Morocco Invests Over $13B in Energy Sector

An aerial view of the solar plant of Ouarzazate in central Morocco. (AP)
An aerial view of the solar plant of Ouarzazate in central Morocco. (AP)
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Morocco Invests Over $13B in Energy Sector

An aerial view of the solar plant of Ouarzazate in central Morocco. (AP)
An aerial view of the solar plant of Ouarzazate in central Morocco. (AP)

Moroccan Minister for Energy, Mines and Sustainable Development Aziz Rabbah has announced that the amount of investments in the country has exceeded MAD130 billion (USD13.7 billion), noting that the government has adopted a "national preference" approach in selecting projects.

Speaking at a press conference on the fields of energy and sustainable development, Rabbah underlined that Morocco has made notable development in the field of scientific research related to the energy sector, particularly renewable energy.

Rabbah added that Morocco’s progress in the field, in addition to its strong potential, has prompted world-leading companies in the energy sector to contribute to developing its energy sector.

He said that thanks to the national energy strategy adopted in 2009, Morocco’s reliance on foreign countries for electricity reduced from 98 percent to 92 percent.

He said the government is evaluating the first 10 years after the adoption of the strategy that aims to gradually move towards renewable energies.

Furthermore, he praised the major and rapid shifts witnessed by the sector, including expansion of local production of components and equipment and a 40 percent reduction in the prices of clean energy equipment over three years.

He explained that these developments have changed the vision for incentive measures and sector support measures, noting that the discussions highlighted several options including tax exemptions to encourage the acquisition of solar energy equipment by individuals, companies and agricultural farms.

He also referred to the introduction of the use of solar pumps in the field of agricultural irrigation. He said the government was planning to launch a special support fund for the acquisition of such agricultural equipment.

However, the low prices of the equipment made farmers move to the market to buy solar pumps without waiting for the government fund. "So far, we have counted 28,000 farm farms using solar pumps, and that's just what we got because the real number is even bigger," he said.

The government continues to amend the legal framework of the sector, noting that a new draft bill is being discussed in the parliament that would permit households to invest in solar energy systems to fulfill their self-needs and to sell the surplus through pumping it in the national electrical grid, said Rabbah.

He stated that another draft bill is underway setting conditions on firms that provide energy services as to human resources, administration, and products' quality – in addition to another draft that organizes opening gas stations and importing fuels and oil products.



Fitch Ratings: GCC Bank US Dollar Debt Issuance to Increase Strongly

Year-to-date issuance is USD20.1 billion, already surpassing the 2023 total of USD15.2 billion. Reuters
Year-to-date issuance is USD20.1 billion, already surpassing the 2023 total of USD15.2 billion. Reuters
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Fitch Ratings: GCC Bank US Dollar Debt Issuance to Increase Strongly

Year-to-date issuance is USD20.1 billion, already surpassing the 2023 total of USD15.2 billion. Reuters
Year-to-date issuance is USD20.1 billion, already surpassing the 2023 total of USD15.2 billion. Reuters

Gulf Cooperation Council (GCC) banks’ US dollar debt issuance is on track for its strongest quarter ever in 1Q24, with issuance already exceeding the full-year 2023 total, Fitch Ratings has said.

Year-to-date issuance is USD20.1 billion, already surpassing the 2023 total of USD15.2 billion.

Annual issuance in 2024 and 2025 could exceed the 2020 record of USD25.2 billion, boosting liquidity to meet strong credit demand, Fitch Ratings said on Thursday.

Banks in Saudi Arabia and the UAE account for 33% and 26% of the YTD figure, respectively.

This is the first time that Saudi Arabian banks have issued more US dollar debt than UAE banks. “They have been increasingly active in international debt capital markets since 2020 to support their strong financing growth plans, diversify their funding bases, and more recently, to offset the high cost of liquidity domestically,” said Fitch Ratings.

It expected Saudi banks’ US dollar issuance to continue gathering pace due to the strong credit growth outlook, especially in the corporate segment, and tight liquidity in the banking sector.

