ISLAMABAD: Pakistan is targeting a 16 percent rise in tax revenues to 3.95 trillion rupees ($37.8 billion) in the year ending June 2017, Finance Minister Ishaq Dar said as he unveiled a budget aimed at shoring up the South Asian country’s finances.
Dar said Pakistan would target a fiscal deficit of 3.8 percent of gross domestic product for the coming financial year, down from the 4.3 percent envisaged for this year.
Pakistan’s economy is growing at its quickest rate in eight years after a slide in oil prices and expansion in industry and services boosted demand. Investor confidence has slowly returned to a country that was battered by the global financial crisis.
“The dangers to the economy are now far behind us. Economic growth has hit an eight year high. This would have been even better if it had not been for a 28 percent fall in the cotton crop,” Dar told parliament.
Still, the economy remains structurally weak, hamstrung by poor infrastructure, the threat of militant violence and a very narrow tax base.
The GDP growth rate of 4.7 percent in the year to June 2016 was less than the government’s 5.5 percent target, and a contraction in the agricultural sector this year meant many Pakistanis do not feel much better off.
Dar said the government’s priority in the year ahead was to push Pakistan’s persistently low tax-to-GDP ratio to above 10 percent and raise revenues from taxation. Pakistan’s financial year runs from July to June.
Successive governments have promised to rein in tax evaders and boost revenues but face fierce resistance to change, including from the many politicians and businessmen believed to be among those dodging their taxes.
The low level of collection and the hefty cost of funding its military has left Pakistan with insufficient money to spend on modernizing its schools and hospitals, to the dismay of donors who end up financing much of the social infrastructure.
Dar said total spending for the 2016/17 year was estimated at 5.08 trillion rupees, while the defense budget would rise 11 percent year-on-year to 860 billion rupees.
Pakistan budget targets big rise in tax revenues
Pakistan budget targets big rise in tax revenues
Saudi 2034 World Cup goals include jobs boost and GDP growth
- Saudi Arabia is the only country to submit a bid to host the football tournament
JEDDAH: Saudi Arabia’s hosting of the 2034 FIFA World Cup will not only showcase the Kingdom’s cultural and administrative capabilities but also serve as a catalyst for significant job creation and infrastructure development, according to experts.
Saudi Arabia is the only country to submit a bid to host the football tournament, and the decision will be rubber stamped by FIFA on Dec. 11.
It will be the second time the global event has been held in the Middle East, with Qatar staging the competition in 2022.
Experts told Arab News that Saudi Arabia could expect a GDP boost of between $9 billion and $14 billion, the creation of 1.5 million new jobs, and the construction of 230,000 hotel rooms developed across five host cities to accommodate visiting fans and dignitaries.
Yaseen Ghulam, an associate professor of economics and director of research at the Riyadh-based Al-Yamamah University, emphasized that the World Cup will provide a unique platform to attract foreign direct investment, diversify income sources, and boost tourism, aligning seamlessly with Saudi Arabia’s Vision 2030 objectives.
However, he asserted that the associated costs and logistical challenges must be managed strategically to maximize long-term benefits for the nation.
“The event will help the Kingdom to not only get noticed for its administrative capabilities and cultural depth but, more importantly, will help it to showcase the investment opportunities that currently exist in Saudi Arabia,” he told Arab News.
Ghulam pointed out that the event demands a significant commitment to quickly building state-of-the-art facilities, including stadiums, hotels, and roads, as well as training facilities, transportation networks, and tourist attractions.
Ghulam noted that Brazil’s World Cup cost $18 billion, while Russia spent $13 billion, with half allocated to infrastructure, including 12 stadiums, as well as hospitals, airports, train stations, motorways, and hotels.
He said that while Qatar invested $200 billion to $300 billion over a decade ahead of its 2022 hosting, the amount spent on stadiums was no more that $7 billion, with the rest on infrastructure developments.
Ghulam explained that hosting the World Cup offers both direct and indirect benefits, with economists estimating short-term gains from visitor spending and broadcasting rights to be about 1 percent of global GDP.
For Qatar, he said, visitor expenditure on tourism and revenue from event-related programming is believed to have been between $2.3 billion and $4.1 billion.
