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Saudi PIF to Inject $266 Bn into New Projects

PIF Governor Yasser al-Rumayyan and Industry and Mineral Resources Minister Bandar al-Khorayef after signing an agreement at the forum (Asharq Al-Awsat)
PIF Governor Yasser al-Rumayyan and Industry and Mineral Resources Minister Bandar al-Khorayef after signing an agreement at the forum (Asharq Al-Awsat)
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Saudi PIF to Inject $266 Bn into New Projects

PIF Governor Yasser al-Rumayyan and Industry and Mineral Resources Minister Bandar al-Khorayef after signing an agreement at the forum (Asharq Al-Awsat)
PIF Governor Yasser al-Rumayyan and Industry and Mineral Resources Minister Bandar al-Khorayef after signing an agreement at the forum (Asharq Al-Awsat)

The Saudi Public Investment Fund invested nearly $1.3 billion in four national companies in the contracting sector during the last period, announced Governor Yasser al-Rumayyan.

Rumayyan announced the establishment of a general department for national development to determine the strategic directions in economic development and measuring impact.

The group launched a set of programs, including the local content growth program "Musahama," which aims to increase the share of local content spending in PIF's domestic portfolio to 60 percent by the end of 2025.

Rumayyan said in his opening speech at the PIF Private Sector Forum that Crown Prince Mohammad bin Salman bin Abdulaziz is enlisting the private sector and enhancing its role in advancing the country's economy and realizing Vision 2030.

The vision promotes innovation and economic diversification and seeks to increase the private sector's contribution to GDP from 40 percent to 65 percent by 2030.

- Government tenders

In a dialogue session titled "Partnership with the private sector is a strategic pillar in shaping the Kingdom's local economy," Industry and Mineral Resources Minister Bandar al-Khorayef stated that the number of government tenders of the mandatory list applies to 50,000, benefiting over 4,000 national factories.

Khorayef, also the Chairman of the Board of Directors of the Local Content and Government Procurement Authority, noted that the value of the tenders exceeded $106.6 billion since the regulations on preference for local content and local SMEs and companies listed on the Capital Market in business and procurement.

Khorayef stated that the industry in the Kingdom has become very attractive, and local investors are moving towards the sector, indicating that local content is an essential part of the Fund's agenda and enjoys unlimited interest and empowerment.

The Minister pointed out that the private sector has a fundamental role in developing the local content and is a significant and essential partner for the authority.

- Motivating mega companies

For his part, the CEO of the Private Sector Partnership Reinforcement Program (Shareek), Abdulaziz al-Arifi, stated that the program's launch came to make a tangible impact on the investments of national companies and institutions in the local market.

Arifi added that the Kingdom has many regional and global pioneering companies with the ability and desire to grow to serve its goals and the Kingdom's aspirations.

He indicated that Shareek's role lies in providing support and incentives to large companies and enabling them to reach the maximum possible extent of growth within the Kingdom and reach the target of $ 1.3 trillion.

The program works closely with the establishments to study expansion plans and projects and ways to enable them to address challenges that may delay the implementation of these projects and coordinate with various government agencies.

Arifi noted that supporting significant companies to expand, grow, and increase their investments inside the Kingdom will open a larger market for all investors locally, indicating that raising the efficiency and quality of investment will open the way for many opportunities within the value and supply chains.

He discussed forming sectoral supervisory committees to develop investment opportunities and present them to large investing companies.

According to Arifi, there is an excellent integration between the authorities in achieving the vision and keenness to place the private sector as a cornerstone in achieving these goals.

He reiterated the importance of PIF's development of opportunities for national companies, noting that it contributes to their growth and would generate revenues for the Kingdom.

- New sectors

For his part, Deputy Governor and Head of MENA Investments at the PIF, Yazeed al-Humied, stated that one of the main principles of PIF programs is the participation of companies in new sectors, indicating that the Kingdom's economy and its rapid growth is a vast area for promising opportunities.

Humied indicated that after implementing the strategy of the 13 sectors, the private sector found many investment and participation opportunities as a supplier and provider of services to achieve supply chains.

- Local content

During the forum, the Fund launched several initiatives to support and empower the private sector and stimulate local content growth through the Musahama program.

The program aims to increase the share of local content spending in PIF's domestic portfolio to 60 percent by the end of 2025. As part of this program, each PIF company will embed local content considerations in their design decisions and procurement policies.

It also launched another initiative, the "Suppliers Development Program," which will support the development and upskilling of local suppliers and vendors to meet the growing requirements of PIF's portfolio companies.

During 2023, PIF will hold vendor boot camps for the contracting sector to help Tier 2, and Tier 3 contractors prepare their companies to qualify as vendors.