“Coupon rates on Saudi banks’ five-year senior unsecured issuance in 1Q24 averaged 5.1%. This is well below the three-month Saudi Interbank Offered Rate of 6.2% ... as the cost of liquidity in the Saudi banking sector is likely to remain high,” it said.

GCC banks have about USD16.9 billion of US dollar debt maturing in 2024, split fairly even between the UAE, Saudi Arabia, Qatar and Kuwait.

GCC banks account for about 10% of the medium-term US dollar debt issued by investment-grade banks in 1Q24.

They are also expanding their investor base through increasing issuance of sukuk. Sukuk accounts for 51% of YTD issuance excluding CDs, reflecting strong investor demand and pricing dynamics.


Fallen Crypto Mogul Sentenced to 25 Years in Prison

Sam Bankman-Fried, second from right, stands flanked by his attorneys, Marc Mukasy, left, and Torrey Young, right, while Judge Kaplan announces his sentence in Manhattan federal court, Thursday, March. 28, 2024, in New York. (Elizabeth Williams via AP)
Sam Bankman-Fried, second from right, stands flanked by his attorneys, Marc Mukasy, left, and Torrey Young, right, while Judge Kaplan announces his sentence in Manhattan federal court, Thursday, March. 28, 2024, in New York. (Elizabeth Williams via AP)
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Fallen Crypto Mogul Sentenced to 25 Years in Prison

Sam Bankman-Fried, second from right, stands flanked by his attorneys, Marc Mukasy, left, and Torrey Young, right, while Judge Kaplan announces his sentence in Manhattan federal court, Thursday, March. 28, 2024, in New York. (Elizabeth Williams via AP)
Sam Bankman-Fried, second from right, stands flanked by his attorneys, Marc Mukasy, left, and Torrey Young, right, while Judge Kaplan announces his sentence in Manhattan federal court, Thursday, March. 28, 2024, in New York. (Elizabeth Williams via AP)

Crypto entrepreneur Sam Bankman-Fried has been sentenced to 25 years in prison for a massive fraud on hundreds of thousands of customers that unraveled with the collapse of FTX, once one of the world’s most popular platforms for exchanging digital currency.

Though he described Bankman-Fried as “extremely smart,” US District Judge Lewis A. Kaplan delivered a blistering analysis of Bankman-Fried and his crimes before announcing a sentence that was half of what prosecutors sought and less than a quarter of the 105 years recommended by the court's probation officers, The Associated Press reported.
“There is absolutely no doubt that Mr. Bankman-Fried’s name right now is pretty much mud around the world,” Kaplan said of the 32-year-old California man who seemed atop the cryptocurrency universe before his businesses collapsed in November 2022, leaving customers, investors and lenders short over $11 billion, which the judge ordered him to forfeit.
He was convicted in November of fraud and conspiracy — a dramatic fall from a crest of success that included a Super Bowl advertisement, testimony before Congress and celebrity endorsements from stars like quarterback Tom Brady, basketball point guard Stephen Curry and comedian Larry David.
Kaplan imposed the sentence in the same Manhattan courtroom where, four months previously, Bankman-Fried testified that he had intended to revolutionize the emerging cryptocurrency market with his innovative and altruistic ideas, not steal.
The judge said Bankman-Fried repeatedly committed perjury on the witness stand in testimony that was “often evasive, hair-splitting, dodging questions.”
Kaplan said the sentence reflected the risk that Bankman-Fried “will be in position to do something very bad in the future. And it’s not a trivial risk at all.” He added that the sentence was fashioned “for the purpose of disabling him to the extent that can appropriately be done for a significant period of time.”
Kaplan said he would advise the Federal Bureau of Prisons to send Bankman-Fried to a medium-security prison near San Francisco because his notoriety, his association with vast wealth, his autism and his social awkwardness are likely to make him especially vulnerable at a high-security facility.
Assistant US Attorney Nicolas Roos had recommended a prison sentence of 40 to 50 years, saying it was the only way to ensure “the defendant doesn't do it again.”
Prosecutors said tens of thousands of people and companies worldwide lost billions of dollars since 2017 after Bankman-Fried looted FTX customer accounts that he promised were safe to make millions of dollars of illegal political donations, bribe Chinese officials, make risky investments, buy luxury real estate in the Caribbean and live lavishly.
Kaplan agreed with prosecutors Thursday that Bankman-Fried should not be credited because some investors and customers might recover some money. He noted that customers lost about $8 billion, investors lost $1.7 billion and lenders were shorted by $1.3 billion.
When he spoke, Bankman-Fried stood and apologized in a rambling statement: “A lot of people feel really let down. And they were very let down. And I’m sorry about that. I’m sorry about what happened at every stage.”
He added, “My useful life is probably over. It’s been over for a while now, from before my arrest.”


