stepped up their attacks since November’s ceasefire between Israel and Iran-backed Hezbollah in Lebanon.
Israel has also struck Yemen, including targeting Sanaa’s international airport at the end of December.
Oil Updates — crude extends gains on optimism over policy support for growth
SINGAPORE: Oil prices extended gains on Friday after closing at their highest in more than two months in the prior session, amid hopes that governments around the world may increase policy support to revive economic growth that would lift fuel demand.
Brent crude futures rose 22 cents, or 0.3 percent, to $76.15 a barrel by 7:20 a.m. Saudi time, after settling at its highest since Oct. 25 on Thursday. US West Texas Intermediate crude was up 25 cents, or 0.3 percent, at $73.38 a barrel, with Thursday’s close its highest since Oct. 14.
Both contracts are on track for their second weekly increase after investors returned from holidays, improving trade liquidity.
Factory activity in Asia, Europe and the US ended 2024 on a soft note as expectations for the New Year soured due to growing trade risks from Donald Trump’s impending return to the US presidency and China’s fragile economic recovery.
“The December PMIs for Asia were a mixed bag, but we continue to expect manufacturing activity and GDP growth in the region to remain subdued in the near term,” Capital Economics analysts said in a note, referring to purchasing managers’ indexes data published on Thursday.
“With growth set to struggle and inflation below target in most countries, we think central banks in Asia will continue to loosen policy.”
Lower interest rates should spur more economic growth that would lead to higher fuel consumption.
Investors are eyeing further interest rate cuts by the Federal Reserve this year to support the US economy, while China’s President Xi Jinping has pledged more proactive policies to promote growth.
“As China’s economic trajectory is poised to play a pivotal role in 2025, hopes are pinned on government stimulus measures to drive increased consumption and bolster oil demand growth in the months ahead,” StoneX analyst Alex Hodes said.
The market also eyes upcoming crude prices from top oil exporter Saudi Arabia. Saudi Arabia may raise crude prices for Asian buyers in February for the first time in three months, tracking gains in Middle East benchmark prices last month, traders said.
In the US, the world’s biggest oil consumer, gasoline and distillate inventories jumped last week as refineries ramped up output, though fuel demand hit a two-year low.
Crude stockpiles fell less than expected, down 1.2 million barrels to 415.6 million barrels last week compared with analysts’ expectations for a 2.8-million-barrel draw.
Traders are paying close attention to recent weather forecasts as expectations of a cold snap in the US and Europe over the coming weeks could boost demand for diesel as a substitute for natural gas for heating.
Investors are also bracing for Trump’s presidency ahead of his Jan. 20 inauguration.
“Trump’s tariffs on China and their impact on global demand patterns will be central to oil prices in 2025,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
