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Saudi Government Enables Private Sector to Engage In Major State Projects

Buildings are seen in Riyadh, Saudi Arabia February 16, 2021. REUTERS/Ahmed Yosri
Buildings are seen in Riyadh, Saudi Arabia February 16, 2021. REUTERS/Ahmed Yosri
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Saudi Government Enables Private Sector to Engage In Major State Projects

Buildings are seen in Riyadh, Saudi Arabia February 16, 2021. REUTERS/Ahmed Yosri
Buildings are seen in Riyadh, Saudi Arabia February 16, 2021. REUTERS/Ahmed Yosri

The Saudi government is seeking to enable the private sector to contribute to state projects by designing a strategy that involves the Federation of Saudi Chambers and public agencies to stimulate and develop the economic sectors.

According to a recent report issued by the Federation of Saudi Chambers, coordination with government agencies contributed to improving the business environment and overcoming the challenges facing the sector.

The report revealed key government projects that supported the private sector, with the contribution of the Federation of Saudi Chambers, including raising the percentage of local content in mega projects, issuing the mining investment system, stimulating national exports according to incentive packages and government facilities, in addition to contributing to the franchise system and organizing the Saudi Center for Commercial Arbitration.

The Federation of Saudi Chambers is participating as a permanent member of the Business Environment Improvement Committee for the private sector, working to improve the regulatory and legislative environment for business affairs, creating innovative solutions to the obstacles facing the sector, and working to educate companies and institutions about the developments in the national economy.

The Open Ministerial Conferences is an initiative that falls within the national plan to stimulate the private sector, which aims to strengthen the complementary relationship between the public and private sectors and achieve comprehensive development.

The initiative also seeks to support and encourage investment in the various regions of the Kingdom and remove obstacles and challenges, with the aim to achieve Saudi Vision 2030.

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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.