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  • NDMC’s $9.6bn move set to bolster Saudi Arabia’s resilience


NDMC’s $9.6bn move set to bolster Saudi Arabia’s resilience

The borrowing plan report sheds light on the achievements of 2023, which provide a solid foundation for the Kingdom. (Shutterstock)
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Updated 22 January 2024
MIGUEL HADCHITY 
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NDMC’s $9.6bn move set to bolster Saudi Arabia’s resilience

  • Balancing debt-raising decisions against key risk factors — liquidity, refinancing, interest rates, foreign exchange, and credit rating — NDMC has ensured a prudent and sustainable debt management strategy
Updated 22 January 2024
MIGUEL HADCHITY 

RIYADH: Saudi Arabia’s National Debt Management Center has unveiled its Annual Borrowing Plan Report for 2024, outlining the Kingdom’s strategies for financing in the coming year. 

The NDMC’s commitment to effective debt management is highlighted by a SR36 billion ($9.6 billion) liability management transaction. This strategic move extended the “Average Time to Maturity,” reducing the risk associated with future maturities. 

Speaking to Arab News, economist Talat Hafiz, emphasized that the Kingdom manages the public debt in a “very professional manner that balances between risks and returns on investments.”

He added: “When the Kingdom settles or prepays any debt, it considers a number of factors, among which the future behavior of interest and exchange rates and the realizable cost saving of early retirement of the debt.”

The borrowing plan report sheds light on the achievements of 2023, which provide a solid foundation for the Kingdom as it seeks to sustain fiscal stability and capitalize on opportunities in the upcoming year.

The Kingdom’s debt portfolio exhibited resilience amid rising interest rates, with the “cost of funding” reaching 3.62 percent, and the average time to maturity extending to approximately 9.5 years by the end of 2023. 

Balancing debt-raising decisions against key risk factors — liquidity, refinancing, interest rates, foreign exchange, and credit rating — NDMC has ensured a prudent and sustainable debt management strategy.

Overview of 2023: A year of strategic borrowing

The Kingdom witnessed a significant growth of its sovereign debt portfolio in 2023, reaching SR1.05 trillion, equivalent to 25.4 percent of the gross domestic product. 

Reflecting on this, Hafiz told Arab News: “The Kingdom is always keen to maintain conservative debt-to-GDP, to avoid loading the Kingdom’s financial system with unnecessary costs of borrowing and also keeping space and room for future borrowing as and when needed.”

He added that Saudi Arabia has set a debt-to-GDP target of 30 percent, which is” very much below world standards of 60 percent.”

The NDMC demonstrated its prowess in debt management by securing SR189 billion in borrowing activities. 

Noteworthy was the successful execution of a domestic sukuk and bond liability management transaction, strategically redeeming maturing securities while simultaneously issuing new ones.

In terms of sources, domestic funding contributed 47 percent of the total, showcasing the Kingdom’s resilience. 

The remaining 53 percent came from international sources, with oversubscription in the international issuances under the sukuk and global medium-term note program indicating strong investor confidence.

2024 outlook and debt raising guidelines

Building on the success of the 2023 liability management transaction, the Kingdom intends to continue borrowing in 2024, not only to finance the budget deficit but also to refinance debt maturities due in the fiscal year.

The total remaining debt maturities for 2024 stand at SR21 billion, while prefunding activities executed in 2023 secured SR14 billion of the 2024 total financing needs. 

The projected budget deficit for 2024 is SR79 billion, resulting in total funding needs of approximately SR86 billion. 

By the end of 2024, the total debt portfolio is expected to reach SR1.11 trillion.

Hafiz highlighted that the 2024 Annual Borrowing Plan includes prepayment of SR21 billion debt balance of last year’s borrowing. He also noted that the Kingdom prepaid SR19 billion in 2023.

Investor relations strategy in 2024

A pivotal aspect of the Kingdom’s debt management strategy for 2024 is active engagement with domestic and international investors. 

The NDMC aims to foster strong relationships through a comprehensive outreach program that will extend across key regions, including Asia, Europe, and North America.