“Considering the gross value added, this amounts to $1.6 billion to $2.4 billion, which represents 0.7 percent to 1 percent of Qatar’s GDP in 2022,” Ghulam said, adding that South Korea also experienced the same numbers in 2002.
The associate professor believes Saudi Arabia could expect to see a GDP boost of $9 billion to $14 billion, based on previous events, the Kingdom’s geographical location, and Saudi Arabia’s growing tourism infrastructure.
“Qatar attracted around a million spectators, and Saudi Arabia could double this number due to the religious tourism potential of Muslim spectators alongside the geographic diversity of the country,” he said.
Ghulam stressed the importance of affordability when it comes to accommodation for traveling fans, noting that Qatar’s hotels saw only 59 percent occupancy during the 2022 World Cup due to high prices, with many spectators opting to stay in neighboring countries and use shuttle services.
The economics professor noted that indirect benefits could arise before and after the tournament through higher foreign direct investment and increased tourism from improved experiences during the event. He also mentioned emerging evidence of increased FDI following World Cup hosting.
“For most of the countries that have hosted the same event, the impact started immediately after the announcement. One recent study estimates the magnitude of such an impact, concluding that an average increase in inward foreign direct investment of $4.33 billion is linked to hosting the FIFA World Cup,” he said.
Ghulam added that FDI has increased by a greater amount in well-governed countries, indicating that governance quality is a significant moderating element.
“The evidence shows that Qatar managed to increase the contribution of non-hydrocarbon income by 40 percent during the decade of preparation for the World Cup by investing in infrastructure and other diversification related activities alongside attracting FDI,” he said.
He noted that the multiplier effect of these investments has boosted other income sources, emphasizing that Saudi Arabia’s current non-hydrocarbon income of $453 billion could significantly rise over the next decade in preparation for the event.
Ghulam highlighted that the event would significantly influence Saudi Arabia’s infrastructure development, with stadiums and fan zones benefiting local communities and contributing to the non-hydrocarbon GDP share in line with Vision 2030.
He emphasized the importance of maintaining and utilizing these stadiums for long-term gains, noting that maintenance costs could be significant.
Highlighting the long-term economic impact of the World Cup on local businesses and tourism, he noted that Saudi Arabia topped the UN’s list for significant foreign tourism growth in 2023.
When it comes to job creation, the academic cited a report from Knight Frank which estimated the 2022 World Cup contributed to the creation of almost 850,000 additional jobs in Qatar’s residential sector between 2010 and 2022.
“Since the event in Saudi Arabia is expected to be prestigious and in fact better than previous events, one could extrapolate to more than 1.5 million new jobs, equating to 10 percent of the currently employed workforce,” Ghulam said.
Infrastructure boost
Waleed Al-Thabi, founder and CEO of Aljdwa, a leading Saudi firm specializing in project feasibility studies and development, told Arab News that hosting the 2034 FIFA World Cup is key to Saudi Arabia’s Vision 2030 initiative aimed at achieving significant economic growth.
Discussing how the preparation for the event would impact the Kingdom’s infrastructure development, he said that hosting the World Cup will establish a legacy of stadiums and sports facilities for future generations.
He added that over 130 training facilities will support players, teams, referees, and administrative staff participating in this event.
“Moreover, Saudi Arabia has developed logistics services, expanding the rail network, such as the Riyadh Metro project, which serves as the backbone of public transport in the capital. Initially designed to accommodate 1.2 million passengers daily, the network is projected to reach nearly 3.6 million passengers in its final phase,” Al-Thabi said.
The CEO noted that several regional and international airports are being developed, including King Salman International Airport in Riyadh, which will cover approximately 57 sq. km and rank among the largest airports globally, adding that the new Abha International Airport is also expected to serve around 10 million passengers annually by the end of 2027.
He highlighted that these advancements will enhance travel experiences for fans, improve transportation efficiency, and ensure maximum comfort and accessibility during the tournament.
The CEO expected that event will attract millions of tourists from around the world, leading to a significant increase in demand for hospitality facilities.
“Approximately 230,000 hotel rooms will be developed across the host cities. To maximize the Kingdom’s geographical advantages and diverse areas, the hosting plan will extend to ten supporting cities that will accommodate some of the participating teams’ training camps before and during the tournament,” he said.
