Fitch affirms Kuwait’s AA- rating with stable outlook
Updated 17 March 2024
ARAB NEWS
RIYADH: Kuwait’s foreign and local currency sovereign credit ratings have been affirmed at AA- with a stable outlook by Fitch Ratings, driven by strong fiscal and external balance sheets.
An AA- rating from Fitch indicates minimal default risk, demonstrating a strong ability to meet financial obligations.
“Kuwait’s fiscal and external balance sheets remain among the strongest of Fitch-rated sovereigns,” said the credit rating agency.
The report, however, added that the assessment is marginally curbed by Kuwait’s significant reliance on oil.
“The rating is constrained by Kuwait’s heavy dependence on oil, its generous welfare system and large public sector that could be challenging to sustain in the long-term, and a political context that hampers efforts to tackle consistent fiscal and economic rigidities and approve legislation to allow debt issuance and clarify government financing sources,” stated Fitch.
The US-based agency added that Kuwait’s fiscal and external balance sheets remain among the strongest of Fitch-rated sovereigns.
The report further projected that Kuwait’s sovereign net foreign asset position will average 529 percent of gross domestic product in 2024-25.
It noted that conflicts between the elected parliament and the 15-member cabinet are a recurring feature of Kuwaiti politics, resulting in frequent resignations of ministers and dissolutions of parliament. The most recent dissolution in February led to elections scheduled for April 4.
“After the election, the government will aim to pass a liquidity law (as previous governments have), but parliamentary approval remains highly uncertain. However, our forecasts, notably for government debt, are based on the assumption that a liquidity law is passed in the fiscal year ending March 2026,” said Fitch.
The assumption highlights Fitch’s view that the rating remains resilient to a moderate increase in government debt. “In the absence of a liquidity law, Fitch believes the government would still be able to meet its limited debt service obligations in the coming years, given the assets at its disposal,” the report added.
The rating agency expects an average oil price of $79.8 per barrel for the financial year 2024, representing a 5 percent dip compared to 2023.
“In the financial year 2025, we assume Kuwait’s average oil price will fall to $71 per barrel and that its crude output will rise to 2.66 million barrels per day, assuming that OPEC+ (Organization of the Petroleum Exporting Countries and its allies) loosens production constraints somewhat,” stated the report.
It added that gross government debt remains low, estimated at 3.1 percent of GDP in the financial year 2023, and it is expected to rise to 11 percent of the GDP by 2025.
Saudi Fund for Development expands global support in final quarter of 2024
Updated 5 sec ago
Nirmal Narayanan
RIYADH: Economies worldwide have faced significant challenges in 2024, marked by escalating geopolitical tensions and the ongoing conflicts in the Middle East.
Despite these difficult circumstances, the Saudi Fund for Development remained steadfast in its mission to support developing nations through financing vital social and infrastructure projects.
In the first nine months of 2024, the SFD supported various initiatives, including a $101 million investment for the Shounter and Jagran-IV Hydropower Projects in Pakistan, a $55 million loan to bolster Turkiye’s education sector, and a $5 million grant to fund a water project in Benin.
As the official development arm of Saudi Arabia, the SFD has financed more than 800 projects across over 100 countries, contributing a total of $20 billion since its inception in 1974. Now, in its 50th year, the SFD continues to build on its legacy, making significant strides during the final quarter of 2024. Here are some of the highlights from its activities in the last three months of the year.
Loans to Serbia
In October, the SFD marked its entry into Serbia by signing three development loan agreements valued at $205 million. The loans are aimed at supporting key sectors, including agriculture, education, and energy. This partnership is seen as a significant step in Serbia’s socio-economic development.
During the signing ceremony, Sinisa Mali, the deputy prime minister and minister of finance of Serbia, expressed his gratitude for the support and highlighted the importance of the projects in creating jobs and strengthening the country’s economy. “We are grateful for the support. The projects for which this money is intended will contribute to the creation of new jobs, the strengthening of our economy, and better positioning of the Republic of Serbia in the world scientific community,” said Mali.
