CAIRO: Egypt will remove subsidies on most energy products by June 15, it told the International Monetary Fund in a January letter released by the IMF on Saturday as part of a review of Cairo’s three-year, $12 billion loan program with the lender.
This will mean increasing the price to consumers of gasoline, diesel, kerosene and fuel oil, which are now at 85-90 percent of their international cost, said the letter, which is dated Jan. 27.
The letter from Egypt’s finance minister and central bank governor was included in an IMF staff report dated Jan. 28 and published following the disbursement in February of the fifth out of six tranches of the loan.
The loan program began in 2016 and is tied to reforms that have included a sharp devaluation of the Egyptian pound and the introduction of a value-added tax. They have helped steady Egypt’s economy but also put millions of Egyptians under increased economic strain.
Fuel prices have increased steadily over the past three years. LPG and fuel oil used for electricity generation and bakeries are not included in the commitment to reaching full cost recovery through subsidy cuts, the letter said.
The government said in its letter that after starting to link less-used Octane 95 petrol to international prices — which it accomplished in April — it would introduce similar indexation mechanisms for other products in June, with the first price adjustments expected in mid-September.
The government noted it had also put in place a hedging mechanism to protect against shocks in oil and other commodities. In its review, however, the IMF “advised caution in using financial instruments with upfront costs that protect only temporarily against extreme price movements,” referring to hedging.
Debt target
Since starting the IMF loan program, Egypt has borrowed heavily from abroad.
In its letter, the government said it intended to reduce its general debt from a projected 86 percent of Gross Domestic Product (GDP) by the end of June to 72 percent by June 2023. Debt was equal to 93 percent of GDP in June 2018.
It also committed to fully eliminating arrears held by the state-owned Egyptian General Petroleum Company (EGPC) by the end of June this year. The arrears stood at $1.043 billion at the end of 2018.
Egypt said it had capped the government’s ability to borrow from the central bank via an overdraft account at 66 billion Egyptian pounds ($3.82 billion) in 2018/19, equal to 10 pct of the previous three years’ revenue, as a way of managing liquidity and reducing inflation.
The central bank would gradually phase out subsidised lending to small- and medium-sized enterprises and social housing programs and instead these programs would be financed directly from the state budget, the letter said.
The sale of stakes in at least 23 state-owned enterprises over between 24 and 30 months starting in April 2018 was expected to raise around 80 billion Egyptian pounds, it added.
The IMF said in its review that Egypt’s reform program was “broadly on track.”
“The progress on structural reforms has been mixed, but the program objectives remain achievable,” it said.
“Sustained efforts are needed to advance critical reforms in competition, industrial land allocation, transparency and governance of state-owned enterprises, and public procurement.”
A recent tightening of global financial conditions had worsened the balance of risks, with Egypt vulnerable to any unexpected increase in oil prices, the IMF said.
“Calls on state-guaranteed loans, which have been increasingly used to finance large infrastructure projects by public entities, or other contingent liabilities could also put pressure on public debt,” the report said.
The IMF did not explain the delay in publishing the review.
Egypt to slash fuel subsidies as it nears end of IMF program
Egypt to slash fuel subsidies as it nears end of IMF program
- Removal of subsidies will mean increasing the price to consumers of gasoline, diesel, kerosene and fuel oil
- The IMF loan program began in 2016 and is tied to reforms that have included a sharp devaluation of the Egyptian pound and the introduction of a value-added tax
PIF’s Alat unveils electrification, AI infrastructure business units
RIYADH: Alat, a flagship company of the Public Investment Fund, unveiled two business units in electrification and AI infrastructure, to establish Saudi Arabia as a premier manufacturing hub globally.
The company unveiled its plans during the Milken Institute Conference held in Los Angeles.
According to a press release, the move comes as part of the PIF company’s strategic vision to spearhead a paradigm shift in industry sustainability while propelling Saudi Arabia on the global stage.
Alat Global CEO Amit Midha said: “I am pleased to announce these two exciting new divisions as they will make a significant contribution to Alat’s overall strategic goal of developing an advanced, sustainable future for the industry.”
The electrification arm will fortify grid technology, catering to the burgeoning demand for electricity driven by exponential growth in renewable energy sources like solar, wind, and hydrogen.
By harnessing Saudi Arabia’s solar energy and other clean resources, the firm seeks to manufacture innovative solutions that will catalyze the global energy transition and drive decarbonization in industry.
The electrification unit will specifically focus on enhancing transmission and distribution technologies, facilitating the integration of renewable energy into existing grids, and pioneering advancements in gas and hydrogen generation and compression technologies.
On the other front, the AI Infrastructure business unit will address the escalating global demand for AI capabilities across industries.
