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Saudi Fund for Development Signs $10M Deal With National Bank of Iraq

Agreement between the Saudi Fund for Development and the National Bank of Iraq to encourage buying Saudi products (Asharq Al-Awsat)
Agreement between the Saudi Fund for Development and the National Bank of Iraq to encourage buying Saudi products (Asharq Al-Awsat)
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Saudi Fund for Development Signs $10M Deal With National Bank of Iraq

Agreement between the Saudi Fund for Development and the National Bank of Iraq to encourage buying Saudi products (Asharq Al-Awsat)
Agreement between the Saudi Fund for Development and the National Bank of Iraq to encourage buying Saudi products (Asharq Al-Awsat)

The Saudi Fund for Development (SFD) announced signing a finance agreement with the National Bank of Iraq (NBI) to provide SAR37.5 million ($10 million) in credit facilities to Iraqi investors willing to import products and services from Saudi companies.

The agreement aims to bolster bilateral cooperation in various fields and affirm the fraternal ties between the Kingdom and Iraq, said SFD CEO Sultan al-Marshad.

Under the agreement, SFD will grant NBI a revolving line of finance worth $10 million to import various commodities and services with a Saudi origin to clients of the bank from importing companies with a finance percentage of 100 percent of their value and with a repayment period of up to 36 months depending on the type of imports and nature of the process.

“This agreement highlights the brotherly ties between the Kingdom of Saudi Arabia and Iraq, and reflects the two countries’ willingness to enhance cooperation in all fields,” Marshad added.

“This deal is part of what the government of the Kingdom of Saudi Arabia has allocated to support reconstruction and development projects in Iraq with more than $1.5 billion.”

He also stressed that supporting stability in countries seeking to realize sustainable economic and social development is a top priority for SFD.

"The agreement comes in line with the Kingdom’s efforts to diversify its sources of national revenues and increase the volume of non-oil exports of commodities and services of Saudi origin," Marshad said.

This deal will open new markets for Saudi producers and contribute to stimulating the Iraqi commercial and financial sectors.

Notably, Riyadh and Baghdad had signed five agreements in various fields on the sidelines of Iraqi Prime Minister Mustafa al-Kadhimi’s visit to the Saudi Kingdom in April.

These included the establishment of a joint fund, with an estimated capital of $3 billion, as a contribution from the Kingdom to promote investment in Iraq.

Chairman of the board of directors of Capital Bank Group Bassem al-Salem, for his part, said the fund’s role reflects the Kingdom’s historical orientations and its continuous support of joint Arab action and contributes to achieving Arab economic integration.

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Expert: Türkiye Anti-inflation Steps Don’t Go Far Enough

People shop at a bazaar in Istanbul. Reuters
People shop at a bazaar in Istanbul. Reuters
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Expert: Türkiye Anti-inflation Steps Don’t Go Far Enough

People shop at a bazaar in Istanbul. Reuters
People shop at a bazaar in Istanbul. Reuters

Although Turkish inflation slowed in September, it is still raging out of control with the government avoiding difficult decisions that could help tackle it, experts told AFP.

Türkiye has experienced spiraling inflation the past two years, peaking at an annual rate of 85.5 percent in October 2022 and 75.45 percent in May.

The government claims it slowed to 49.4 percent in September.

But the figures are disputed by the ENAG group of independent economists who estimate that year-on-year inflation stood at 88.6 percent in September.

Finance Minister Mehmet Simsek has said Ankara was hoping to bring inflation down to 17.6 percent by the end of 2025 and to “single digits” by 2026.

And President Recep Tayyip Erdogan recently hailed Türkiye’s success in “starting the process of permanent disinflation.”

“The hard times are behind us,” he said.

But economists interviewed by AFP said the surge in consumer prices in Türkiye had become “chronic” and is being exacerbated by some government policies.

“The current drop is simply due to a base effect. The price rises over the course of a month is still high, at 2.97 percent across Türkiye and 3.9 percent in Istanbul.

“You can’t call this a success story,” said Mehmet Sisman, economics professor at Istanbul’s Marmara University.

Spurning conventional economic practice of raising interest rates to curb inflation, Erdogan has long defended a policy of lowering rates. That has sent the lira sliding, further fueling inflation.

But after his reelection in May 2023, he gave Türkiye’s Central Bank free rein to raise its main interest rate from 8.5 to 50 percent between June 2023 and March 2024.

The central bank’s rate remained unchanged in September for the sixth consecutive month.

“The fight against inflation revolves around the priorities of the financial sector. As a result, it is done indirectly and generates uncertainty,” explained Erinc Yeldan, economics professor at Kadir Has University in Istanbul.

But raising interest rates alone is not enough to steady inflation without addressing massive budget deficits, according to Yakup Kucukkale, an economics professor at Karadeniz Technical University.

He pointed to Türkiye’s record budget deficit of 129.6 billion lira (3.45 billion euros).

“Simsek says this is due to expenditure linked to the reconstruction in regions hit by the February 2023 earthquake,” he said of the disaster that killed more than 53,000 people.

“But the real black hole is due to the costly public-private partnership contracts,” he said, referring to infrastructure contracts which critics say are often awarded to firms close to Erdogan’s government.

Such contracts cover construction and management of everything from motorways and bridges to hospitals and airports, and are often accompanied by generous guarantees such as state compensation in the event they are underused.

“We should question these contracts, which are a burden on the budget because this compensation is indexed to the dollar or the euro,” said Kucukkale.

Anti-inflation measures also tend to impact low-income households at a time when the minimum wage hasn’t been raised since January, he said.

“But these people already have little purchasing power. To lower demand, such measures must target higher-income groups, but there is hardly anything affecting them,” he said.