He also emphasized the importance of the partnership: “The agreements will also reinforce the long-term partnership between the Republic of Serbia and the Kingdom of Saudi Arabia and contribute to the implementation and development of important projects in our country.”
Sultan Al-Marshad, CEO of SFD, commented on the significance of the partnership, stating that it aligns with the fund’s mission to support sustainable development through strategic investments in infrastructure and education.
Partners with the World Bank Group
In another significant move in October, SFD signed a memorandum of understanding with the World Bank Group to deepen international cooperation in advancing sustainable development in emerging economies. The partnership focuses on joint efforts in knowledge-sharing, co-financing, and tackling critical challenges like water and food security, particularly in regions vulnerable to climate change and fragility.
The agreement includes all five institutions within the World Bank Group: the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International Center for Settlement of Investment Disputes.
Key areas of focus outlined in the MoU include promoting renewable energy, enhancing transportation infrastructure, developing digital economies, and strengthening institutional capacity.
Cooperation with the Global Water Organization
In October, the Saudi fund also signed an MoU with the Global Water Organization. This collaboration aims to support water-related projects worldwide, with the goal of achieving sustainable development goals in various countries.
“This memorandum reflects SFD’s efforts over the past 50 years in enhancing international cooperation in the field of water resource management and water security. This partnership will enhance the provision of innovative financing options to support water projects,” said Al-Marshad at the time.
Deal with AIIB
In the same month, the SFD further extended its reach by signing an MoU with the Asian Infrastructure Investment Bank. The agreement seeks to foster sustainable, resilient, and inclusive development in AIIB member countries, with a particular focus on mobilizing resources through joint initiatives, knowledge sharing, and coordinated communication.
The MoU builds on a $10 million contribution by the SFD to AIIB’s Special Fund Window for Less Developed Members in 2023.
“As a key player in global development, SFD is dedicated to supporting least developed countries and advancing sustainable growth. We strongly believe that partnerships are essential for fostering long-term, impactful development,” said Al-Marshad.
He added: “Working closely with AIIB is a natural fit, given our aligned mission of promoting sustainability and resilience. With the Kingdom of Saudi Arabia’s recent contributions to AIIB’s Special Fund Window, this MoU marks an important milestone in our joint efforts to expand collaboration and drive meaningful change in developing countries.”
AIIB President Jin Liqun highlighted the significance of the agreement, noting that it would unlock new synergies and enhance institutional capabilities to drive resilient, inclusive growth in regions most in need.
“Building on SFD’s support to our Special Funds Window, and our joint effort to explore co-financing project opportunities, the collaboration with SFD will unlock new synergies and bolster our institutional capabilities, driving resilient and inclusive growth, where it is most critically needed,” said Liqun.
Healthcare in Djibouti
In November, the SFD signed an MoU with Djibouti to bolster the East African nation’s healthcare sector. The agreement involves the rehabilitation of the Sultan bin Abdulaziz Dialysis Center at Peltier General Hospital and the construction of a new dialysis center in the Balbala district of Djibouti City, with a total value of SR1.6 million ($426,000).
“This large-scale health project is expected to significantly expand Djibouti’s medical services, reinforcing SFD’s commitment to advancing healthcare infrastructure in Djibouti,” said the fund in a statement.
Djibouti’s Minister of Economy and Finance, Ilyas Moussa Dawaleh, welcomed a delegation from the Saudi Development Fund. SFD
Meetings
In the final quarter of the year, SFD participated in the Multilateral Industrial Policy Forum, organized by Saudi Arabia’s Ministry of Industry and Mineral Resources in partnership with the UN Industrial Development Organization. At the event, SFD showcased its developmental journey since its founding in 1974.