The Private Sector Hub is a dedicated channel to share supplier and investment opportunities with the private sector.

The hub contains more than 100 opportunities and will be continuously enhanced and updated.

Head of the National Development Division at PIF, Jerry Todd, said that the launch of Musahama was a significant step forward in the efforts to drive the growth of local content in the Kingdom.

Both programs would ensure that PIF and its portfolio companies embed local content considerations in the activities and operations, contributing directly towards developing local industries and building long-term supplier and vendor partnerships.

It would strengthen local capabilities, enhance regional players' competitiveness, improve supply chain resilience, and stimulate innovation in the Saudi economy.

- Longterm partnerships

The Fund stressed the success of the long-term partnership with the private sector, urging more companies to participate in reaching the goals of Vision 2030.

Head of MENA Securities Investments at PIF Abdulmajeed al-Hagbani stated that building successful partnerships with the private sector is based on key frameworks.

At the "Building Successful Partnerships between the Public Investment Fund and the Private Sector" panel, Hagbani stated that the partnerships also focus on the additional value that the Fund gives, including governance and follow-up of the private sector through the development of a system of governance and specialized committees.

The second framework is adopting an effective operating model through establishing a shared services center to benefit from institutional communication, finance, legal, and tax affairs expertise and increase human resource efficiency.

It aims to stimulate innovation and business development and provide an infrastructure for all PIF and private companies.

The third framework included establishing a network for the Fund with local and regional partners, international investors, and government agencies to provide new and broad horizons.

For his part, the CEO of Zamil Group, Adib al-Zamil, discussed the experience of the Zamil Holding partnership with the Fund, explaining that long-term investment and mutual trust are among the secrets of the success of such partnerships.

Zamil indicated that the financial revenues might take time. The main goal is to grow with the available human and technical capabilities and benefit from them long-term.

The President and CEO of ACWA Power, Paddy Padmanathan, confirmed that the partnership with PIF gives confidence and credibility to provide and develop new outputs and products on a large scale.

Padmanathan pointed out that the partnership experience enabled the company's rapid growth and attracted huge capital.

He said the partnership also gave ACWA Power additional value and provided the ability to develop products on a large scale, with greater opportunities for joint investments.

- Memoranda of Understanding

During the forum, the Public Investment Fund signed four memorandums of understanding (MoU) with several entities and agencies to enhance cooperation through many initiatives to empower the local private sector in strategic sectors in the Kingdom.

The memorandums of understanding were signed on the sidelines of the inaugural PIF Private Sector Forum in Riyadh.

The Fund signed the first memorandum with the Local Content and Government Procurement Authority to develop local content in the national economy by cooperating in developing the programs and strategies and offering local content opportunities in the sovereign Fund's strategic sectors.

PIF signed an MoU with the Building Technology Stimulus Initiative under the Ministry of Municipal, Rural Affairs, and Housing to explore opportunities for developing modern construction methods and related technologies to serve the future direction of the housing and construction sectors in the Kingdom.

The third MOU was agreed upon with the Saudi Contractors Authority to follow through on the objectives of the PIF real estate schemes by cultivating the Kingdom's local contracting sector.

The Fund concluded the fourth agreement with the Federation of Saudi Chambers to define cooperation, activate the role of the private sector in projects and investments and increase local content based on the part of the Federation as an umbrella for the business sector and chambers of commerce in the Kingdom.

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Business

Official: Iraq Has Not Yet Applied for an IMF Loan

A floating oil export platform in Basra port, Iraq (Reuters)
A floating oil export platform in Basra port, Iraq (Reuters)
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Official: Iraq Has Not Yet Applied for an IMF Loan

A floating oil export platform in Basra port, Iraq (Reuters)
A floating oil export platform in Basra port, Iraq (Reuters)

Financial Advisor to the Iraqi Prime Minister Mazhar Mohammed Saleh revealed on Saturday that Iraq has not yet submitted a formal request for a loan from the International Monetary Fund (IMF).

The Iraqi News Agency quoted Saleh as saying that “Iraq enjoys close relations with the IMF, and since 2003, it has concluded more than five agreements, three of which were Stand-by Arrangements, while the other agreements related to emergency support.”

Iran's war has caused significant disruptions in supply chains, especially in the energy sector, which was severely affected by a near-complete closure of the Strait of Hormuz, through which about 20 percent of global oil supplies pass.

Saleh stated that “the Fund has played a significant role in supporting the Iraqi economy over the past 23 years, especially since Iraq is now considered one of the biggest victims of the ongoing war in the region, considering that 85 percent of its oil exports pass through the Strait of Hormuz. This has caused significant harm and international concern, given that Iraq is an important and active member in the stability of the region and world markets.”

