BUENOS AIRES: Argentina’s unions paralyzed the country with a 24-hour strike on Monday in protest at the government’s latest deal with the International Monetary Fund.
With no trains, subways, buses or flights in service, organizers expected at least one million workers to take part in the industrial action.
Although the General Confederation of Workers (CGT) called only for a strike, more radical groups organized demonstrations that cut off access to Buenos Aires.
Toward 7:00 am (1000 GMT), activists began to close off the main routes into the capital where hundreds of federal law enforcement personnel were deployed. Most of the city was deserted, including schools.
“The strike is against the economic program ... The IMF has always brought hardship to the Argentines,” CGT director Juan Carlos Schmid told AFP.
He described the strike as “the biggest in eight years.”
The unions are demanding that salary negotiations for this year be reopened in order to align them with projected inflation, calculated at 27 percent by the central bank and which could rise to 30 percent by year’s end.
Negotiations mostly took place at the start of the year, when the annual inflation target was 15 percent — a goal which had been abandoned by May.
In the interest of maintaining dialogue with the unions, labor minister Jorge Triaca said his office was in favor of such negotiations.
Following a currency crisis in April and May, in which the peso shed roughly 30 percent of its value, the IMF announced a $50 billion standby loan for Argentina in early June after Latin America’s third-largest economy sought help to bolster market confidence.
Argentina has a bitter history with the global crisis lender, which many Argentines view as having imposed tough conditions that worsened economic pain 17 years ago.
As the strike gripped Buenos Aires Monday, only a few cars could be seen on the city streets, which were quieter than on a Sunday.
“A general strike isn’t enough. We need a battle plan to counter this war plan against the workers,” Marcelo Ramal, a leader of the Workers Party, said at one of the roadblocks.
The finance ministry estimated the strike would cost Argentina’s economy one billion dollars.
“The government is in a tough spot, it is at its very lowest point (in polls) and is strongly criticized by workers” whose wages are losing value against the high rate of inflation, said political analyst Diego Reynoso.
Argentina’s center-right president Mauricio Macri came to power in 2015 after 12 years of leftist rule by the late Nestor Kirchner, who held office from 2003-2007, and then his wife Cristina, who was president from 2007 until late 2015.
Macri, a free-market businessman and a former mayor of the capital, scrapped many subsidies his predecessors had granted on a variety of services, most notably electricity, gas and water.
The rise in the cost of utilities, as well as in public transport, further eroded the spending power of Argentines.
The government’s deal with the IMF aims to balance the budget by 2020.
Argentina paralyzed by anti-IMF deal strike
Argentina paralyzed by anti-IMF deal strike
- With no trains, subways, buses or flights in service, organizers expected at least one million workers to take part in the industrial action
- Activists began to close off the main routes into the capital where hundreds of federal law enforcement personnel were deployed
Saudi Arabia’s crude production rose to 8.99m bpd in April: JODI
RIYADH: Saudi Arabia’s crude production increased by 13,000 barrels per day in April to reach 8.99 million, according to an analysis from the Joint Organizations Data Initiative.
The data indicated that exports over the same month saw a decline despite this growth, dipping by 445,000 bpd to 6 million compared to March.
The Kingdom’s direct burn of crude oil, which involves using oil without substantial refining processes, increased by 93,000 bpd in April compared to the previous month – an 11 percent year-on-year growth.
The decline in the Kingdom’s crude exports and a marginal rise in production can be attributed to the voluntary cuts adopted by members of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+.
In March, Saudi Arabia announced the extension of its 1 million bpd cut, initially implemented in July 2023, until the end of 2024.
Earlier this month, the Kingdom’s Minister of Energy Prince Abdulaziz bin Salman said Saudi Arabia will increase its oil production capacity from 2025 to 2027 before returning to a production level of 12.3 million bpd in 2028.
“In 2025, we will have an incremental increase. We will have a bigger incremental increase in 2026 and 2027. And then we will go back to our 12.3 million bpd production in 2028,” said the energy minister.
According to JODI Data, total oil demand in India, one of the largest crude consumers in Asia, slipped by 156,000 bpd in April compared to March.
Similarly, the Asian nation’s total product exports also edged down by 85,000 bpd in April.