Al-Marshad met with several world leaders to discuss ongoing development projects. In November, Kyrgyzstan President Sadyr Japarov met with SFD CEO during the Extraordinary Arab and Islamic Summit in Riyadh to review development projects in the Central Asian nation. Likewise, in October, Vietnam’s Prime Minister Pham Minh Chinh met with Al-Marshad to discuss future support for pivotal sectors in Vietnam, which has been benefiting from SFD’s initiatives since 2011.
Through loans exceeding $164 million, the SFD has financed 12 development projects in Vietnam across sectors like transportation, communications, and social infrastructure, all contributing to the country’s economic growth and sustainable development.
Startups of the Year: eyewa and Lean Technologies attract top US investors to Mideast
Updated 38 min 3 sec ago
Nour El-Shaeri
RIYADH: Saudi startups eyewa and Lean Technologies have set a new benchmark in attracting international investment and driving innovation across the Middle East in 2024.
Operating in the retail and fintech sectors, respectively, these companies have secured significant funding rounds and reached major milestones, cementing their roles as pivotal players in the region’s entrepreneurial ecosystem.
The future of eyewear
Dual-headquartered in the UAE and Saudi Arabia, eyewa had a landmark year in 2024. The company surpassed 150 stores across the Middle East and secured its largest funding round to date — $100 million — led by General Atlantic, a leading global growth investor based in the US.
In an interview with Arab News, co-founder and co-CEO of eyewa Anass Boumediene emphasized the importance of these milestones, saying: “Investment from such a major international growth equity firm clearly highlights the strength of our business model.”
He added that eyewa’s rapid expansion is part of a broader strategy to reach 250 stores by the end of 2025.
Customer feedback has been central to eyewa’s success, helping the company navigate challenges in its competitive market. “Our first step in mitigating challenges has always been to listen to what we are being told by our customers,” Boumediene said.
Drawing from this feedback, the company invested in advanced technological solutions to improve the customer experience. Notable innovations include AI-assisted eye exams for more accurate prescriptions and augmented reality features that allow customers to try on glasses virtually via eyewa’s website and app.
Boumediene added: “These innovations have allowed us to bridge the gap between in-store and online experiences, making eyewear shopping more accessible and convenient.”
The founders of eyewa, with Anass Boumediene on the right. Supplied
Eyewa’s Gulf-centric approach to product design and pricing sets it apart from global competitors. “We design our glasses specifically for people in the region, whereas our global competitors tend to follow the US or European trends,” Boumediene said.
Affordability is another key driver of eyewa’s success, with prescription glasses starting at $100 — half the average price in the GCC.
“Our designs and pricing are a major factor in the success of eyewa. People in the region really feel like they can connect with the brand at a variety of price points,” he explained.
Building a diverse and strong team has been integral to eyewa’s growth. The company now employs over 1,300 people from more than 50 nationalities, achieving gender parity, with just over 50 percent of its workforce being female.
Boumediene highlighted eyewa’s approach to talent development, saying that optometrists have clear career paths, whether technical or managerial. “Our retail director, who leads our retail operations, is an optometrist,” he added, underscoring the company’s commitment to internal growth.
Looking ahead to 2025, eyewa plans to open an additional 100 stores and establish a production and fulfillment hub in Riyadh. Boumediene described the hub as a game-changer: “It will allow us to deliver bespoke products to customers within 24 hours, the fastest service in the region.”
He further noted that the Middle East’s young population and rapidly growing economies will continue to fuel demand for eyewear, positioning eyewa to capitalize on these trends.
Powering fintech
Lean Technologies, one of the Middle East’s leading fintech infrastructure startups, marked 2024 as a year of milestones, growth, and impact.
Hisham Al-Falih, CEO of Lean Technologies, told Arab News: “This year, two milestones stand out. The first, and perhaps the most visible, is our Series B funding round of $67.5 million, led by General Catalyst with participation from Bain Capital Ventures, Stanley Druckenmiller, Arbor Ventures, and other top-tier investors.”