The center also aims at diversifying the investor base. This move is not only a risk mitigation strategy but also a proactive measure to ensure continued access to global debt markets at favorable rates.

The NDMC seeks to provide investors with the latest updates on the Saudi economy, discuss environmental, social, governance and sustainability initiatives, and showcase the Kingdom’s ambitious Vision 2030 transformation agenda.
Additionally, it plans to extend invitations to international investors to visit the Kingdom.

This engagement will allow investors to interact directly with government leaders and witness the progress of giga-projects that are shaping the nation’s future.

Economic resilience

As the Kingdom continues its journey toward fiscal stability and economic growth, the proactive measures outlined in the report position it to overcome uncertainties in the global financial landscape.

The strategic debt management initiatives, prudent risk management approach, and investor relations strategy underscore the Kingdom’s dedication to maintaining a resilient and sustainable debt profile.

Saudi Arabia’s high credit rating by Fitch, Moody’s, and S&P of ‘A’ with a positive future outlook, has supported the Kingdom’s credit position and enhanced its financial ability and strong commitment not to default on loan payments, according to Hafiz.

He said: “The Kingdom has proven to the world its strong financial portion and its ability to meet its financial obligations before its due.”

By proactively addressing refinancing risks and diversifying the investor base, NDMC aims to ensure Saudi Arabia has continued access to global debt markets and favorable financing conditions.

Topics: National Debt Management Center (NDMC) Saudi economy

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Closing Bell: Saudi main index slips to close at 11,859

Updated 13 sec ago
Reem Walid
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Closing Bell: Saudi main index slips to close at 11,859

Updated 13 sec ago
Reem Walid

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Thursday, losing 32.85 points, or 0.28 percent, to close at 11,859.47.

The total trading turnover of the benchmark index reached SR2.80 billion ($747 million), as 78 stocks advanced and 143 retreated.

Similarly, the Kingdom’s parallel market Nomu declined by 120.35 points, or 0.39 percent, to close at 30,886.71, with 37 stocks advancing and 38 retreating.

The MSCI Tadawul Index also dropped 3.44 points, or 0.23 percent, to end at 1,490.30.

The best-performing stock of the day was Rasan Information Technology Co., whose share price surged 7.58 percent to SR79.50. Other top performers included The Mediterranean and Gulf Insurance and Reinsurance Co., which rose by 7.17 percent to SR24.80, and The National Co. for Glass Industries, up 4.15 percent to SR55.20.

On the downside, Saudi Research and Media Group recorded the steepest drop, falling 3.86 percent to SR269.00. Al-Baha Investment and Development Co. saw its share price decline by 3.85 percent to SR0.50, while Red Sea International Co. dropped 3.63 percent to SR58.40.

On the announcement front, Mutakamela Insurance Co. launched its new identity and brand name, Mutakamela, following regulatory approvals and shareholder consent at its extraordinary general assembly meeting. 

Mutakamela ended the session unchanged at SR14.78.

Al-Yamamah Steel Industries Co. reported a net profit of SR70.8 million for the year ending Sept. 30, a significant turnaround from the SR130.14 million loss recorded in the previous year. The profit increase was attributed to reduced costs in the construction sector by 20.82 percent, electricity by 7.56 percent, and solar energy by 10.35 percent.

Additionally, the company’s board recommended distributing SR25.4 million in cash dividends to shareholders for the fiscal year ending Sept. 30. Eligible shareholders will receive a dividend of SR0.50 per share, representing 5 percent of the share’s par value, with 50.8 million shares eligible for the payout. 

Al-Yamamah Steel closed the session at SR35.00, down 1.75 percent.

Arabian Contracting Services Co. secured a project worth SR563 million with the Royal Commission for Riyadh City to invest in and lease internal advertising spaces within the King Abdulaziz Public Transport Project in Riyadh. 

The 10-year agreement aligns with the company’s strategy to expand its advertising activities. 

Its stock rose 0.68 percent to close at SR149.00.

Bank Al-Jazira announced the start of issuing its Additional Tier 1 Sukuk under a SR5 billion program through private placement. The issuance amount and terms will be determined based on market conditions, with a minimum subscription of SR1 million. 