With anticipated growth in tourism and commercial activity, Al-Thabi stressed the need for efficient Saudi companies in these sectors to capture a significant share of the cash flow generated during the event.
“Such cash flows contribute to reducing unemployment rates and stimulate the flow of funds within the economy, directly impacting the Kingdom’s GDP,” he said.
Al-Thabi added that jobs will primarily be in event management, security, hospitality, and transportation, as well as facility service and operations coordination, allowing employees to benefit from longer hours and higher incomes, thus enhancing living standards.
“Additionally, the construction sector will expand, creating jobs for engineers, architects, and construction workers, further advancing the Kingdom’s economic development,”
FDI rise
Abdullah Al-Maghlouth, a member of the Saudi Economic Association, stated that the Kingdom’s hosting of the 2034 World Cup will showcase an exceptional and unprecedented version of the tournament, harnessing Saudi strengths to delight football fans globally.
He pointed out that all the stadiums are designed to meet the Kingdom’s long-term infrastructure needs, noting that Saudi Arabia is also developing railway plans to connect with Gulf nations, enhancing the movement of fans and teams.
“While the opening and final matches of the 2034 World Cup will be held in the capital, Riyadh, the maximum distance a fan will need to travel within the Kingdom is two hours,” Al-Maghlouth said.
The Saudi economist further noted that the event will play a pivotal role in attracting foreign direct investment, as hosting plans include the construction of 11 new world-class stadiums and the development of 15 existing ones.
“These projects are expected to draw substantial foreign investment in construction and related services, such as transportation, accommodation, entertainment, and technology. This increased economic activity is anticipated to encourage more foreign companies to enter the Saudi market, thereby enhancing the volume of foreign direct investment,” he said.
Beyond the direct economic benefits, he continued, hosting the event represents an opportunity to develop infrastructure in the host cities.
“These cities will witness significant developments, including improvements to public transportation, roads, and public facilities. These enhancements will elevate the quality of life for residents and leave a sustainable legacy after the tournament concludes, strengthening the long-term competitiveness of these cities.” Al-Maghlouth said.
Furthermore, the event will enhance innovation and entrepreneurship, driving entrepreneurs to devise rapid solutions to challenges faced by organizers, he added.
Moody’s upgrades Saudi Arabia’s rating on strong diversification progress and fiscal prudence
- Saudi Arabia’s local and foreign currency medium-term note program ratings was also upgraded to (P)Aa3 from (P)A1
RYADH: Global credit ratings agency Moody’s Ratings upgraded Saudi Arabia’s long-term local and foreign currency issuer and senior unsecured ratings to Aa3 from A1, taking note of the Kingdom’s progress in diversifying its economy.
Saudi Arabia’s local and foreign currency medium-term note program ratings was also upgraded to (P)Aa3 from (P)A1.
“Continued progress will, over time, further reduce Saudi Arabia’s exposure to oil market developments and long-term carbon transition,” the ratings agency said.
“The recent fiscal space exercise and recalibration and reprioritization of diversification projects – which will be regularly reviewed – will provide a more conducive environment for sustainable development of the kingdom’s non-hydrocarbon economy and help preserve the relative strength of the sovereign’s balance sheet.”
Moody’s expects Saudi Arabia’s non-hydrocarbon private sector GDP to continue expanding by about 4 percent to 5 percent in the coming years, among the highest in the Gulf region, as its diversification strategy reduces the Kingdom’s exposure to oil market developments and long-term carbon transition over time.
“Our baseline projections assume there will be no significant downward pressure to oil prices or production over the next few years. We also assume that heightened geopolitical tensions in the region, which are having a limited impact on Saudi Arabia so far, will not escalate into a full-scale military conflict between Israel and Iran with collateral effects that could affect the kingdom’s ability to export oil or deter private sector investment supporting the diversification momentum,” Moody’s said.
Saudi Arabia has invested heavily to induce growth in the non-hydrocarbon private sector, particularly that of the Public Investment Fund’s (PIF) outlays for capital expenditure and domestic investments.