Al-Falih emphasized that the funding round was not just significant for the capital raised, but also for the caliber of investors backing Lean. “It’s a reflection of the potential they see in the region,” he said, calling it a standout moment for the fintech industry.
Hisham Al-Falih, CEO of Lean Technologies. Supplied
Al-Falih also shared the significance of seeing team members celebrate their five-year anniversaries. “For a company just over five years old, this is deeply meaningful. It highlights the enduring commitment of the people who helped shape Lean from the beginning and continue to drive its mission forward.”
Operating at the intersection of banks, third-party providers, regulators, and millions of end-users, Lean Technologies faces unique challenges in balancing innovation, compliance, and reliability. “This year was particularly challenging as both Saudi Arabia and the UAE accelerated their Open Banking and Open Finance initiatives,” Al-Falih explained.
In this regulatory landscape, Lean played a key role in helping shape the frameworks while maintaining its commitment to clients and end-users. “It’s been a demanding but rewarding process—one that underscores our responsibility not just as a company, but as a critical enabler for the entire ecosystem,” he added.
Lean’s customer-centric approach has been a defining factor in its success. “What sets Lean apart is our relentless focus on solving the most critical challenges faced by our clients and their end users,” Al-Falih noted.
By embedding itself within clients’ businesses, Lean ensures it understands their needs. “This proximity gives us the clarity to address current challenges while also anticipating future opportunities,” he said.
In the UAE, Lean’s account-to-account payment solutions processed over $2 billion in transaction volumes in 2024, streamlining pay-ins and payouts for major companies like e&, DAMAC, and Careem.
In Saudi Arabia, the company’s data solutions, operating under the Saudi Central Bank’s regulatory sandbox, have been leveraged by companies such as Tawuniya, ALJUF, and Salla, as well as Tabby and Tamara to unlock new use cases in insurance, lending, and marketplaces.
Al-Falih reflected on Lean’s growth, saying: “Surpassing our ambitious growth targets wasn’t just about numbers. It was about demonstrating what’s possible when a team is deeply aligned with the needs of its market and its clients.”
This alignment is rooted in Lean’s culture, which Al-Falih described as “the pursuit of greatness.” He explained: “This mindset drives our culture, and we’ve worked hard to create an environment where people can collaborate with exceptional colleagues, achieve remarkable outcomes, and receive the feedback they need to grow.”
Lean structures its approach through a framework called the “3 Spheres of Influence,” which emphasizes mastery of craft, collaboration, and integrity. “These principles encourage our team members to reflect and grow both individually and as part of the Lean team,” Al-Falih added, noting that this cultural foundation has been instrumental in the company’s success.
Looking ahead to 2025, Lean is well-positioned to capitalize on the rapid advancements in Open Banking in Saudi Arabia and Open Finance in the UAE. “For us, these frameworks represent the culmination of five years of hard work—lobbying, collaborating with regulators, and partnering with banks,” Al-Falih explained.
The company’s focus will be on making these initiatives a reality for the market. “Our priority is to seize the opportunities these frameworks create and help bring the vision of Open Banking and Open Finance to life,” he said.
Beyond regulatory developments, Lean is also exploring new ways to improve financial infrastructure for individuals and SMEs. “Our mission remains clear: to enable the next generation of financial innovation,” Al-Falih said, adding: “With the momentum we’ve built, we’re confident in our ability to continue scaling and delivering impact across the region.”
RIYADH: Saudi Aramco has reduced the official selling prices for propane and butane for January 2025.
According to an official statement on Tuesday, the price of propane was lowered by $10 per tonne, while butane saw a $15 per tonne reduction compared to the previous month.
Propane and butane are both types of liquefied petroleum gas, commonly used for heating, vehicle fuel, and as a feedstock in the petrochemical industry. These products have distinct boiling points, making them suitable for different applications.