Government Incentives Increase Saudi Arabia’s Foreign Investment Flows

The Saudi market constitutes an attractive investment environment for international companies. (Photo: Reuters)
The Saudi market constitutes an attractive investment environment for international companies. (Photo: Reuters)
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Government Incentives Increase Saudi Arabia’s Foreign Investment Flows

The Saudi market constitutes an attractive investment environment for international companies. (Photo: Reuters)
The Saudi market constitutes an attractive investment environment for international companies. (Photo: Reuters)

Figures of net foreign direct investment (FDI) flows published in the fourth quarter of 2023, which amounted to about 13 billion riyals ($3.4 billion), indicate that the Saudi government succeeded in creating a flexible investment environment in accordance with global standards.

Foreign direct investment flows recorded very high levels in the fourth quarter, according to the figures of the General Authority for Statistics (GASTAT). Those amounted to around SAR 19 billion ($5 billion), with an increase of 16.6 percent compared to the third quarter of 2023.

The Saudi government has recently presented a package of new tax incentives for a period of 30 years to support the program to attract the regional headquarters of international companies, including exemption from income tax.

Economic analyst at King Faisal University Dr. Mohammad bin Dulaim Al-Qahtani told Asharq Al-Awsat that the flow of foreign investment into the country was expected to exceed SAR50 billion in the fourth quarter of 2026, with the completion of the infrastructure for a number of giant projects, including NEOM, the Red Sea tourism projects, and others.

He said the Kingdom will witness a major development as the Saudi economy has multiple resources, including oil, gas, minerals, gold, cultural and religious tourism, as well as sports and non-oil industries.

Dr. Salem Bajajah, an academic at King Abdulaziz University, said that the Saudi market is attractive for investment in several promising sectors, including tourism, entertainment, sports, and nutrition.

He attributed the increase in foreign direct investment flows in the Kingdom to companies making several lucrative returns, in addition to the government incentives that turn the investment environment attractive to international companies.


Unemployment Among Saudis is Close to Vision 2030 Target

The fourth quarter of 2023 witnessed an increase in the number of female workers. (Asharq Al-Awsat)
The fourth quarter of 2023 witnessed an increase in the number of female workers. (Asharq Al-Awsat)
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Unemployment Among Saudis is Close to Vision 2030 Target

The fourth quarter of 2023 witnessed an increase in the number of female workers. (Asharq Al-Awsat)
The fourth quarter of 2023 witnessed an increase in the number of female workers. (Asharq Al-Awsat)

The unemployment rate among Saudis approached the target of 7 percent, which was set in Vision 2030. At the end of the fourth quarter of 2023, unemployment declined to 7.7 percent, supported by a greater female participation in the labor market.

Human resources experts link this positive development to corrective strategies for the labor market and nationalization programs, as well as specialized programs that target the private sector.

Crown Prince Mohammed bin Salman had previously revealed that Vision 2030 sought to achieve an unemployment target of 4 to 7 percent, stressing that the government would attain this goal before the specified date.

According to data from the General Authority for Statistics (GASTAT) on Thursday, the unemployment rate among Saudis decreased in the fourth quarter of 2023 to the lowest level, due to the rise in the number of female workers and growth rates recorded by non-oil activities in the Kingdom, which contributed to providing more job opportunities.