This entails the development of cutting-edge technologies encompassing network and communications equipment, servers, data center networking, storage, industrial edge servers, and Industry 4.0 computing.
“The global electrification market size reached $73.64 billion in 2022 and it is expected to hit around $172.9 billion by 2032, growing at a CAGR of 8.91 percent between 2023 and 2032,” the press release added.
The global AI Infrastructure market is set to hit $460.5 billion by 2033, with a robust 28.3 percent compound annual growth rate, driven by widespread adoption across industries for innovation, decision-making enhancement, and task automation.
As a gold sponsor at the Milken Institute Conference, the firm now has nine business units focused on sustainable technology manufacturing.
“Alat will invest $100 billion by 2030 across these business units to develop key partnerships and build advanced manufacturing capabilities in Saudi Arabia to bring jobs and economic diversification to the Kingdom,” the press release said.
Saudi Arabia’s Qiddiya to build region’s largest water theme park
- Aquarabia will also feature the first underwater adventure trip with diving vehicles
RIYADH: Saudi Arabia Qiddiya Investment Co. will construct the region’s largest water theme park as a cornerstone of its Six Flags Qiddiya City venture it was announced on Monday.
To be named Aquarabia, Qiddiya hopes to draw visitors from around the globe with 22 attractions and water experiences suitable for all family members, as well as some “world-first” attractions, Saudi Press Agency reported.
These attractions include the world’s first double water loop, the tallest water coaster with the highest jump, the longest and highest water racing track, and the tallest water slide.
Aquarabia will also feature the first underwater adventure trip with diving vehicles, catering to adventure enthusiasts with water sports areas designated for rafting, kayaking, canoeing, free solo climbing, and cliff jumping.
Additionally, the park will introduce the first surfing pool in the Kingdom, incorporating immersive design elements themed around ancient desert water springs and Qiddiya’s wildlife.
With sustainability in mind, Aquarabia will implement advanced systems capable of reducing water waste by up to 90 percent and decreasing energy consumption. As part of the Six Flags Qiddiya project, the venture, the first Six Flags of its kind outside North America, aims to recycle operational waste, diverting over 80 percent from landfill.
Scheduled to open in 2025, both Aquarabia and Six Flags Qiddiya City are situated within Qiddiya City, forming a fully walkable neighborhood offering a diverse array of activities, accommodations, dining options, and relaxation spots.
Abdullah Al-Dawood, managing director of Qiddiya Investment Co., hailed the announcement as a significant milestone for Qiddiya and the entertainment, tourism, and sports sectors in the Kingdom.
He emphasized that the projects will cater to diverse entertainment needs while contributing to economic diversification and job creation in the tourism sector.
The project also aims to meet the growing local demand for immersive entertainment experiences, particularly in water activities, aligning with the goals of Saudi Arabia’s Vision 2030 to enhance local tourism and employment opportunities.
The unveiling of Aquarabia follows the announcement of several other entertainment, sports, and cultural attractions in Qiddiya, including the world’s first multi-use gaming and electronic sports area, the multi-sport Prince Mohammed bin Salman Stadium and the Dragon Ball amusement park.
Saudi Arabia ascends as key destination for global talent: BCG report
RIYADH: Saudi Arabia has emerged as a key player in attracting global talent amid ongoing geopolitical shifts and financial uncertainty, moving up two spots on the list of preferred countries for workforce mobility.
The “Decoding Global Talent 2024” report by Boston Consulting Group highlights Saudi Arabia’s rise to the 26th most preferred country, underscoring the success of the Kingdom’s strategic initiatives to position itself as a global hub for professionals.
This fourth edition of the study draws insights from over 150,000 professionals across 188 nations, tracking global talent trends since 2014.
Riyadh’s rise to the 54th rank globally underscores its emergence as a hub of opportunity and progress in the eyes of global talent.
Christopher Daniel, managing director and senior partner at BCG, said: “As the global talent shortage becomes an increasingly pressing challenge for the world's foremost economies, Saudi Arabia is emerging as a pivotal player in narrowing this gap.”
He added: “With a significant proportion of respondents citing the quality of job opportunities, the attractive income, tax, and cost of living, as well as the assurance of safety, stability, and security as key reasons for choosing the Kingdom, it’s evident that Saudi Arabia’s strategic investments in its labor market are bearing fruit.”
Daniel noted that the Kingdom is leveraging labor migration to enhance its workforce, offering a secure and hospitable environment that caters to the diverse needs of international professionals.
“By fostering a job market that is attuned to the evolving aspirations of global talent while prioritizing their well-being, Saudi Arabia is positioning itself as a compelling destination for those seeking growth and fulfillment in their careers,” he said.
