Saudi Minister of Economy and Planning Mohammed Al-Tuwaijri: ‘The whole world is interested in Saudi Arabia’

Mohammed Al-Tuwaijri, Saudi minister of economy and planning. (Illustration by Luis Granena)
Updated 28 October 2018
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Saudi Minister of Economy and Planning Mohammed Al-Tuwaijri: ‘The whole world is interested in Saudi Arabia’

  • For an economy like Saudi Arabia, with its history of reliance on the public sector to spur economic growth, that is a big challenge
  • Saudi investors are ready for privatization

RIYADH: The “green room” at the Future Investment Initiative in Riyadh is an inappropriate name.
Like the rest of the King Abdulaziz International Conference Center, next to the five-star Ritz Carlton Hotel, the areas reserved for the elite speakers at the adjacent plenary hall is a melange of white marble, gold and the rich browns of teak and mahogany, with plenty of sparkling crystal in evidence too. Anything but green, really.
Last Thursday morning, Mohammed Al-Tuwaijri entered the room with weighty matters on his mind. The minister of economy and planning for Saudi Arabia was the top billing on a panel of luminaries from Jordan, Russia and Britain, considering the question: “Which model for privatization will prevail?”
Al-Tuwaijri, who got the top job in the Kingdom’s economic policy-making apparatus last year in a government reshuffle, is well able to give an expert view on that issue. A lifetime investment banker with experience at some of the biggest global banks in the world, he has been privy to many of the biggest corporate deals in the Middle East and elsewhere. Privatization is, and always has been, a subject on which the investment bankers have particular expertise.
In the green room, he was confident and composed, and declared himself willing to answer virtually any question on a subject crucial to the success of the Kingdom’s Vision 2030 strategy.
You might argue that privatization is at the heart of the strategy. The Vision’s architects recognized that the Kingdom’s essential challenge was to move away from dependence on the government-owned energy sector, and to increase the portion of the economy driven by the private sector. For an economy like Saudi Arabia, with its history of reliance on the public sector to spur economic growth, that is a big challenge.
As an economic policy, privatization has a fairly recent origin. The British prime minister Margaret Thatcher kicked off the modern version in the 1980s with a strategy to sell shares in government-owned companies, including the telecommunications, aviation and energy sectors, and found imitators around the world.
After the end of Communism in 1990, a tsunami of privatization washed over the former Soviet economies. The post-Soviet privatization model certainly ended state ownership of the economy, but also led to abuses and a concentration of economic power in a few hands — the beginning of the Russian “oligarchy.”
China, meanwhile, was undergoing a form of privatization that provided another possible model for encouragement of private enterprise, but all within the context of a centrally commanded structure that ultimately retained state control of business.
On the plenary stage, Al-Tuwaijri showed that he was acutely aware of the variety of models on offer for a would-be privatizer, but also conscious of the need to fit them to the Saudi context. “We look for our own model. We literally mapped the world, historically and geographically. So there is the good, the bad and the ugly experiences of the past.
“Ultimately we look at it from the point of view of what investors really want. They like to see a stable macro economy, growth, developing labor markets, accessible capital markets, transparency, firmness and quality assets. The government is committed to do these things, which are the big guidelines we are adopting here in Saudi Arabia. We also checked with all government entities and Vision 2030 programs, to make sure that in terms of execution and the time to come to market we are also aligned,” he added.
Alignment means ensuring that the interests of government, citizens and investors are synchronized and coordinated, he said, and gave the example of the housing industry, where Saudi Arabia has big plans to build more units for citizens under private auspices, but which also has implications for power and water generation businesses, as well as the financial investors in the projects. A “center of excellence” has been established in the Kingdom to co-ordinate these policies.
So, the broad principles of the privatization plan have been mapped out. But privatization means different things to different people, and can take a variety of forms.
It can occur in the form of the sale of shares to the general public and investing institutions via initial public offering (IPO) on stock markets; or via partnerships between the public sector and private enterprises on the provision of services previously run by the government, the so-called PPP option; or it can take the form of asset sales to private companies, domestic or foreign, by state-owned organizations.
These are complex concepts. Does Al-Tuwaijri believe that Saudi investors are capable of understanding the processes involved?
“A lot of effort has been dedicated to educating the people about privatization — what are the benefits, what it means, what are the processes, the levels of expectations and engagement. Generally, we agreed that the more governance, transparency and top advisers, the better,” he said.
“I think Saudi investors are ready for privatization. We have a history of privatizing state companies going back to the 1970s, in telecommunications, banking and mining. Our private sector is mature enough, strong enough, to understand privatization, but it is not just the domestic market we need to address. The whole world is interested in Saudi Arabia, and we have many potential investors from Asia and Europe interested in our privatizations,” he added.
Some international observers have expressed their frustration that the program of state sales has not yet got underway, more than two years after the Vision 2030 strategy was announced. Al-Tuwaijri was cautious in his response.
“We spoke about market conditions, and in Saudi Arabia we needed to bring the economy back into sustainable growth. That has been achieved now. There was also a need to have a legal structure for privatization, and to develop labor policies. Privatization has a great many implications for labor practices.
And of course the capital markets had to be ready, with the emerging markets status in prospect.
“Could we press a button on some of these assets today? The answer is yes. Are we being optimal if we pressed the button today? Maybe not,” he said.
Nonetheless, there is a shortlist of assets that are at the head of the pipeline for sale between now and the end of the first quarter of 2019. Al-Tuwaijri identified assets in the grain and silo business, in education, health care and in the desalinization industry that were all ready to come to market in that time frame.
Some time ago, Al-Tuwaijri gave an estimate of $200 billion of the total value of the Saudi privatization plan, excluding the $100 billion target from an IPO of Saudi Aramco. He said that was still achievable, depending on what is included in the sell-off portfolio and the state of global markets.
“You have to look at whether you include the Public Investment Fund assets within that or not. Do we include the ‘opportunity discovery,’ which is not today immediately in the program? We’re talking to some of the government entities, the payments systems in the Saudi Arabian Monetary Authority, some of the assets the Ministry of Finance hold. These are also ongoing opportunities that may be very attractive to the private sector,” he said.
So far in the panel discussion the biggest issue in the privatization universe had not been approached: The IPO of Saudi Aramco.
“The company (Aramco) is absolutely ready, in terms of financial statements, to the best global standards and requirements of global listing venues,” Al-Tuwaijri said, adding that the forthcoming acquisition of Saudi Basic Industries Corporation (SABIC) and “potentially other” deals would enhance the Aramco growth strategy.
“But it goes back to the question of alignment. The government has all the right in the world to time that IPO so that it is optimal in terms of value and shareholder benefit,” he said.