Unemployment among Saudi women decreased to 13.7 percent compared to 16.3 percent during the third quarter, while the rate among Saudi males remained stable at 4.6 percent.

Experts told Asharq Al-Awsat that the strategies of the current human resources system were able to stimulate the private sector to accelerate the rate of employment of Saudis, in addition to the training, empowerment and guidance support programs of the Human Resources Development Fund, which in turn increased the employment process in the labor market.

Dr. Abdullah Al-Jassar, member of the Saudi Economic Society and the Energy Economics Society, explained to Asharq Al-Awsat that the decline in the unemployment rate among Saudis to 7.7 percent was achieved through support programs launched by the Ministry of Human Resources and Social Development, pointing as well to the growth of job opportunities in the private sector and efforts to stimulate investments and create an attractive economic environment.

Human resources expert Ali Al Eid noted that the entry of a large number of local and international companies into the Saudi labor market, in addition to the launch of a number of major government projects, contributed to raising employment rates.


S&P Raises Türkiye’s 2024 Growth Forecast to 3%

In 2023, Türkiye’s economy grew by a larger-than-expected 4.5% (Reuters)
In 2023, Türkiye’s economy grew by a larger-than-expected 4.5% (Reuters)
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S&P Raises Türkiye’s 2024 Growth Forecast to 3%

In 2023, Türkiye’s economy grew by a larger-than-expected 4.5% (Reuters)
In 2023, Türkiye’s economy grew by a larger-than-expected 4.5% (Reuters)

International credit rating agency Standard & Poor’s (S&P) increased its 2024 total growth forecast for Türkiye to 3%.
Also, the credit rating agency Fitch announced Tuesday it upgraded Türkiye Wealth Fund's (TWF) rating from “B” to “B+.”
In its second quarter economic outlook reports for the US and emerging markets, S&P Global said the growth forecast for Türkiye was increased from 2.4% to 3% for 2024 and from 2.7% to 3% for 2025. On the other hand, the growth expectation for the Turkish economy was reduced from 3% to 2.8% for 2026.
In 2023, Türkiye’s economy grew by a larger-than-expected 4.5%, exceeding the government’s forecast of 4.4%.
The economy expanded by 4.0% in the final quarter of the year, maintaining growth performance uninterruptedly for 14 quarters.
National income per capita increased to $13.110.
Meanwhile, Fitch Ratings has upgraded Turkiye Wealth Fund's (TWF) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'B+' from 'B' with a positive outlook.
It said the upgrade of the IDRs and the Positive Outlook follow the upgrade of Türkiye's sovereign ratings dated 8 March 2024.
On March 8, Fitch Ratings upgraded the country’s rating to “B+” from “B” and changed its outlook from “stable” to “positive.”
This is because Türkiye has tightened its monetary policy since June 2023.
Senior director in Fitch Ratings’ sovereigns group and primary Türkiye analyst Erich Arispe Morales said Fitch Ratings has “greater confidence” that the country’s current economic policy pivot is “more durable.”
“Regarding the effectiveness of the policy shift, improving reserve levels, reduced contingent liability in terms of effects of protected deposits without increasing dollarization, reduced current account deficit, and easing inflation expectations, these developments warrant the rating that we took,” Morales said.
“Also, with the caveat that we've seen an improvement in the international reserve levels, and we know that if the policy settings are sustained as our base case assumes we will be seeing that reserve coverage will improve to 4.5 months in 2025,” he said. “That would bring Türkiye’s reserve coverage above what is expected for countries with a similar rating which is the B rating category,” the analyst added.
On March 13, Fitch Ratings raised its forecast for the growth of the Turkish economy from 2.5 to 2.8 percent in 2024.
According to the World Economic Outlook report, entitled "Growth expectations improve but inflation continues", the Turkish economy grew in the last quarter of 2023, above expectations, and the increase in private consumption was effective in that.
Fitch expects economic momentum to continue in the first quarter of this year. The Turkish economy is expected to grow by 3.1 percent in 2025.

