Saudi Arabia Stresses Global Need for Structural Reforms at Davos

Saudi Minister Mohammed Al-Jadaan participating at a session at the World Economic Forum in Davos titled “Resilience: What It Means and What to Do About It” (screengrab)
Saudi Minister Mohammed Al-Jadaan participating at a session at the World Economic Forum in Davos titled “Resilience: What It Means and What to Do About It” (screengrab)
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Saudi Arabia Stresses Global Need for Structural Reforms at Davos

Saudi Minister Mohammed Al-Jadaan participating at a session at the World Economic Forum in Davos titled “Resilience: What It Means and What to Do About It” (screengrab)
Saudi Minister Mohammed Al-Jadaan participating at a session at the World Economic Forum in Davos titled “Resilience: What It Means and What to Do About It” (screengrab)

Saudi ministers at the 2024 World Economic Forum in Davos, Switzerland, highlighted the need for governments to take proactive steps such as implementing structural reforms, boosting the ability to handle shocks, and investing in human resources.
The officials argued that these steps are essential for economic resilience.
On his part, Saudi Finance Minister Mohammed Al-Jadaan stressed the importance of investments for low-income countries.
He highlighted the need to build economic resilience and boost productivity to create job opportunities for youth.
The minister made the remarks while participating at a session at the World Economic Forum (WEF) in Davos titled “Resilience: What It Means and What to Do About It.”
Al-Jadaan highlighted the importance of aiding African countries facing debt challenges. He emphasized the responsibility to offer support and suggested that banks play a role in assisting these nations in rebuilding their economies.
He clarified that some African countries also face the challenge of having over 3 million job seekers, while others lack a sufficient workforce. This presents an opportunity to leverage the available workforce in Africa.
Al-Jadaan discussed the financial lessons learned from recent economic shocks. He highlighted the need for governments to focus on structural reforms, boost their ability to respond to shocks, and invest in human resources. These steps are crucial for enduring financial and economic resilience.
“I think governments will need to ensure that they do what they can every day, every week, every month and every year, to be more resilient by (applying) structural reform and continuing to enhance that, and increase(ing) your ability to respond to shocks,” Al-Jadaan said.
In a session titled ‘Gulf Economies: All In,’ Saudi Investment Minister Khalid al-Falih shared his optimistic outlook for the Gulf, noting how “the GCC is attracting Foreign Direct Investments (FDIs) at more than twice the average rate than around the world when you compare it and normalize it for GDP.”
“We believe we are at an inflection point of increase of FDIs, as we have seen in Saudi Arabia,” affirmed the minister.
Al-Falih mentioned that the GCC countries will mostly see growth in non-oil sectors.
Talking about the digital shift in the region, al-Falih noted that factors like connectivity and speed are vital for attracting investors to the kingdom. He stressed the crucial role of digitization in the Gulf’s economic strategies.
Bandar Alkhorayef, Saudi Minister of Industry and Mineral Resources, said in a session on ‘Supply Chains of the Future’ high-growth sectors including logistics, manufacturing and mining are becoming critical drivers of Saudi Arabia’s nationwide diversification.
“Saudi Arabia offers a combination of enablers, including energy and petrochemicals, but also our geographic location,” affirmed the minister.
He explained how the Kingdom collaborates with investors to eliminate carbon from operations and shift towards clean energy and “green initiatives,” aligning with diverse models to reduce carbon emissions in pursuit of the Vision 2030 targets.
He emphasized that the supply chain process should be driven by market dynamics, not politics.



Trump Treasury Pick Bessent Backs Fed Independence, Dollar, Sanctions on Russian Oil

 Scott Bessent, US President-elect Donald Trump's nominee to be secretary of treasury, looks on as he testifies during a Senate Committee on Finance confirmation hearing on Capitol Hill in Washington, US, January 16, 2025. (Reuters)
Scott Bessent, US President-elect Donald Trump's nominee to be secretary of treasury, looks on as he testifies during a Senate Committee on Finance confirmation hearing on Capitol Hill in Washington, US, January 16, 2025. (Reuters)
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Trump Treasury Pick Bessent Backs Fed Independence, Dollar, Sanctions on Russian Oil

 Scott Bessent, US President-elect Donald Trump's nominee to be secretary of treasury, looks on as he testifies during a Senate Committee on Finance confirmation hearing on Capitol Hill in Washington, US, January 16, 2025. (Reuters)
Scott Bessent, US President-elect Donald Trump's nominee to be secretary of treasury, looks on as he testifies during a Senate Committee on Finance confirmation hearing on Capitol Hill in Washington, US, January 16, 2025. (Reuters)

President-elect Donald Trump's pick for Treasury secretary, Scott Bessent, said on Thursday that the dollar should remain the world's reserve currency, the Federal Reserve should stay independent and that he is ready to impose tougher sanctions on Russia's oil sector.