On the other hand, India’s overall crude imports rose by 510,000 bpd, marking an 8.1 percent year-on-year increase.
Earlier this month, OPEC said that oil demand globally would rise by 2.25 million bpd in 2024, driven by growth in markets such as China, India, the Middle East and Latin America.
On June 6, speaking at the International Economic Forum in St. Petersburg, Haitham Al-Ghais, secretary-general of OPEC, said that the world will witness continued oil demand growth in the coming years.
“Last year, OPEC’s forecast for oil demand was the best. And all those who criticized OPEC’s forecast kept adjusting their number throughout the year,” said Al-Ghais.
However, the International Energy Agency forecast oil demand growth to slow as the world continues its energy transition journey, although it noted that there would be growth of 1 million bpd in 2024.
Saudi developer Al-Othaim Investment launches new cruise ship in Hail
RIYADH: A five-star hotel is part of a new cruise ship set for Saudi Arabia’s Hail region, local real estate developer Al-Othaim Investment has announced.
The new project, also referred to as Al-Othaim Cruise Hail, is built on a total area of 77,000 sq. m. and includes a shopping mall, 276 residential units, 16 luxurious palaces, and multiple entertainment spaces.
Moreover, the planned hotel on the ship contains 120 rooms and 156 apartments, as well as office spaces on six floors covering an area of over 9,000 sq. m.
The company said in a post on X that this move falls in line with its expansion strategy, which aims to launch several projects in various regions of the Kingdom.
“Our staff of 4,000 young Saudi men and women serve the passengers the recreational services,” the company said in its post.
The new development is also projected to contribute significantly to sustainable development, achieving the nation’s Vision 2030 goals and enhancing Saudi Arabia’s position as a leading global investment center.
Additionally, the planned cruise ship aligns well with the ongoing encouragement of Prince Abdulaziz bin Saad, the governor of the Hail region, to support the growth and development process in the area and to enhance its position as a leading investment destination.
The project also occurs alongside the continuous support for the private sector from the Saudi Minister of Municipal and Rural Affairs and Housing, Majid bin Abdullah Al-Hogail, and his dedication to creating an attractive investment environment throughout the Kingdom’s various regions and cities.
In May, Saudi Tourism Investment Co.’s CEO revealed that the Kingdom’s northwestern city of Hail would home to the firm’s fifth destination development.
Speaking to Arab News on the sidelines of the Future Hospitality Summit at the time, Fahad bin Mushayt announced the plan, which comes after the activation of the company’s projects in Al-Baha, Yanbu, Al-Ahsa, and Taif.
Mushayt noted that the initiatives were launched within a year of the unveiling of the Public Investment Fund-owned firm Asfar.
The CEO also highlighted at the time that the company is mandated to invest in new projects and develop attractive travel destinations, incorporating hospitality, tourist attractions, retail, and food and beverage offerings in cities across Saudi Arabia.
Bin Mushayt said at the time: “In almost one year, Asfar is already playing in four destinations, with Hail coming soon, so I can reveal that.”
Clean energy investments crucial for Africa’s sustainable economic growth: IEA
RIYADH: Africa’s rising energy demand requires substantial investments in clean power projects, which is crucial for the continent’s sustainable economic growth, an analysis revealed.
In its latest report, the International Energy Agency said that Africa’s aspiration for greater economic and social development depends on access to an affordable, reliable, modern and sustainable supply of power.
According to IEA, meeting the growing energy demand from African countries requires requires more than doubling the current annual investments to over $240 billion in the sector by 2030, of which three-quarters of the funds needs to be focused on clean technology.
The organization also called for “swift action to tackle financial barriers so investment can reach the levels that are needed.”
IEA highlighted that $22 billion is required from 2023 to 2030 to connect all African homes and businesses to electricity, while $4 billion per year is needed to provide clean cooking solutions.
“The lack of energy access in Africa is a great injustice, but increased spending on impactful projects could quickly turn the tide,” said Fatih Birol, executive director of IEA.
Africa’s energy concerns
According to the agency, Africa remains energy-poor despite holding significant resources.
The report highlighted that around 600 million Africans still lack access to electricity and more than 1 billion still cook their meals over open fires and traditional stoves using wood, charcoal, kerosene, coal and animal waste.