 


1,200 Brands Ready for Franchising in Saudi Arabia

Food, beverages, and retail are among the most prevalent industries in the Saudi franchising system (Asharq Al-Awsat)
Food, beverages, and retail are among the most prevalent industries in the Saudi franchising system (Asharq Al-Awsat)
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1,200 Brands Ready for Franchising in Saudi Arabia

Food, beverages, and retail are among the most prevalent industries in the Saudi franchising system (Asharq Al-Awsat)
Food, beverages, and retail are among the most prevalent industries in the Saudi franchising system (Asharq Al-Awsat)

More than 10,000 business opportunities are available in Saudi Arabia’s franchising market, with over 1,200 brands ready for franchising.
Saudi Arabia is becoming a hotspot for investment in the Middle East due to its favorable market conditions and supportive commercial environment.
The Kingdom has been welcoming hundreds of global brands in recent years, offering franchise opportunities across various regions.
According to a report by the Small and Medium Enterprises General Authority (Monshaat), there are over 1,000 franchising brands in the Kingdom, with 380 being local and more than 600 foreign brands.
The Saudi franchising market mainly focuses on sectors like food and beverage, retail, and services.
Saudi Arabia holds a significant share of the franchising market in the Middle East, making it attractive for global brands, especially after the launch of Vision 2030, which has spurred major investment projects in the country.
The franchising industry allows big international companies to enter local markets, providing opportunities for small investors and entrepreneurs to grow their businesses.
In 2020, the executive regulations of the franchise system were implemented to facilitate the entry of global companies into the Saudi market and to encourage investment opportunities for Saudi entrepreneurs.
The Saudi franchising law aims to ensure transparent relationships between franchisors and franchisees, offering necessary protection throughout the process.
The report from Monshaat highlighted that the Franchising Center, linked to the authority, has been assisting various Saudi brands. Their services include checking if brands are ready for franchising, licensing brokers, offering mediation services, and appointing franchise managers.
The goal of the Franchising Center is to boost the system and empower brands and stakeholders. They aim to make Saudi Arabia a regional and global hub for both local and international brands.
Through a bold program, the Franchising Center aims to help SMEs expand through franchising. This will increase the number of active brands in Saudi Arabia by offering guidance from industry experts.
Their program aims to prepare national brands, set up operational systems, and give new Saudi entrepreneurs and SMEs the chance to grow.
These franchising programs are expected to bring good returns in the short, medium, and long term, supporting fast-growing industries.
The franchising market is predicted to create job opportunities in Saudi Arabia in the coming years. Despite being relatively new in the Kingdom, it has quickly grown and developed.


EBRD to Provide 30 Mln Euros for Türkiye's Earthquake Regions 

A new building for earthquake survivors is under construction in Diyarbakir, Türkiye August 26, 2023. (Reuters)
A new building for earthquake survivors is under construction in Diyarbakir, Türkiye August 26, 2023. (Reuters)
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EBRD to Provide 30 Mln Euros for Türkiye's Earthquake Regions 

A new building for earthquake survivors is under construction in Diyarbakir, Türkiye August 26, 2023. (Reuters)
A new building for earthquake survivors is under construction in Diyarbakir, Türkiye August 26, 2023. (Reuters)

The European Bank for Reconstruction and Development (EBRD) will provide 30 million euros ($32.50 million) in long-term financing to Türkiye's Ronesans Gayrimenkul Yatirim to support regions affected by last year's earthquakes.

The loan will be provided to the subsidiary of Türkiye's Ronesans Holding that deals with commercial real estate development and investment, the company said in a statement.

It said the funds will be used to support capex of two shopping centers in the southeastern provinces of Kahramanmaras and Sanlıurfa that were struck by the February 2023 earthquakes. The loan will be backed by a guarantee from the European Union.

The financing will also help to support businesses and livelihoods in the region which faces labor shortages following migration from the area after the disaster, the statement said.

On Tuesday, the Turkish treasury and the EBRD signed a memorandum of understanding for 500 million euro financing to support efforts to revive the earthquake region, Anadolu news agency reported.


