Saudi Arabia’s budget for 2018 demonstrates the government’s great optimism for its economic diversification and expansion plans, overseen by Crown Prince Mohammed bin Salman, the architect of Vision 2030.
That was the message from economy minister Mohammad Al Tuwaijri, who told a news conference in Riyadh that the country was moving to “a more optimistic scenario” in its fiscal planning.
“We’re very satisfied with what happened in 2017, and we’ll continue on this journey,” he declared.
Unveiling its largest ever budget on Tuesday, the kingdom projected a return to growth next year amid efforts to lift an economy affected by lower oil revenues and fiscal tightening during 2017.
GDP, which rose 1.7 per cent last year, is expected to shrink by 0.5 per cent in 2017 but grow by 2.7 per cent in 2018 and 2019.
Riyadh plans to increase spending to a record 978 billion riyals in 2018, the finance ministry said. That is up from 926 billion riyals this year.
Next year’s deficit is forecast to fall to 195 billion riyals, or 7.3 per cent of GDP, compared with a shortfall of 230 billion riyals (8.9 per cent of GDP) in 2017.
“The expansionary 2018 budget includes a complete set of new development initiatives that aim to create financial and economic stability that was outlined in Vision 2030,” the crown prince said.
“About 50 percent of the new budget will be financed from non-oil sources,” he added.
Analysts and commentators welcomed the announcements as the kingdom prepares for the post-oil era.
“This new budget shows that the recession is over as the government undertakes major reform measures,” Khalid Ashaerah, a private business consultant in Riyadh, told CNN. “The focus now will be on services and supporting the private sector to increase job growth.”
Monica Malik, chief economist at Abu Dhabi Commercial Bank, said Riyadh needed to shift policy towards faster growth to support long-term reforms designed to reduce the economy's reliance on oil exports.
“They are balancing fiscal consolidation required by rating agencies and international investors - they can't have a blowout budget - with the domestic need to show progress with the economic transformation plan, and boost the feel-good factor with stronger growth,” she said.
Saudi Arabia is implementing an economic overhaul plan and various reforms under the 2020 National Transformation Programme and its over-arching Vision 2030 agenda to help wean the country off oil income and create new revenue streams.
The Arab world’s biggest economy intends to continue with an expansionary budget for 2019 with spending projections of 1 trillion riyals, with a fiscal deficit representing 5.9 per cent of GDP. For 2020, the kingdom is projecting a 1.05 trillion riyals budget with a fiscal deficit of 4.9 per cent of GDP.
Government revenue is forecast to rise 12.5 per cent to 783bn riyals next year from 696bn riyals in 2017. Oil revenue is projected to rise 11.8 per cent to 492bn riyals from 440bn riyals in 2017, while non-oil revenue will grow 13.7 per cent to 291bn riyals.
The government has pushed back its deadline for a balanced budget to 2023 from 2020, giving the economy time to resume growth, the finance ministry said.
Hettish Karmani, head of research at Muscat based U-Capital, said: “To steer the economy to a new path, they have pushed for expansionary budget and put the austerity on hold.”
He continued: “It is a positive sign for the markets as well and we should see good momentum in the equity markets [on Wednesday] morning.”
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
Gertrude Bell's life in focus
A feature film
At one point, two feature films were in the works, but only German director Werner Herzog’s project starring Nicole Kidman would be made. While there were high hopes he would do a worthy job of directing the biopic, when Queen of the Desert arrived in 2015 it was a disappointment. Critics panned the film, in which Herzog largely glossed over Bell’s political work in favour of her ill-fated romances.
A documentary
A project that did do justice to Bell arrived the next year: Sabine Krayenbuhl and Zeva Oelbaum’s Letters from Baghdad: The Extraordinary Life and Times of Gertrude Bell. Drawing on more than 1,000 pieces of archival footage, 1,700 documents and 1,600 letters, the filmmakers painstakingly pieced together a compelling narrative that managed to convey both the depth of Bell’s experience and her tortured love life.
Books, letters and archives
Two biographies have been written about Bell, and both are worth reading: Georgina Howell’s 2006 book Queen of the Desert and Janet Wallach’s 1996 effort Desert Queen. Bell published several books documenting her travels and there are also several volumes of her letters, although they are hard to find in print. Original documents are housed at the Gertrude Bell Archive at the University of Newcastle, which has an online catalogue.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
McIlroy's recent struggles
Last six stroke-play events (First round score in brackets)
Arnold Palmer Invitational Tied for 4th (74)
The US Masters Tied for 7th (72)
The Players Championship Tied for 35th (73)
US Open Missed the cut (78)
Travellers Championship Tied for 17th (67)
Irish Open Missed the cut (72)
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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The Buckingham Murders
Starring: Kareena Kapoor Khan, Ash Tandon, Prabhleen Sandhu
Director: Hansal Mehta
Rating: 4 / 5
Company%C2%A0profile
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The specs: 2019 BMW X4
Price, base / as tested: Dh276,675 / Dh346,800
Engine: 3.0-litre turbocharged in-line six-cylinder
Transmission: Eight-speed automatic
Power: 354hp @ 5,500rpm
Torque: 500Nm @ 1,550rpm
Fuel economy, combined: 9.0L / 100km
MATCH INFO
Uefa Champions League semi-finals, first leg
Liverpool v Roma
When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome
The%20trailblazers
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Pathaan
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