Aramco’s OSPs for LPG are widely used as benchmarks for contracts supplying the product from the Middle East to the Asia-Pacific region.
Demand for propane typically increases during the winter months, as it is heavily utilized for home heating.
Such seasonal demand spikes can lead to price fluctuations, as supply and demand dynamics come into play. Higher demand during colder months often results in rising prices, reflecting the basic economic principle of supply and demand.
ACWA Power secures $703m for Egyptian wind power plant
Updated 31 December 2024
Nirmal Narayanan
RIYADH: Saudi utility giant ACWA Power has secured SR2.63 billion ($703 million) in financing to develop, operate, and maintain a 1,100-megawatt wind power plant in Egypt’s Suez governorate.
In a statement to Tadawul, the company said the funding was sourced from the European Bank for Reconstruction and Development, African Development Bank, and British International Investment.
Additional lenders include DEG Deutsche Investitions, the OPEC Fund for International Development, and Arab Petroleum Investments Corp., with a loan tenure of 20 years.
The project aligns with Egypt’s green energy ambitions, aiming to generate 42 percent of the nation’s electricity from renewable sources.
Principal debt for the project was financed by Standard Chartered Bank and Arab Bank through the European Bank for Reconstruction and Development’s B financing structure. The total investment cost of the plant is SR4.13 billion, with ACWA Power holding a 70 percent stake.
The firm plays a pivotal role in Saudi Arabia’s renewable energy strategy, contributing to the Kingdom’s goal of generating 50 percent of its power from green sources. The Tadawul-listed company’s operations span 13 countries, underscoring its global ambitions in the utility sector.
ACWA Power recently announced its entry into China, securing over 1 gigawatt of renewable energy projects. These initiatives, which include solar photovoltaic and wind energy, are jointly owned with leading Chinese renewable energy firms.
Earlier this month, ACWA Power launched three renewable projects in Uzbekistan, involving wind, solar, and battery storage, with a combined investment of $3 billion.
In October, the company signed four agreements worth SR6.69 billion during the Future Investment Initiative in Riyadh, targeting renewable energy and storage projects across the Gulf Cooperation Council region, China, Central Asia, and North Africa.
The firm’s net profit for the first nine months of 2024 rose 15.74 percent year on year to SR1.25 billion, driven by increased revenue from electricity sales and operation and maintenance activities.
Founded in 2004, ACWA Power manages a portfolio of 90 projects valued at SR94 billion, according to its website. The company continues to expand its footprint as a leader in renewable energy and utility services worldwide
Saudi Arabia, Canada to strengthen economic ties after high-level meeting
Updated 31 December 2024
Nadin Hassan
RIYADH: Economic cooperation was the focus of a high-level meeting between a top Saudi official and the Canadian Ambassador as relations between the nations continue to progress.
The Kingdom’s Minister of Economy and Planning Faisal Al-Ibrahim held talks with Jean-Philippe Linteau at his department’s headquarters in Riyadh, according to the Saudi Press Agency.
This meeting signifies a positive development in Saudi-Canadian relations, which were restored in May 2023 after a five-year diplomatic rift.
The restoration followed discussions between Saudi Crown Prince Mohammed bin Salman and Canadian Prime Minister Justin Trudeau on the sidelines of the Asia-Pacific Economic Cooperation forum in Bangkok in November 2022.
Since normalizing relations, Canada is keen to build a “great relationship” with the Kingdom, Linteau said during an interview with Arab News in February.
The recent meeting between Al-Ibrahim and the top diplomat reinforces their commitment to deepening cooperation and tackling mutual challenges.
In January, Saudi Arabia and Canada agreed to re-exchange trade delegations, aiming to improve economic relations and increase trade and investment volumes.
Hassan Al-Huwaizi, president of the Saudi Chambers of Commerce, emphasized that establishing a joint business council would provide a platform for business leaders to promote activities and engage in partnerships, facilitating continuous interaction and information exchange about market opportunities.