New Saudi Initiative Supports Exporters, Stimulates Economic Sustainability in South

The Cluster 2 Company, in cooperation with the Saudi SAL Logistics Services Company and Saudia Cargo, announced on Tuesday the launch of the initiative that aims to encourage and increase Saudi Arabia’s exports of agricultural crops. (Photo: SAL)
The Cluster 2 Company, in cooperation with the Saudi SAL Logistics Services Company and Saudia Cargo, announced on Tuesday the launch of the initiative that aims to encourage and increase Saudi Arabia’s exports of agricultural crops. (Photo: SAL)
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New Saudi Initiative Supports Exporters, Stimulates Economic Sustainability in South

The Cluster 2 Company, in cooperation with the Saudi SAL Logistics Services Company and Saudia Cargo, announced on Tuesday the launch of the initiative that aims to encourage and increase Saudi Arabia’s exports of agricultural crops. (Photo: SAL)
The Cluster 2 Company, in cooperation with the Saudi SAL Logistics Services Company and Saudia Cargo, announced on Tuesday the launch of the initiative that aims to encourage and increase Saudi Arabia’s exports of agricultural crops. (Photo: SAL)

In line with the ongoing efforts towards strengthening and sustaining the local economy and expanding trade exchange in the region, the Cluster 2 Company announced a new initiative aimed at supporting farmers and exporters in Jazan, south of the Kingdom.

Jazan is considered one of the most important agricultural regions in the Kingdom, thanks to its arable soil and groundwater. The city is also home to basic and transformational industries, and an ideal center for the growth of business and manufacturing industries.

The Cluster 2 Company, in cooperation with the Saudi SAL Logistics Services Company and Saudia Cargo, announced on Tuesday the launch of the initiative that aims to encourage and increase Saudi Arabia’s exports of agricultural crops, and to support farmers and exporters in the region, specifically during the current 2024 mango season.

In remarks to Asharq Al-Awsat, Logistics specialist Nashmi Al-Harbi pointed to the importance of this initiative, in terms of reducing export fees, which in turn will help increase the export volume and expand the access of national products to local and international markets.

He added that Jazan City for Basic and Transformative Industries represents a qualitative leap in terms of economic development in the southern region.

Al-Harbi noted that the new initiative was consistent with the objectives of the National Strategy for Transport and Logistics Services, both in improving goods and shipping services, as well as advancing the Kingdom’s ranking on logistics services performance indicators and ensuring its leadership regionally.

Jazan is known for seven important sectors, including agriculture in greenhouses, sustainable evergreen and deciduous fruit trees, the manufacture of agricultural products and their accessories, as well as crops, services, agricultural equipment, natural plants, flowers and roses, and vertical agriculture.

As the Jazan region is a major home to the world’s most famous Arabica coffee, the Public Investment Fund (PIF) announced in May 2022 the launch of the Saudi Coffee Company, with the aim of supporting the local coffee and elevating it to global ranks.

The Cluster 2 Company manages and operates 22 international, tourist and domestic airports in the Kingdom, by applying the best experiences, engaging the private sector, attracting local and international investments to enhance the customer experience, as well as improving sustainable infrastructure, and providing valuable benefits for beneficiaries.

SAL is a national facility specialized in providing ground handling services for air cargo and logistical solutions in the Kingdom. It handles 95 percent of the volume of air shipments at airports, making it a major driver in the development of this sector, according to Vision 2030.


China's President Meets US Executives in Beijing

The US and Chinese flags
The US and Chinese flags
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China's President Meets US Executives in Beijing

The US and Chinese flags
The US and Chinese flags

Chinese President Xi Jinping met with American business leaders at the Great Hall of the People in Beijing on Wednesday, as the government tries to woo foreign investors back into the country and international firms seek reassurance over new regulations.

Some 20 firms were invited to participate in the gathering, according to two sources with knowledge of the matter, and the meeting ran for around 90 minutes, one of the sources said.