The sukuk offer price, par value, and return will also be market-dependent. The bank has appointed Al-Jazira Capital, Al-Rajhi Capital, and HSBC Saudi Arabia as joint lead managers and dealers.

Bank Al-Jazira’s stock rose 0.96 percent to close at SR18.68.

Topics: TASI Tadawul Stock Market shares

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Turkiye lowers interest rate to 47.5%

Updated 26 December 2024
AFP
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Turkiye lowers interest rate to 47.5%

  • Central bank now expects inflation to reach 44% at the end of 2024
  • Decision signals the start of an easing cycle after eight months of steady policy
Updated 26 December 2024
AFP

ISTANBUL: Turkiye’s central bank lowered its key interest rate on Thursday, the first cut in nearly two years as it battles with double-digit inflation.
The bank’s monetary policy committee decided to reduce the policy rate from 50 percent to 47.5 percent, with a statement citing improvement in “inflation expectations and pricing behavior.”
The last cut was in February 2023.
The central bank began to raise interest rates last year to battle soaring prices, after President Recep Tayyip Erdogan dropped his opposition to orthodox monetary policy.
It has kept the main rate stable at 50 percent since March.
Thursday’s decision signals the start of an easing cycle after eight months of steady policy.
The bank said the decisiveness over its tight monetary stance “is bringing down the underlying trend of monthly inflation and strengthening the disinflation process.”
In November, Turkiye’s annual inflation rate slowed for the sixth month in a row, at 47.1 percent.
The central bank now expects inflation to reach 44 percent at the end of 2024, up from a previous estimate in August of 38 percent.
The bank said the level of the policy rate would be determined in a way to ensure the tightness required by the projected disinflation path, taking into account both realized and expected inflation.
This week, the central bank announced that it would hold fewer policy meetings next year.
“The Committee will make its decisions prudently on a meeting-by-meeting basis with a focus on the inflation outlook,” the bank said, adding it would “decisively use all the tools at its disposal in line with its main objective of price stability.”
The bank “will make its decisions in a predictable, data-driven and transparent framework,” it added.
Hakan Kara, former chief economist at the central bank, welcomed the cut as “very reasonable and balanced start” that came with a “cautious/optimistic communication.”
“In my opinion, the central bank is doing its best. From now on, the ball is in other policies,” Kara commented on social media platform X, including in the pace of spending and regulations on critical institutions.
The rate slash comes amid a moderate increase in Turkiye’s minimum wage after several rounds of negotiations.
The net monthly minimum wage has been raised by 30 percent to 22,104 lira ($600), beginning from Jan. 1 — far below the demands of the workers union.
The union had demanded a 70 percent increase.
Erdogan welcomed the rise this week and said: “We once again remained true to our promise not to let our workers be crushed by inflation.”

Topics: Turkiye Turkish Central Bank Inflation

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Saudi Arabia’s JEDCO, Tarshid partner to boost energy efficiency at King Abdulaziz Int’l Airport

Updated 26 December 2024
MOHAMMED AL-KINANI
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Saudi Arabia’s JEDCO, Tarshid partner to boost energy efficiency at King Abdulaziz Int’l Airport

  • Tarshid will conduct on-site surveys and technical studies of KAIA’s targeted buildings and facilities
  • Project aims to encourage the aviation industry to adopt sustainable practices
Updated 26 December 2024
MOHAMMED AL-KINANI

JEDDAH: Saudi Arabia’s King Abdulaziz International Airport is set to enhance energy efficiency and reduce emissions through a strategic partnership with the country’s National Energy Services Co., or Tarshid.

The pact between Jeddah Airports Co., or JEDCO, the airport’s operating company, and Tarshid, a Public Investment Fund company, aims to deliver sustainable energy efficiency solutions for the airport’s facilities. The partnership is facilitated through a Tarshid subsidiary and aligns with the Kingdom’s Vision 2030 and the Saudi Green Initiative.

The agreement was signed in the presence of Prince Abdulaziz bin Salman, minister of energy and chairman of Tarshid’s board of directors, according to the Saudi Press Agency.