“We estimate that the total spending on projects and long-term investments by the government and PIF will continue to exceed 20 percent of non-hydrocarbon GDP. Private consumption growth will also be strong, as the design of many ongoing projects, including the PIF’s giga projects and other large-scale projects of the government, incorporates commercialization phases that will boost supply-side capacity in the services sector, particularly in hospitality, leisure and entertainment, retail and restaurants,” Moody’s said.
The ratings agency also noted while Saudi Arabia’s fiscal prudence as well as recalibration and reprioritization of projects may affect project implementation and the development of the non-hydrocarbon sectors, “the focus on macroeconomic and fiscal sustainability is credit positive.”
“Regularly reviewing projects to maximize the economic impact on the domestic economy and develop a domestic industrial base and related ecosystems will help the non-hydrocarbon economy develop more sustainably,” Moody’s said.
Citi gets license for regional headquarters in Saudi Arabia, memo shows
- Wall Street giant received the approval from the Ministry of Investment Saudi Arabia
RIYADH: US bank Citigroup has received approval to establish its regional headquarters in Saudi Arabia’s Riyadh, according to an internal memo seen by Reuters on Friday.
The Wall Street giant received the approval from the Ministry of Investment Saudi Arabia (MISA), according to the memo.
“This marks a significant leap forward for our franchise in Saudi Arabia and we look forward to our continued growth in the kingdom,” Citi Saudi Arabia CEO Fahad Aldeweesh said in the memo.
Bloomberg News reported the development earlier in the day.
Wall Street titan Goldman Sachs also received a license in May to set up its regional headquarters in Saudi Arabia’s Riyadh.
Saudi Arabia joins global hydrogen fuel partnership
RIYADH: Saudi Arabia has joined a key international alliance designed to enhance cooperation around the development and deployment of hydrogen and fuel cell technologies.
The International Partnership for the Hydrogen and Fuel Cell Economy works to deliver a balanced and effective global transition to cleaner and more efficient energy systems.
The Kingdom’s Ministry of Energy announced Saudi Arabia had signed up to the organization, with a press release saying the move represents a new step that confirms the “pioneering role” that the Kingdom is playing in international efforts aimed at enhancing sustainability and “innovating advanced solutions” in the fields of clean power.
Saudi Arabia has pledged to achieve zero neutrality in terms of carbon emissions by 2060, as well as becoming one of the world’s most important producers and exporters of clean hydrogen.
The press release added: “The Kingdom’s accession to this partnership confirms its firm vision regarding the role of international cooperation and its importance in achieving a more sustainable energy future.”
The IPHE was originally launched in 2003 by the US, and has two active working groups covering Education & Outreach, and Regulations, Codes, Standards, & Safety.
COP29 enters final hours amid key negotiations on climate finance and carbon markets
BAKU: As COP29 nears its conclusion, negotiators are working intensively to finalize agreements that could significantly advance global climate action.
Hosted in Baku, Azerbaijan, the conference has focused on critical issues such as climate finance, adaptation strategies, and the operationalization of carbon markets under the 2015 Paris Agreement.
Although decisions remain in draft form, the discussions signal progress on aligning global efforts with the urgent need to combat the climate crisis.
Saudi Arabia has emerged as a key player, leveraging its growing diplomatic influence and domestic climate initiatives to shape the outcomes.
Push for equitable climate finance
One of the most pressing topics at COP29 has been the New Collective Quantified Goal on climate finance.
Negotiators are seeking to establish a framework that mobilizes $1.3 trillion annually by 2035 to support developing nations in addressing climate change.
This new goal reflects the escalating financial demands of both mitigation and adaptation efforts, with developing countries requiring $215 billion to 387 billion annually for adaptation alone through 2030.
Saudi Arabia has been a vocal advocate for equitable financing mechanisms, emphasizing the need for practical pathways to unlock funds for countries that bear the brunt of climate impacts yet have limited resources.
The Kingdom has supported calls for reforming global financial institutions to reduce barriers such as high borrowing costs and restrictive conditions. This aligns with Saudi Arabia’s broader position that climate finance must be accessible and targeted to the most vulnerable nations.
Domestically, Saudi Arabia has backed its advocacy with action. The Kingdom has committed significant investments to its Saudi Green Initiative, which includes billions of dollars for renewable energy projects, reforestation, and environmental restoration.
These initiatives underscore Saudi Arabia’s dual focus on addressing domestic climate challenges and contributing to global solutions, according to the draft resolution.
