Saudi Arabia’s foreign reserves, which rose to more than a one-year high in April, are expected to continue climbing in the medium term thanks to privatisation plans, inclusion in emerging markets benchmarks and higher oil prices, according to Japan’s biggest lender, Mitsubishi UFJ Financial Group.
Net foreign assets at the Saudi Arabian Monetary Authority, the kingdom’s central bank, grew $13.3 billion month-on-month in April, official data showed this week.
“We view that the inclusion of Saudi Arabia in the FTSE and MSCI EM indices, along with privatisation plans which are likely to come to fruition in 2019, will lead foreign exchange reserves to continue rising over the medium-term,” said the report from MUFG on Thursday.
“The sharp increase in April was primarily due to current account surpluses (owing to a rise in oil receipts) and foreign borrowing.”
The reserves had declined over the last three years from their August 2014 peak of $737bn due to draw downs to plug a fiscal deficit shortfall that reached a record in 2015.
However, the government has narrowed its fiscal deficit, introduced taxes and cut spending over the last three years to help slow the draw down of reserves. It also issued in April $11 billion in international bonds and started a domestic sukuk programme last year to diversify its sources of funding the deficit.
Saudi Arabia, the world’s biggest oil exporter, is revamping its economy under the overarching Vision 2030 programme to cope with the low oil price environment. The country’s reforms, which include changes to stock market regulations, are expected to help it gain inclusion in index complier MSCI widely-tracked emerging market index. Rival FTSE Russel already announced plans to include it in its emerging market benchmark. The inclusion, which is expected to be announced next month, will trigger $15-$30bn in inflows over the next 12 months, according to MUFG.
The government is also plans to privatise some prized assets, including a share float of 5 per cent of Saudi Aramco, the world’s biggest oil producer.
“Moreover, key privatisation plans, such as the Aramco IPO, as well as IPO and public-private participation (PPP) initiatives in sectors such as in transportation, leisure and utilities, could all generate higher inflows, however this will likely come to fruition from 2019 onwards,” MUFG said.
“Saudi Arabia continues to remain well-positioned to withstand its challenging operating environment, noting that the fiscal breakeven price is $87.9 per barrel this year and is able to continue financing fiscal deficits and the investment programme in line with Vision 2030.”
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
UAE currency: the story behind the money in your pockets
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
THREE
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RESULTS
6.30pm UAE 1000 Guineas Trial Conditions (TB) US$100,000 (Dirt) 1,400m
Winner Final Song, Christophe Soumillon (jockey), Saeed bin Suroor (trainer).
7.05pm Handicap (TB) $135,000 (Turf) 1,000m
Winner Almanaara, Dane O’Neill, Doug Watson.
7.40pm Handicap (TB) $175,000 (D) 1,900m
Winner Grand Argentier, Brett Doyle, Doug Watson.
8.15pm Meydan Challenge Listed Handicap (TB) $175,000 (T) 1,400m
Winner Major Partnership, Patrick Cosgrave, Saeed bin Suroor.
8.50pm Dubai Stakes Group 3 (TB) $200,000 (D) 1,200m
Winner Gladiator King, Mickael Barzalona, Satish Seemar.
9.25pm Dubai Racing Club Classic Listed Handicap (TB) $175,000 (T) 2,410m
Winner Universal Order, Richard Mullen, David Simcock.
Mia Man’s tips for fermentation
- Start with a simple recipe such as yogurt or sauerkraut
- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.
- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.
- Always use clean, closed, airtight lids and containers such as mason jars when fermenting yogurt and kraut. Keep the lid closed to prevent insects and contaminants from getting in.
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
THE SPECS
Engine: 1.5-litre
Transmission: 6-speed automatic
Power: 110 horsepower
Torque: 147Nm
Price: From Dh59,700
On sale: now