The deal, which aims to launch innovative energy-saving initiatives and promote environmental responsibility, supports Saudi Arabia’s Civil Aviation Environmental Sustainability Program and contributes to achieving the goals of the Saudi Green Initiative and Vision 2030, which seek to improve energy efficiency and implement sustainable solutions across public and private sector facilities in the Kingdom.

The Kingdom has been developing the Civil Aviation Environmental Sustainability Plan, which seeks to mitigate the environmental impact associated with the expected growth of the country’s civil aviation sector.

The plan is crafted to align with global commitments outlined in the Paris Climate Agreement and the emission reduction targets set by the International Civil Aviation Organization.

The country has made several national-level achievements over the past years in the pursuit of its net-zero emissions goal, set for 2060. It is also pursuing new technologies to improve fuel efficiency and decarbonize the aviation sector.

Ranked among the top 100 airports globally, KAIA holds the distinction of being the third-best airport in the Middle East, according to rankings by UK-based consulting firm Skytrax.

Under the agreement, Tarshid will conduct on-site surveys and technical studies of KAIA’s targeted buildings and facilities, recommending optimal solutions to enhance energy efficiency and reduce consumption within the project’s scope.

Waled Abdullah Al-Ghreri, CEO of Tarshid and board member, said that they are dedicated to realizing Vision 2030’s objectives of enhancing energy efficiency and sustainability in Saudi Arabia.

“Tarshid continues to strengthen its partnerships with both public and private sectors, and our collaboration with Jeddah Airports Co. is a pivotal step toward establishing new energy efficiency benchmarks in the aviation sector, reflecting a future that merges operational excellence with environmental responsibility.”

Mazen bin Mohammed Johar, CEO of JEDCO, expressed his enthusiasm for the collaboration, saying that the agreement is a significant step in advancing the company’s efforts to enhance the operational efficiency of airport facilities.

Johar added that the agreement aligns with the National Aviation Strategy’s goal of operating a world-class, sustainable airport with high energy efficiency standards, consistent with Vision 2030.

He highlighted KAIA’s achievements in environmental preservation, including sustainability projects such as a recycling initiative that reduces carbon emissions and achieves net-zero targets, electricity and water conservation projects utilizing solar panels and smart technologies, and air quality monitoring in collaboration with the National Center for Environmental Compliance.

He said that the airport has increased green spaces to mitigate carbon emissions.

Established in 2017, Tarshid specializes in retrofitting buildings and facilities to improve energy efficiency and sustainability across government and private sectors. The KAIA project is among its key initiatives with the private sector, aiming to encourage the aviation industry to adopt sustainable practices.

By the end of the third quarter of this year, the company had achieved annual energy savings of 7.3 terawatt-hours across various projects, equivalent to conserving over 11.7 million barrels of oil equivalent and avoiding approximately 4.2 million metric tonnes of harmful emissions. These efforts equate to the environmental impact of planting more than 69.4 million seedlings annually, SPA reported.

Tarshid has recently signed a similar agreement with SAL Logistics Services, underscoring its role in advancing energy efficiency and sustainability across both governmental and private sectors. 

Topics: Jeddah Airports Co. King Abdulaziz International Airport (KAIA) Tarshid

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Saudi non-profit sector revenues surge 33% to $14.4bn in 2023

Updated 26 December 2024
Nour El-Shaeri  
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Saudi non-profit sector revenues surge 33% to $14.4bn in 2023

  • Health sector led the revenue surge with a 70% increase compared to the previous year
  • Education and research activities followed, growing 53%
Updated 26 December 2024
Nour El-Shaeri  

RIYADH: Saudi Arabia’s non-profit sector recorded revenues of SR54.4 billion ($14.4 billion) in 2023, marking a 33 percent year-on-year increase, according to data from the Saudi General Authority for Statistics.  

The sector’s total expenditures also rose by 33 percent, reaching SR47 billion, while employee compensation climbed 17 percent to SR21.7 billion. 