The analysis suggested that the consequences of this lack of energy supply are dire in terms of health, education, climate, and economic and social development, with many of these impacts disproportionally affecting women and children in the continent.
“There are also affordability challenges to consider; only half of households without electricity access today would be able to afford basic energy services without additional financial support, and even fewer would be able to afford modern cooking solutions,” said the report.
It added: “A lack of reliable and affordable energy restrains Africa’s farmers from higher productivity; hinders industry, where energy prices and affordability remain key determinants in competitiveness; and limits the ability of countries to attract and cultivate new sectors of their economies.”
Moreover, although Africa accounts for around 20 percent of the world’s population, it attracts less than 3 percent of energy spending.
The study highlighted that investments in the energy sector on the continent have been falling since its peak in 2014 and are currently down 34 percent.
“Increasing investment in domestic energy systems faces hurdles, notably a shortage of bankable projects and the high cost of capital, which can be two to three times higher for renewable projects in Africa than in advanced economies,” said IEA.
Expansion of electricity holds the key
According to the report, around half of the energy funding required in Africa by 2030 is needed in electricity, where policies play a key role in attracting more investment.
“Total electricity sector investment increases from just under $30 billion in 2022 to more than $120 billion in 2030 in the Sustainable Africa Scenario, with around 50 percent going toward renewable generation alone,” added the report.
IEA further noted that Africa is home to the most cost-competitive green energy outlets in the world, with 60 percent of the best solar resources globally, and many countries on the continent have high-potential hydropower, geothermal, and wind resources.
The release noted that utility-scale renewable energy projects have found a foothold in African markets, where around 80 percent of clean projects by volume have reached investment decisions in the last five years.
New industries to propel Africa’s energy sector
The report projected that new industries, including those related to clean technologies, can support Africa’s growing energy sector.
“Developing industry goes hand-in-hand with the expansion of Africa’s energy system. By 2030, Africa is projected to build more floor area than exists in Japan and Korea today,” said IEA.
It added: “Accordingly, demand for steel and cement is set to grow considerably from today’s levels, alongside rising demand for irrigation pumps, cold chains, data centers and mining.”
The analysis further highlighted that mineral exploration, and the manufacturing of clean energy technologies present practical opportunities to cultivate a growing industrial base in the continent.
The report revealed that revenues from the production of copper and key battery metals in Africa are already estimated to be more than $20 billion annually, and with the current pipeline, the market value of this sector is expected to increase by 65 percent by the end of this decade.
Additionally, if all initiatives under the pipeline come to fruition, low-emissions hydrogen production from announced electrolyzer projects in Africa could reach 2 tonnes by 2030.
“Investments in these fast-growing sectors can help diversify global supply chains and reduce import burdens for Africa,” said IEA.
It added: “If well-designed, these projects could also be powered by energy investments that serve Africa’s wider domestic energy needs and ensure their development creates jobs, supports local communities, and meets important health, safety, and labor criteria.”
The analysis also underscored the importance of private sector involvement in ensuring Africa’s energy security.
According to IEA, private sector spending needs to grow 2.5 times between 2022 and 2030 to meet Africa’s energy investment needs.
“In the Sustainable Africa Scenario, $190 billion of private capital is required by 2030, growing from around $75 billion today,” said IEA.
The study further noted that concessional capital from international sources will play a key role in mobilizing this increase, with an estimated $30 billion per year for clean energy projects required to mobilize commercial funding over the 2023 to 2030 period.
Fertile fintech scene driving digital banking in Saudi Arabia
RIYADH: The digital revolution within Saudi Arabia’s banking sphere has significantly enhanced the nation’s economic panorama, facilitating effortless financial transactions for customers, experts have told Arab News.
Situated in the heart of the Middle East, the Kingdom stands out not just for its deep-rooted history and cultural legacy but also for its swift embrace of digital advancements, notably within the banking domain.
In recent years, the nation has undergone a significant transformation in its banking sector, propelled by the ambitious Vision 2030 program led by Crown Prince Mohammed bin Salman.
This visionary endeavor seeks to broaden the economic landscape, diminish reliance on oil income, and propel the country forward into a new age of prosperity.