Stephen Schwarzman, co-founder and CEO of private equity firm Blackstone, Raj Subramaniam, head of American delivery giant FedEx, and Cristiano Amon, the boss of chips manufacturer Qualcomm were among those who attended the meeting, which was organized by the National Committee on US-China Relations, the US-China Business Council and the Asia Society think tank.

Beijing wants to boost growth this year in the world's second largest economy, after foreign direct investment into China shrank 8% in 2023 as investor concern grew over an anti-espionage law, exit bans and raids on consultancies and due diligence firms.

Xi's increasing focus on national security has left many companies uncertain where they might step over the line, even as Chinese leaders make public overtures towards overseas investors.

"The history of China-US relations is a history of friendly exchanges between our two peoples," Xi said, according to state media, while calling on the two countries to "seek common ground and build more consensus."

The US and China have been gradually resuming engagements after relations between the two economic superpowers sank to the lowest in years, clashing over trade policies, the future of democratically ruled Taiwan and territorial claims in the South China Sea.

Wednesday’s gathering took place in the East Hall of the Great Hall of the People, which is reserved for important functions. Attendees sat in a square formation around a large red, orange and green floral installation, a video released by state media showed.

The audience with Xi follows Chinese Premier Li Qiang not meeting visiting foreign CEOs at the China Development Forum in Beijing on March 24-25.

The chance to exchange views with Beijing's second-ranking leader had become a key element of the summit in previous years.
Wednesday's meeting followed on from a dinner in November with US executives in San Francisco, where Xi received a standing ovation.


Egyptian Pound Falls Against Dollar in Currency Markets

A view from an airplane window shows buildings in a densely populated area, in Cairo, Egypt, March 23, 2024 REUTERS/Mohamed Abd El Ghany
A view from an airplane window shows buildings in a densely populated area, in Cairo, Egypt, March 23, 2024 REUTERS/Mohamed Abd El Ghany
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Egyptian Pound Falls Against Dollar in Currency Markets

A view from an airplane window shows buildings in a densely populated area, in Cairo, Egypt, March 23, 2024 REUTERS/Mohamed Abd El Ghany
A view from an airplane window shows buildings in a densely populated area, in Cairo, Egypt, March 23, 2024 REUTERS/Mohamed Abd El Ghany

The Egyptian pound fell against the dollar on Tuesday, nearing 48 pounds in some banks.

Despite Prime Minister Mustafa Madbouly’s assurance of clearing all goods at Egyptian ports, some traders are holding back deliveries, expecting the pound to weaken further.

Madbouly mentioned that the Finance Ministry seized $1.7 billion worth of goods, but owners are hesitant to accept them, waiting for the dollar’s price to drop.

Capital Economics predicts the Egyptian pound will hit 49 against the dollar by year-end, down from the current 47 average, and may drop further to 50-55 in the coming years.

Meanwhile, Egypt’s GDP is expected to grow by 2.3% in 2023-2024, then dip to 1.5% in 2024-2025 before bouncing back to 5% in the following fiscal year.

The transition to a more conventional economic policy will initially slow down growth, but it's expected to pave the way for stronger GDP growth in the long term.

The recent Central Bank’s decision to reduce the pound’s exchange rate hints at a more flexible monetary approach.

This could mean avoiding interest rate hikes and securing an $8 billion deal with the IMF, along with additional assistance from the European Union and the World Bank. It’s a positive sign for Egypt’s financial support.

Those agreements have improved Egypt’s financial standing abroad, with all financial aid promises expected to bring in a significant flow of foreign currency, covering more than the total external financing needs of Egypt.

Meanwhile, Capital Economics notes that foreign capital inflows into local bond and stock markets have sped up, with hopes that Egypt's political moves will boost direct investment.

However, it anticipates some challenges ahead, as the government intends to stick to tight fiscal policy and aims to increase the initial budget surplus from 2.5% to 3.5% of GDP.

Additionally, Capital Economics points to plans to extend the maturity of public debt, which will ease concerns about Egypt's fragile debt situation.

The research firm expects the government debt-to-GDP ratio to drop to 93% in 2024-2025 and 89% in 2025-2026 from an estimated average of 96.2% in the current fiscal year.