Furthermore, the report highlights that younger generations and individuals from rapidly expanding populations are particularly attracted to global mobility, pursuing diverse experiences and opportunities for professional growth.
With 23 percent of global professionals actively pursuing international positions and 63 percent remaining receptive, Saudi Arabia is well-positioned to capitalize on this trend.
The Kingdom offers an enriching environment for a globally oriented workforce to excel and progress in their careers, presenting an enticing option for individuals seeking both personal and professional advancement in an ever more interconnected global landscape.
Riyadh Air to expand fleet with additional aircraft orders, CEO reveals
RIYADH: Saudi Arabia’s Riyadh Air plans to bolster its aircraft lineup through additional orders, as it requires “a very large fleet” to establish itself alongside regional giants, stated the CEO.
This move comes as the Kingdom’s second flag carrier, backed by the country’s Public Investment Fund, ordered 39 Boeing 787-9 jets last year, with options for 33 more.
It also aligns well with Saudi Arabia’s goal to expand its aviation industry and attract more tourists, broadening its airline capacity beyond pilgrimage travel, which currently forms the backbone of the country’s inbound tourism.
“We need a very large fleet, we’re going to make a number of additional orders,” CEO of Riyadh Air, Tony Douglas, said in an interview with Bloomberg Television.
He added: “We will be making a narrowbody order, we’ll probably be doing another large order after that to build us up to scale.”
During the interview, Douglas, who previously led the Abu Dhabi flag carrier Etihad Airways, expressed being “very conscious” of potential delays to aircraft deliveries. This concern arises as both Boeing and Airbus SE grapple with production challenges amidst record demand and supply issues at the two plane makers.
The establishment of a second Saudi national airline alongside the existing flag carrier Saudia is part of the Kingdom’s economic diversification plan.
In November 2023, Douglas expressed confidence in the demand for travel. “We’re not well enough connected. It’s as simple as that,” he said at the time.
The new airline stands to benefit from Saudi Arabia’s rapidly growing economy and the increasing influx of tourists to the Kingdom. Riyadh Air does not intend to pursue mergers and acquisitions to fuel its growth. “No, it’s organic,” Douglas emphasized at the time.
The initial destinations will include major cities in Europe, the US East Coast, and Canada, with the inaugural flight scheduled to depart by June 2025.
By that time, Riyadh Air will have secured slots at major airports, Douglas mentioned, although hubs like London Heathrow are already operating close to capacity.
“It won’t be easy ... but we have no reason to be anything other than confident that we’ll resolve all of that,” he said at the time.
Saudi Arabia and Egypt retain top spots in MENA travel preferences: Wego study
RIYADH: Saudi Arabia and Egypt remain dominant destinations among Middle East and North Africa travelers in 2024, retaining top spots in international preferences, according to a study.
Singapore-based travel booking app Wego ranked Egypt as the top destination for tourists from the region between January and April, followed by the Kingdom, with India consistently holding the third spot since 2016.
Saudi Arabia’s second spot on the wish list is a clear indication of the Kingdom’s progress as a global tourist destination, aligning with its National Tourism Strategy aiming to attract 150 million visitors by 2030.
“We are excited to see Egypt emerge as the leading destination for travelers in the MENA region during Q1 2024. According to Wego's data, Egypt stands out as a favored choice among travelers seeking unique cultural experiences and diverse attractions,” said Mamoun Hmedan, chief business officer at Wego.
He added: “Meanwhile, the United Kingdom retains its position as the preferred European destination for Middle Eastern travelers.”
Among Middle East destinations, the top three — Egypt, Saudi Arabia, and UAE —maintained their positions from 2023. Egypt and the Kingdom, in particular, have consistently held the top two spots since Wego began tracking customer trends over a decade ago.
The study utilized traveler searches and hotel booking data from its website as the foundation for its findings.
The report further revealed that the UAE ranked as the fourth favorite destination, followed by Pakistan, Kuwait, and Turkiye.
Meanwhile, China dropped one spot, reaching the 27th top destination among MENA travelers.
The UK remains the top European destination from the Middle East, holding the first spot for 10 of the last 11 years, briefly overtaken during the pandemic. Italy has notably surged from fourth to second.
Italy, a top global tourist spot, consistently ranks in the top ten European destinations for Middle East travelers.
This year marks Italy’s debut in the top three. Joint investments between Saudi Arabia and Italy in late 2023, along with direct flights by ITA Airways to Riyadh and Jeddah, signify growing ties.
Countries farther from the Gulf region, such as Morocco, Indonesia, and the US experienced the most decline among top destinations.
This trend continued in 2024, with Malaysia, the Philippines, and the US dropping out of the global top 10, while Kuwait, Pakistan, and Jordan, which entered the top ten last year, remain preferred destinations for MENA travelers.