In an interview with Arab News, Saudi-based economist Talat Hafiz set out how the digital transformation has positively impacted the overall economic landscape of the country.
Hafiz said: “It has allowed (customers) to perform financial transactions and conduct financial businesses related transactions real-time around the clock and year round, which has facilitated doing business in the Kingdom and in turn have reflected positively on the overall economy, as it has saved time and efforts and ultimately cost reduction to businesses.”
Fabrice Franzen, partner at Bain & Co., told Arab News that the Kingdom has been one of the first countries to avail full digital banking licenses without the need for branches.
“SAMA (Saudi Central Bank) has actively promoted the digital bank model, and three licenses were issued to local investors and companies, which should go live imminently,” he added.
Franzen anticipated that this should create healthy competition with the traditional players and drive further innovation and enhance customer experience.
Infrastructure and government support
The journey toward digitalization commenced with substantial investments in telecommunications infrastructure.
This effort positioned Saudi Arabia as a frontrunner in digital regulatory maturity and network speed among G20 nations.
According to the International Telecommunication Union’s Digital Regulatory Maturity Index, the Kingdom secured the top spot in the Middle East and Africa and ranked ninth among G20 countries.
Notably, Saudi Arabia stood sixth globally in terms of the fastest data download speed in fifth-generation networks, showcasing its remarkable progress.
The rise of digital banks and banking solutions
Demonstrating the government’s backing for digital transformation within the banking sphere, the Saudi Cabinet greenlit the licensing of two local digital banks in 2021: STC Bank and the Saudi Digital Bank.
This involved the conversion of stc pay into a local digital bank, now known as “STC Bank,” equipped to conduct banking operations in the Kingdom with a capital of SR2.5 billion ($670 million).
Furthermore, an alliance of companies and investors spearheaded by Abdul Rahman bin Saad Al-Rashed and Sons Co. established another local facility named the Saudi Digital Bank, with a capital of SR1.5 billion.
The introduction of the Saudi Arabian Riyal Interbank Express, also known as SARIE – which translates literally from Arabic as “fast” – marked a significant turning point for the digital banking sector in the Kingdom.
This system not only boosts the efficiency of the national payment infrastructure but also aligns seamlessly with the ongoing developmental trajectory observed within the Kingdom’s payments sector.
According to Hafiz, this system provides the mechanism for all Saudi commercial banks to make and settle payments in riyals.
The economist added: “It provides the basis for improved banking products and services and is the foundation for the payments system strategy of the Kingdom.”
Hafiz asserted that SARIE is a “state-of-the-art payment,” as it provides the mechanism for banks to exchange funds transfer and direct debit messages safely and efficiently on behalf of their customers as well as for their own trading purposes.
SAMA has consistently demonstrated a strong interest in promoting safety and enhancing efficiency within payment systems, aligning with its overarching focus on financial stability, according to the economist.
As a result, the central bank plays a pivotal role in both the development and operation of payment systems in the Kingdom.
SARIE, for Hafiz, has undoubtedly represented a significant milestone, profoundly impacting consumer behavior and the operational efficiency of financial institutions across the nation.
Saudi Arabia’s support for fintech companies
The rollout of accelerator programs aimed at bolstering the expansion of emerging fintech companies marked a significant catalyst for the sector’s advancement.
This initiative was crafted to facilitate the transfer of best practices, tools, and resources to empower emerging firms in the financial technology domain, fostering their growth and amplifying their presence within the Kingdom.
SAMA has been actively supporting the emergence of the fertile fintech scene in Saudi Arabia, providing a wide range of licensing options, according to Bain and Co.
“Local investors (institutional, family offices) are also actively investing in fintech, providing a healthy flow of seed capital and supporting subsequent capital raises,” the partner told AN.
He added that Saudi fintechs benefit from a sizable domestic market of over 30 million residents, enabling rapid scaling.
Hafiz noted the significance of this program particularly when it comes to supporting new startup fintech companies because such programs are carefully designed to help fintech companies accelerate their growth by providing different services that help them through a fast-track program to scale up their businesses.