He pointed out that there is an Iraqi government team in contact with the IMF, meeting with Fund officials for consultations twice a year.

He clarified that “Iraq signed an agreement with the IMF on July 7, 2016, for a Stand-by Arrangement by providing a significant loan, which played a major role in supporting the general budget,” noting that “signing an agreement with the Fund is a matter decided by the Iraqi government, and this does not prevent consultations between the two parties, as Iraq is a member of this institution responsible for global stability.”

Saleh mentioned that “Iraq will borrow from the International Monetary Fund if the need arises, but there is no formal request from the government yet, and the current need is for the war in the region to stop, and for its geopolitical impacts on oil exports to cease.”

He added that “technical assistance from the IMF is available now, unlike the issue of financing, which requires the approval of a program by the Iraqi government.”

He explained that “the loan itself represents a reform program to support the budget or to achieve social goals, such as supporting the health and education sectors, because it is a human investment that must be subject to conditions defining expenditure directions and commitment to a reform program agreed upon by the Iraqi state and the IMF.”

Business

Mawani Adds CMA CGM’s Ocean Rise Express Service to Jeddah Port

Mawani Adds CMA CGM’s Ocean Rise Express Service to Jeddah Port
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Mawani Adds CMA CGM’s Ocean Rise Express Service to Jeddah Port

Mawani Adds CMA CGM’s Ocean Rise Express Service to Jeddah Port

The Saudi Ports Authority (Mawani) has added CMA CGM's Ocean Rise Express (OCR) shipping service to Jeddah Islamic Port, aiming to strengthen maritime connectivity between Saudi Arabia and global markets, support the smooth flow of supply chains, and increase the efficiency of port operations.

The OCR service will connect Jeddah to key international ports, including Kobe, Nagoya, and Yokohama in Japan; Xiamen, Yantian, and Nansha in China; Rotterdam in the Netherlands; Hamburg in Germany; and Southampton in the United Kingdom.

The route will utilize vessels with a capacity of up to 10,000 TEUs, according to SPA.

This addition aligns with Mawani’s efforts to enhance Jeddah Islamic Port’s global competitiveness and support international trade.

By enabling access to new markets, the initiative reinforces the Kingdom's position as a global logistics hub in line with the National Transport and Logistics Strategy and Saudi Vision 2030.

Business

Lebanon's Financial Battles Persist Despite War Priorities

Lebanese President Joseph Aoun meets with a delegation from the Association of Banks in Lebanon (Lebanese Presidency)
Lebanese President Joseph Aoun meets with a delegation from the Association of Banks in Lebanon (Lebanese Presidency)
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Lebanon's Financial Battles Persist Despite War Priorities

Lebanese President Joseph Aoun meets with a delegation from the Association of Banks in Lebanon (Lebanese Presidency)
Lebanese President Joseph Aoun meets with a delegation from the Association of Banks in Lebanon (Lebanese Presidency)

Lebanon's unresolved financial and monetary issues continue to generate new and pressing obligations for the executive, legislative and monetary authorities. Although they have been partially overshadowed by the storm of war and its devastating human, reconstruction and social consequences, these issues remain high on both the political and economic agenda.

As the government's economic team works on amendments to the draft financial-gap law, including discussions over reservations raised by the central bank, newly proposed changes to the banking reform law, submitted by the government to parliament this month, have reignited the ongoing disputes within Lebanon's financial sector.

These disputes remain centered on the rescue plan and the treatment of structural crises that have persisted into their seventh consecutive year, most notably reflected in the repeated failure to meet reform commitments required to secure a financing agreement with the International Monetary Fund (IMF).

According to information obtained by Asharq Al-Awsat from a financial official, wartime developments and their repercussions have effectively granted Lebanon additional time, at least until the autumn meetings of international financial institutions, to complete legislation forming the roadmap for restoring financial stability and recovering deposits.

This includes the sought-after reforms of the banking sector, alongside compliance with anti-money laundering requirements, particularly measures aimed at curbing the informal economy, shutting down channels used for illicit financial flows, and addressing excessive cash circulation through enhanced source-to-beneficiary verification requirements.

A notable development is expected to influence future deliberations in parliamentary committees and the legislature's general assembly. In an updated report, the IMF classified the crisis affecting Lebanon's banking sector as a "systemic crisis," placing it alongside similar crises experienced by 13 countries worldwide over the past decade, from Angola in 2015 to Vietnam in 2022. This classification is expected to help align Lebanon's reform measures and responsibilities with international standards and draw on rescue plans implemented in comparable cases.

