Saudi Arabia replaced its central bank chief and long-time oil minister as part of sweeping economic changes led by Deputy Crown Prince Mohammed bin Salman to reduce the nation’s reliance on hydrocarbons.
King Salman bin Abdulaziz Al Saud appointed Ahmed Alkholifey to head the Saudi Arabian Monetary Agency, as the central bank is known, succeeding Fahad Al Mubarak, who had been in the role since 2011.
Also out is Minister of Petroleum and Mineral Resources Ali al-Naimi, the architect of the 2014 switch in OPEC policy that has since roiled crude markets, replaced by Saudi Aramco chairman Khalid al-Falih.
Photo: Reuters
Saudi Arabia is undergoing its biggest ever economic shakeup, led by the deputy crown prince and second in line to the throne, as it prepares for the post-oil era following the plunge in crude prices that started in 2014.
The kingdom’s energy industry, as well as its central bank, will play a “critical role in the economic transformation” plans, said Simon Kitchen, head of macro-strategy at Cairo-based investment bank EFG-Hermes.
“The deputy crown prince has now put his stamp on both institutions,” he said.
As part of Saturday’s royal decrees, the name of the oil ministry has becomes the Ministry of Energy, Industry and Mineral Resources, and will undertake tasks and responsibilities related to electricity.
Prince Mohammed’s plans, outlined in the so-called “Vision 2030” blueprint announced on April 25, include setting up the world’s biggest sovereign wealth fund, transforming Aramco into an energy and industrial conglomerate, and generating an additional US$100 billion in non-oil revenue by 2020.
One of the government’s biggest challenges, though, will be navigating the worst economic slowdown since the global financial crisis as authorities cut spending to plug a budget deficit that reached about 15 percent of GDP last year.
The economy will expand 1.5 percent this year, according to the median estimate of a Bloomberg survey, the slowest since 2009, complicating efforts to reduce what is already among the region’s highest levels of youth unemployment.
The International Institute of Finance (IIF) said in a report published on Tuesday that it expects “sharply slower growth in the next few years due to the serious fiscal consolidation.”
While Saudi banks are “well placed to weather the slump in oil prices,” they will come under pressure as borrowing costs climb because of increased government borrowing and the decline in private-sector deposits, IIF economists Giyas Gokkent and Garbis Iradian wrote in the report.
Alkholifey, deputy governor before the king promoted him to central bank chief, takes office as the government prepares to borrow more through local and global debt markets.
The central bank is also considering reducing the reserves banks are required to hold against customer deposits to release more funds for lending, the IIF said.
The central bank’s net foreign assets fell by US$115 billion last year, fueling speculation that the kingdom will abandon the dollar peg.
Along with Al Mubarak, a former Morgan Stanley banker, Alkholifey reiterated Saudi Arabia’s commitment to the policy.
“The peg will stay. A strong nominal anchor is important during a time of major economic change,” Kitchen said.
The king’s government reorganization on Saturday is the third major change since he took power in January last year. The previous two reshuffles helped propel a younger generation of the al-Saud ruling family, mainly his son Prince Mohammed, closer to the throne of the world’s top oil exporter.
The prince was named defense minister, leading the kingdom’s war effort in Yemen against rebels it says are backed by its rival Iran. He also oversees the economy and oil through the Council for Economic and Development Affairs.
The prince’s rapid rise to power and fast-paced policy changes have stunned diplomats and analysts alike.
His economic plans, which include selling shares in Aramco as well as cutting subsidies, were received with skepticism by some foreign analysts who predict he may face domestic resistance.
“Vision 2030 represents a Saudi plan for economic leadership in a world where oil is no longer dominant,” Simon Henderson, the Baker Fellow and director of the Gulf and Energy Policy Program at The Washington Institute, wrote in a report. “If it succeeds, it will also bring about much broader changes within the kingdom.”
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day