The health sector led the revenue surge with a 70 percent increase compared to the previous year. Education and research activities followed, growing 53 percent, while volunteer intermediary and enhancement activities rose 36 percent. Together, these areas were the largest contributors to the sector’s growth. 

Saudi Arabia’s non-profit sector has seen rapid growth, aligning with the objectives of Vision 2030. As of March 2024, the Kingdom had 4,721 registered non-profit organizations — a 182 percent increase since 2018.  

On the spending front, the health sector led with a 74 percent year-on-year rise in expenditures in 2023, followed by education and research activities with a 55 percent increase, and environmental activities, which grew by 34 percent. These categories contributed the most to the sector's overall spending.  

Employee compensation reflected similar trends, with education and research activities seeing the sharpest growth at 84 percent. Environmental activities recorded a 38 percent rise, while volunteer-related activities saw a 29 percent increase in compensation. 

In terms of workforce distribution, cultural and recreational sectors emerged as the largest employers, accounting for 27.6 percent of total employment in the non-profit sector. Social services followed at 27.2 percent, with development and housing activities comprising 12.4 percent. Health-related roles accounted for 11.5 percent, and education and research activities contributed 7.5 percent, while other non-profit activities made up the remaining 13.8 percent. 

This distribution marked a shift from 2022, where social services led at 29.7 percent, followed by cultural and recreational activities at 25.4 percent. 

This growth in the non-profit sector has raised its contribution to the gross domestic product to 0.87 percent, exceeding the 2023 target of 0.51 percent and aiming for an ambitious 5 percent by 2030. 

Additionally, the Kingdom has surpassed its target of 1 million volunteers six years ahead of schedule, achieving this milestone by the end of 2024. 

Topics: Non-Profit sector Saudi

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Dubai sees 7.4% surge in international visitors through August

Updated 26 December 2024
Reem Walid
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Dubai sees 7.4% surge in international visitors through August

  • Dubai’s hotel inventory grew by 240 rooms in the third quarter, bringing the total to approximately 155,400 rooms
  • Dubai International Airport reported a record 44.9 million passengers in the first half of 2024
Updated 26 December 2024
Reem Walid

RIYADH: Dubai recorded a 7.4 percent year-on-year increase in international visitors from January to August 2024, reaching a total of 11.93 million, according to recent data from the Dubai Department of Economy and Tourism.

The report highlights that Western Europe, South Asia, and the Gulf Cooperation Council remain the top three source markets for the emirate, collectively accounting for more than 50 percent of all international visitors.

This growth in tourism mirrors Dubai’s strong market performance, with both the average daily rate and revenue per available room seeing year-on-year increases of 2.5 percent and 2.7 percent, respectively, between January and September.

Meanwhile, according to the latest JLL report, Dubai’s hotel inventory grew by 240 rooms in the third quarter, bringing the total to approximately 155,400 rooms. The report also anticipates an additional 4,800 rooms will be added by the end of 2024, mainly in the four- and five-star categories.

Major projects like Marsa Al-Arab, The Island by Wasl, and Dubai Islands are expected to set new benchmarks for luxury beachfront real estate, further driving growth in the hospitality sector.

However, the JLL report also noted an emerging trend of price sensitivity within the luxury hotel segment. Increased competition from other regional and global tourist destinations has led to a shift in the spending behavior of high-end travelers.

In response, luxury hotel operators are adjusting their ADR to maintain higher occupancy levels, a strategy that is also being adopted by mid-scale and budget hotels.

As competition in the hospitality market intensifies, hotel operators are focusing on improving guest experiences, food and beverage offerings, and overall service quality to attract visitors and stay competitive. Price fluctuations in the luxury segment are expected as operators align rates with changing demand patterns.

In another sign of Dubai’s growing global appeal, Dubai International Airport reported a record 44.9 million passengers in the first half of 2024. CEO Paul Griffiths emphasized the airport’s strategic importance as a global aviation hub and reiterated Dubai’s position as a leading destination for business, tourism, and talent. With these strong indicators of growth, Dubai is well on track to solidify its place as one of the world’s top travel and tourism destinations.

Topics: Dubai tourism

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