Global debt marches to record high, raising risk of bond vigilantes, IIF says

Updated 8 sec ago
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Global debt marches to record high, raising risk of bond vigilantes, IIF says

  • $7 trillion rise in global debt was less than half of the 2023 increase

LONDON: The global debt-to-GDP ratio rose for the first time since 2020 last year, as the world’s debt stock hit a new year-end record of $318 trillion and economic growth slowed, an Institute of International Finance report showed on Tuesday.
The $7 trillion rise in global debt was less than half of the 2023 increase, when expectations of Federal Reserve interest rate cuts sparked a borrowing surge. The IIF warned, however, that so-called bond vigilantes could punish governments if rising fiscal deficits persist.
“The increasing scrutiny of fiscal balances — particularly in countries with highly polarized political landscapes — has been a defining feature of recent years,” the IIF said.
Market reactions to fiscal policies in the United Kingdom brought down the short-lived tenure of Prime Minister Liz Truss in 2022, while similar pressures in France ousted Prime Minister Michel Barnier last year.
Debt-to-GDP — an indicator of the ability to repay debt — approached 328 percent, a 1.5 percentage point increase, as government debt levels of $95 trillion clashed with slowing inflation and economic growth.
The IIF said it expects debt growth to slow this year, amid unprecedented global economic policy uncertainty and still-elevated borrowing costs.
It warned, though, that despite high borrowing costs and economic policy uncertainty, its forecast of a $5 trillion increase in government debt this year could rise due to calls for fiscal stimulus and larger military spending in Europe.
“I think we will likely see much more volatility in sovereign debt markets, especially in those countries where we see high political polarization,” said Emre Tiftik, the IIF’s director of sustainability research.
ROLLOVER CHALLENGE
Emerging markets, driven by China, India, Saudi Arabia and Turkiye, accounted for roughly 65 percent of global debt growth last year.
This borrowing, along with a record $8.2 trillion in debt which emerging markets need to roll over this year — 10 percent of it in foreign currency — could strain countries’ abilities to weather looming political and economic storms.
“Heightened trade tensions and the Trump administration’s decision to freeze US foreign aid, including cuts to USAID, could trigger significant liquidity challenges and curb the ability to roll over and access to FX debt,” the report said.
“This underscores the increasing importance of domestic revenue mobilization to build resilience against external shocks.”
Tiftik added that the high volatility underscored the need to increase multilateral development banks’ abilities to mobilize private capital.
Several developing economies, such as Kenya and Romania, have struggled to boost domestic revenue due to public anger over tax hikes and coming elections, respectively.