“Through initiatives like the Saudi Green Initiative, the Kingdom has committed to reducing regional emissions by more than 10 percent and leading the planting of 50 billion trees across the Middle East to combat desertification and foster environmental sustainability,” the document stated.
Carbon Markets: A Saudi priority
Discussions on Article 6 of the Paris Agreement, which governs international carbon trading, have been another focal point of COP29.
Saudi Arabia has taken a prominent role in shaping the rules for carbon markets, advocating for frameworks that promote transparency and equitable participation.
Under Article 6.2, which covers bilateral cooperation, and Article 6.4, which establishes a centralized mechanism for trading carbon credits, Saudi negotiators emphasized the importance of avoiding double-counting emissions reductions and ensuring environmental integrity.
These safeguards are essential for building trust in the carbon market as a tool for accelerating emissions reductions.
In the draft resolution on financing released by the UN Framework Convention on Climate Change it is outlined that “Saudi Arabia emphasizes the importance of transparency and equitable participation in Article 6 mechanisms, ensuring that developing nations can benefit from international carbon trading frameworks.”
The Kingdom’s engagement in these discussions reflects its broader ambition to become a regional hub for carbon trading. The Kingdom is advancing projects in carbon capture, utilization, and storage, positioning itself as a leader in leveraging market-based solutions to achieve climate goals.
These efforts align with the Saudi Green Initiative’s targets for emissions reductions and renewable energy expansion.
A commitment to adaptation
While mitigation often dominates global climate discussions, COP29 has seen renewed attention to adaptation – an area where Saudi Arabia has also contributed actively.
Negotiators are working to refine the Global Goal on Adaptation by developing measurable indicators to track progress.
These metrics aim to ensure that adaptation efforts are effective and responsive to the needs of vulnerable communities.
“Saudi Arabia continues its focus on promoting energy efficiency, a critical pillar of its sustainability agenda, as highlighted by top officials during COP29 discussions,” reads the draft resolution.
The Kingdom has supported these efforts, emphasizing the importance of integrating local knowledge and traditional practices into adaptation strategies. The Kingdom’s approach aligns with its domestic priorities, which include enhancing resilience to desertification and water scarcity, challenges exacerbated by its arid climate, the document added.
Inclusivity and collaboration
Inclusivity has been a central theme at COP29, and Saudi Arabia has demonstrated its commitment to ensuring diverse voices are part of the climate conversation. The Kingdom supported the draft Baku Workplan, which aims to elevate indigenous peoples and local communities in climate governance.
Domestically, Saudi Arabia has prioritized inclusivity through education and workforce development programs that prepare youth and women for leadership roles in green industries.
These initiatives are part of broader reforms under Vision 2030, which aims to diversify the economy while ensuring equitable opportunities for all citizens.
Regional leadership
Saudi Arabia’s influence extends beyond its national borders. Through the Middle East Green Initiative, the Kingdom is fostering regional cooperation to combat climate change.
The initiative includes ambitious goals to plant 50 billion trees across the Middle East and reduce regional emissions by more than 10 percent.
At COP29, these efforts were presented as examples of how regional action can amplify global progress.
By working closely with other Gulf Cooperation Council countries, Saudi Arabia is also driving investments in renewable energy projects that enhance energy security and sustainability.
These partnerships underscore the Kingdom’s role as a regional leader in climate action, capable of catalyzing collective efforts to address shared challenges.
Challenges and opportunities ahead
As COP29 approaches its conclusion, much remains to be finalized. The draft decisions on climate finance, carbon markets, and adaptation reflect significant progress but also underscore the complexity of reaching consensus among diverse stakeholders.
Saudi Arabia’s contributions to these discussions demonstrate its ability to balance domestic priorities with international leadership. By advocating for equitable solutions, advancing regional cooperation, and showcasing its own climate successes, the Kingdom has positioned itself as a key player in shaping the global response to climate change.
The conference has marked an important step forward in the global fight against climate change. The agreements under discussion – particularly those on finance and carbon markets – highlight the growing recognition that collective action is essential to achieving the Paris Agreement’s goals.
Saudi Arabia’s active participation in these negotiations underscores its evolving role as a climate leader.