Bessent, testifying at a Senate Finance Committee confirmation hearing, underscored an urgent need to extend Trump's 2017 individual tax cuts, saying that allowing them to expire at the end of this year would unleash a $4 trillion tax hike that could crush the US economy.

"If we do not renew and extend, then we will be facing an economic calamity," Bessent said. "We will see a gigantic middle class tax increase."

Bessent, a hedge fund manager and founder of Key Square Capital Management, voiced support for Trump's plans to impose steep tariffs, saying they would combat unfair trade practices, raise revenues and increase US negotiating leverage, including on non-trade issues.

In prepared remarks he said pro-growth tax, investment, trade and energy policies would usher in a "a new economic golden age" of prosperity.

RUSSIAN OIL SANCTIONS

Bessent said that US sanctions against Russia's oil sector have been too weak, partly because the Biden administration was too concerned about increasing prices at the same time it was constraining US oil output. Increased US oil production would allow for tougher sanctions on Russian oil majors, he said.

"I think if any officials in the Russian Federation are watching this confirmation hearing, they should know that if I'm confirmed, and if President Trump requests as part of his strategy to end the Ukraine war, that I will be 100% on board with taking sanctions up - especially on the Russian oil majors - to levels that would bring the Russian Federation to the table," Bessent said.

He also had harsh words for China, calling it "the most imbalanced, unbalanced economy in the history of the world," one that was trying to export its way out of a "severe recession/depression" and the US could not allow China to flood US or world markets with cheap goods.

NO DRAMA

In a hearing marked by few testy exchanges, Bessent coolly fielded questions ranging from child tax credits to tariff impacts on farmers and did not stray from answers consistent with previous Republican Treasury nominees, but without contradicting Trump's policy plans.

He said that US spending on President Joe Biden's clean energy tax credit was "wildly out of control" and that high deficits in recent years were due to a "spending problem." Asked if a 100% tax credit for business research and development needed to be restored, he said his "inclination" would be to support that.

Democrats chided Bessent for taking advantage of a tax loophole, the legality of which has been disputed by the Internal Revenue Service, to reduce the Medicare taxes paid by his hedge fund by $910,000 over three years.

"This is exactly the kind of abusive scheme that leaves Americans feeling disgusted with our tax system," said Senator Ron Wyden, the panel's top Democrat.

Bessent said that he would set aside funds to pay any taxes owing once the case is decided. He has pledged to shutter Key Square to avoid conflicts of interest if his nomination is confirmed.

FED INDEPENDENCE

Markets were expected to scrutinize Bessent's comments on keeping the Federal Reserve independent for clues as to whether Trump would try to exert control over the US central bank given the president-elect's frequent complaints over Fed interest rate decisions.

But Bessent came down firmly on the side of Fed monetary policy independence, adding that Trump would still make his views known.

"I think on monetary policy decisions, the FOMC should be independent," he said, referring to the Fed's rate-setting panel, the Federal Open Market Committee.

Although some economists have said that Trump's plans to impose tariffs, cut taxes and curb immigration would be inflationary, Bessent disagreed, saying Trump's plans, including increased energy production, would lower inflation to the Fed's 2% target while increasing wages.

Despite Trump's longstanding complaints about a strong dollar hurting US exports, Bessent said: "Critically - critically - we must ensure that the dollar remains the world's reserve currency."

Bessent also rejected the idea of a central bank digital currency for the Fed, saying that the dollar's wide use and security made this unnecessary. He said he was open to the idea of creating a US sovereign wealth fund, but said the US needed to get control over short-term deficit growth first.

HIGH DEBT, LESS CAPACITY

Bessent vowed that there would be no debt default on US Treasury debt under his watch. Asked whether Congress should abandon the federal debt ceiling, Bessent said that if Trump requested that, he would work with Congress to make it happen.

The high debt level means that there is less capacity to borrow heavily to combat a crisis, Bessent said, citing examples of the 1930s Great Depression, World War Two and the recent COVID-19 pandemic.

"Treasury – along with the whole of government and Congress - has used its borrowing capacity to save the union, save the world, and save the American people," Bessent said. "What we currently have now, we would be hard pressed to do the same."