Oil Updates — crude edges up as US stockpile report counters rising supply concerns

Updated 20 min 1 sec ago
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Oil Updates — crude edges up as US stockpile report counters rising supply concerns

SINGAPORE: Oil prices rose marginally on Wednesday, bouncing off two-month lows hit in the prior session after an industry group reported US crude stockpiles fell last week.

Brent crude rose 20 cents, or 0.3 percent, to $73.22 a barrel by 7:30 a.m. Saudi time. US West Texas Intermediate crude oil futures were up 18 cents, or 0.3 percent, to $69.11.

US crude stocks fell 640,000 barrels in the week ended Feb. 21, market sources said on Tuesday, citing American Petroleum Institute data. Official US stockpile data is due later on Wednesday.

“If confirmed by the EIA later today, it would mark the first decline in US crude oil inventories since mid-January,” said ING commodities strategists in a note on Wednesday.

Analysts polled by Reuters estimated a 2.6-million-barrel increase in US crude stocks last week.

On the supply side, prospects for a peace deal between Russian and Ukraine are improving, said ING, while the market also eyed the potential implications of a minerals deal between the US and Ukraine.

“This would take us a step closer to Russian sanctions being lifted, removing much of the supply uncertainty hanging over the market,” the ING strategists said.

The US and Ukraine agreed terms of a draft minerals deal central to Trump’s efforts to rapidly end the war, sources familiar with the matter told Reuters on Tuesday.

Meanwhile, dour economic reports from the US and Germany capped price gains, after pulling oil prices more than 2 percent lower on Tuesday. Brent crude closed at its lowest since Dec. 23, while WTI recorded its lowest settlement since Dec. 10.

US data showed consumer confidence in February deteriorated at its sharpest pace in 3-1/2 years, with 12-month inflation expectations surging. Meanwhile, the German economy shrank in the last three months of 2024 versus the prior quarter.

Oil prices have been buffeted by concerns that US President Donald Trump’s decisions about tariffs against China and other trading partners could add to pressure on the country’s economy.

That has eased worries about tighter near-term oil supply despite fresh US sanctions against Iran, ANZ Bank analysts wrote in a note to clients.

Even though US policy measures could drive an up to 1 million barrel-per-day reduction in Iranian crude exports, any loss in supply from the Middle Eastern nation is countered by OPEC+ members hoping to bring more supply to the market in the months ahead, Commodity Context analyst Rory Johnston said. 


Lucid CEO steps down, company expects to more than double vehicle production this year

Updated 38 min 48 sec ago
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Lucid CEO steps down, company expects to more than double vehicle production this year

BENGALURU: Electric vehicle maker Lucid Group said on Tuesday that Peter Rawlinson, its CEO for over 5 years, is stepping down from the role, and forecast its vehicle production will more than double this year, sending the company’s shares up 10 percent in extended trading.

Through his 12-year tenure as part of the top brass at Lucid, Rawlinson helped launch the company’s Air models and guided it through its public offering.

The company’s operating chief, Marc Winterhoff, will take the position of interim CEO.

Saudi Arabia’s Public Investment Fund is the majority shareholder in Lucid Group via Ayar Third Investment Co., and in October it invested an additional $1.5 billion into the EV producer.

“Now that we have successfully launched the Lucid Gravity, I have decided it is finally the right time for me to step aside from my roles at Lucid,” Rawlinson said.

The firm also forecast vehicle production this year to be around 20,000, compared with around 9,000 cars it made in 2024.

Andres Sheppard, senior equity analyst at Cantor Fitzgerald, said the CEO transition is “surprising” but not unexpected given the company’s previous underperformances, adding that the production forecast is “encouraging.”

The company hired veteran finance professional Taoufiq Boussaid as its chief financial officer last month. Boussaid previously helped reduce debt load for his former company.

As the EV demand in the US remains uncertain, Lucid has been trying to diversify its product lineup and step into the SUV market with the Gravity model, going toe-to-toe with Tesla’s model X and Rivian’s R1S vehicles.

The success of the Gravity SUV is seen as crucial to Lucid’s long-term outlook, as it burns through cash ramping up production while its Air sedans have seen price cuts due to slower demand.

“They (Lucid) still have an amazing product. Now it’s just a matter of can they turn the company around, can they increase demand and production with the Gravity, and really that’s going to bridge the gap to their mid-size vehicle in 2026,” Sheppard said.

The company continues to lose tens of thousands of dollars per vehicle, while rivals such as Rivian move aggressively to cut costs in a bid to make profits.