According to the financial official, the IMF's classification could help settle long-running domestic disputes that have prolonged the failure to adopt a comprehensive plan for exiting the financial and monetary crisis and containing its social and economic consequences. Such a plan remains the only viable pathway to restoring confidence in the financial sector and returning gradually to economic recovery, particularly after the enormous reconstruction and economic losses caused by successive destructive wars, estimated to exceed $20 billion at a minimum.

Lebanese President Joseph Aoun meets with Central Bank of Lebanon Governor Karim Souaid on May 7. (Lebanese Presidency)

Systemic Crisis and Financial Sector Restructuring

The official added that this approach takes on added importance amid discussions surrounding the restructuring of the financial sector, particularly the draft law on restoring financial order and recovering deposits submitted by the government to parliament.

"The recognition of the systemic nature of the crisis requires reconsidering some of the proposals currently on the table in a way that ensures a fairer distribution of responsibilities and burdens among all parties concerned, rather than reducing what happened to a narrow framework and placing the full cost of the collapse on depositors and banks," the official said.

This international reassessment is consistent with an opinion issued by Lebanon's State Council more than two years ago, which concluded that Lebanon was not facing an ordinary banking crisis but rather a systemic one, assigning primary responsibility for the financial crisis to the state because of its reliance on borrowing from the central bank to finance budget deficits.

Banks Ready to Shoulder Responsibilities

The issue resurfaced during a meeting between President Joseph Aoun and the board of the Association of Banks in Lebanon, headed by Salim Sfeir. The association conveyed the banking sector's readiness to assume its responsibilities and participate in absorbing losses, provided that reform does not amount to liquidation and that restructuring does not unfairly burden both banks and depositors. It stressed the need for a fair allocation of responsibilities and costs while safeguarding depositors' rights and preserving the sector's viability.

Aoun emphasized "the importance of reaching a fair and comprehensive solution to the banking crisis that satisfies all parties and preserves rights equally."

He stressed the importance of reform without destroying or undermining the sector, adding that "it is the state's duty to stand by the banking sector, reform it and restructure it in order to safeguard the economy and guarantee depositors' rights."

He further noted that "without a sound banking sector, there will be no investment, and there will be no country."

A general view of Beirut, Lebanon. (Reuters/File Photo)

Central Bank Governor Voices Reservations

Earlier, Central Bank Governor Karim Souaid openly expressed reservations about key provisions in the government's proposal, stating that "the draft requires further clarification and strengthening regarding the state's obligations. Since the state is ultimately the entity that used these funds over many years, its contribution must be explicitly defined, measurable, legally binding, and linked to a clear and credible timetable."

In several remarks, Souaid highlighted the challenge of distributing financial burdens and responsibilities among the state, the central bank and commercial banks. He additionally stressed the need to reduce the fiscal deficit by eliminating irregular claims, categorizing deposits into clearly defined groups, and carrying out repayments through a combination of cash payments and asset-backed financial instruments in phases and within available liquidity limits.

Banks continue to insist on their right to participate in discussions that will determine their future. They have outlined an approach that seeks to balance depositor protection with the sector's continued viability. In a memorandum submitted to officials, they argued that "instead of ensuring a fair distribution of responsibilities, the draft law submitted to parliament exempts the state, which bears primary responsibility for the financial gap, from making any clear contribution toward losses. Moreover, the proposal harms both the banking sector and depositors alike."

For instance, the draft law, despite objections from the monetary authorities, requires the removal of impaired assets, meaning assets deemed unrecoverable for depositors, and proposes deducting them from deposits without returning them to their owners. At the same time, banks would be required to absorb their value as losses. In practice, this would impose losses on both depositors and banks, pushing banks toward liquidation rather than enabling them to repay deposits.

Consequently, if banks are burdened with obligations that exceed their responsibilities and capacities, the outcome will be clear: the liquidation of the majority of banks.

The financial official noted that international experience shows that systemic crises, regardless of their severity, can become a starting point for rebuilding stronger and more modern financial systems when political will and serious reforms are present. The current period therefore represents an opportunity to redesign a new economic and financial model that can restore Lebanon's regional financial role and rebuild confidence both domestically and internationally.

In this context, the official said, it is essential to adopt a balanced and inclusive approach that rebuilds confidence in the financial and banking sectors while safeguarding the rights of depositors and investors and ensuring the continuity of financial institutions.

Economic recovery cannot be achieved through confrontational policies or temporary solutions, but rather through a comprehensive reform vision that recognizes the true scale of the crisis and lays the groundwork for a gradual and sustainable recovery.