Lucid reported revenue of $234.5 million, beating Wall Street expectations of $214.2 million, according to data compiled by LSEG.

It posted a loss of $397.2 million in the quarter ended Dec. 31, compared with a loss of $653.8 million a year ago.

Demand for pure battery cars in the US has been slow as people gravitate more toward cheaper hybrids owing to high interest rates and economic uncertainty.


Saudi Arabia raises $2.36bn in euro bonds, including inaugural green tranche 

Updated 26 February 2025
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Saudi Arabia raises $2.36bn in euro bonds, including inaugural green tranche 

RIYADH: Saudi Arabia has raised €2.25 billion ($2.36 billion) through a euro-denominated bond sale, including its first green tranche, as part of its Global Medium-Term Note Issuance Program. 

In a press statement, the Kingdom’s National Debt Management Center said the offering, split into two tranches, saw an oversubscription of four times the issuance size, attracting around €10 billion in orders. The green tranche, valued at €1.5 billion, carries a seven-year maturity, while the second tranche, worth €750 million, matures in 12 years. 

This marks the first time Saudi Arabia has issued a green euro bond, aligning with its broader sustainability strategy under the Financial Sector Development Program. The issuance is a step toward the Kingdom’s goal of achieving net-zero emissions and reflects its commitment to sustainable financing, NDMC said. 

“It also highlights the Kingdom’s efforts to investors and market participants, representing a significant step toward realizing the objectives of Saudi Vision 2030,” it added.   

Earlier this month, Muhannad Mufti, NDMC’s chief of portfolio management, said at the Capital Markets Forum that Saudi Arabia is considering issuing green bonds in international markets in 2025. 

The Kingdom’s debt market has grown significantly in recent years, drawing investor interest in debt instruments amid rising interest rates. 

In December, a report by Kamco Invest projected that Saudi Arabia would account for the largest share of bond and sukuk maturities in the Gulf Cooperation Council region, reaching $168 billion between 2025 and 2029. Of this, government-issued bonds and sukuk are expected to total $110.2 billion. 

Another report by Fitch Ratings noted that the GCC’s debt capital market surpassed the $1 trillion outstanding mark by the end of November 2024. 

Meanwhile, NDMC completed its February issuance of riyal-denominated sukuk at SR3.07 billion ($818 million). The Kingdom raised SR3.72 billion in sukuk in January, SR11.59 billion in December, and SR3.41 billion in November.


Pakistan in talks with IMF for up to $1.5 billion in climate financing – official

Updated 26 February 2025
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Pakistan in talks with IMF for up to $1.5 billion in climate financing – official

  • Negotiations with a four-member team currently visiting Islamabad are likely to conclude by Friday
  • IMF’s Resilience and Sustainability Facility was introduced in 2022 to help climate vulnerable nations

KARACHI: Pakistan is negotiating for additional financing of $1 billion to $1.5 billion from the International Monetary Fund (IMF) to strengthen climate resilience, a senior government functionary said on Tuesday night, as discussions between the two sides continue over the issue.

Last year, Pakistan secured a $7 billion loan under the Extended Fund Facility (EFF) to continue structural reforms and consolidate macroeconomic gains achieved in the past two years through stringent financial measures.

Ranked among the ten most vulnerable countries to climate change, Pakistan has suffered extreme weather events, including floods, droughts and heatwaves, causing significant loss of life in recent years along with billions of dollars in damage to infrastructure. The 2022 floods alone inflicted losses exceeding $35 billion, prompting the government to seek international assistance for rebuilding homes and public property while investing in climate resilience projects.

Islamabad is now looking to tap into the IMF’s climate financing under the Resilience and Sustainability Facility (RSF) and is engaged in talks with a four-member technical team that arrived in the capital on Monday.

“The IMF team is here and discussions are underway for climate financing,” said a senior government official privy to the talks, speaking on condition of anonymity. “Pakistan is seeking about $1 billion to $1.5 billion from the Fund.”

He added the ongoing discussions were expected to conclude “by Friday,” with further details likely to emerge by then.

The RSF, introduced in 2022, aims to provide longer-term, affordable financing to IMF member states facing climate-related and sustainability challenges.

Countries qualify based on their vulnerability to climate shocks and commitment to policy reforms that address these risks and enhance resilience.

The facility typically requires nations to adopt structural policies, such as regulatory reforms and climate adaptation measures, which are monitored periodically to ensure compliance with agreed objectives before disbursements are approved.

Meanwhile, another IMF team is expected to arrive in Pakistan at the beginning of March to conduct a biannual review under the $7 billion EFF program.