“The national Fintech Strategy goals and objectives are to create 525 Fintech companies in the Kingdom that create 18,000 Fintech job opportunities and contribute SR13.3 billion to the Kingdom’s Gross Domestic Product by 2030,” the economist highlighted.
Rapid growth in electronic payments
By the end of 2021, the retail sector in the Kingdom witnessed a significant milestone in digital transformation: electronic payments accounted for 57 percent of total transactions, surpassing the target set by Vision 2030, according to data from the central bank.
Additionally, Saudi Arabia achieved the highest adoption rate of Near Field Communication, NFC, payments, reaching 94 percent, outpacing even nations in the EU, as well as Hong Kong, Canada, and the Middle East and North Africa region.
Financial literacy and inclusion
Financial inclusion in Saudi Arabia aims to provide affordable financial services to all citizens, aligning with government efforts to enhance financial literacy and economic participation.
This is becoming a major concern for the financial authorities in Saudi Arabia, according to Hafiz.
He attributed it to the aim of making financial services available to all individuals in the Kingdom at affordable pricing, supporting the government’s efforts connected to raising the financial literacy in the society.
One of the main goals and objectives of the Financial Sector Development Program – a Saudi Vision 2030 program – is to raise individuals’ financial literacy through proper financial planning and investment.
“Policymakers in Saudi Arabia have implemented robust policies that encourage and ensure the enhancement of financial inclusion, since it has been identified as imperative for economic growth,” Hafiz added.
According to Franzen, the Financial Services Development Program has set an ambitious trajectory to develop the sector as a way to support financial inclusion, literacy, and efficiencies.
“This is benefiting the economy and Saudi citizens as they have enhanced access to cheaper and more secure banking solutions,” he added.
Diverse digital banking ecosystem
The digital banking landscape in Saudi Arabia is vibrant, offering a range of services to cater to evolving consumer needs.
“With three full digital banking licenses approved, Saudi Arabia is at the forefront of promoting full digital banking solutions – at par with the UAE and well ahead of other GCC (Gulf Cooperation Council) countries,” Franzen said.
He observed that the Kingdom could rely on advanced regulations for biometric customer identification and centralized databases, greatly easing digital onboarding and authentication.
Online banks, neo-banks, challenger banks, and Banking-as-a-Service all play roles in the digital revolution.
“While neo-banks and challenger banks are still nascent in the market, one should expect that they will drive a higher speed of innovation and will put pressure on traditional players,” Bain and Co. partner emphasized.
“Similar trends have been observed in other markets such as the UK when new digital banks came to challenge the High Street incumbents,” he continued, adding: “This has led to cheaper and more reliable financial services becoming the norm in the UK market (no or very low fees, instant solutions), to the benefit of the customer.”
According to a report by KPMG, a global network of professional firms providing financial services, neo-banks hold a 20 percent market share in Saudi Arabia’s digital banking sector.
Furthermore, online banks claim 30 percent, while the Banking-as-a-Service segment is projected to reach a market valuation of $7 trillion by 2030, with a yearly growth rate of 26 percent.
Enhanced customer experience
Banks are prioritizing improving customer experience through advanced technologies. AI-driven chatbots offer instant support, and data analytics enables personalized financial advice. These advancements streamline operations and cultivate customer loyalty.
“In Saudi Arabia, 95 percent of people who hold bank accounts and have access to the internet prefer digital over traditional banking channels, such as physical branches and phone banking,” according to a report by Backbase, a Dutch financial technology company.
Bain and Co. partner said that “while customers have grown accustomed to managing their lives from the comfort of their home on their phone (ride-hailing, food delivery, online shopping, home entertainment), they expect a similar service from the banks.”
Franzen added that mobile solutions offer an attractive alternative for those living in remote areas of the Kingdom where branch density is much lower than in the main urban hubs. It also offers cheaper banking solutions for those with lower income.
Future trends and projections
With the rise of pure digital banking entities intensifying their operations, a notable trend is emerging: a surge in account openings, both initially and for secondary accounts, as customers explore branch-less alternatives.
Franzen said that as confidence in these digital-only players grows, a shift towards them serving as primary banks is anticipated, akin to the trajectory witnessed in countries like the UK, where neo-banks have secured over 25 percent of primary banking relationships.
“One key potential technology unlock to drive digital financial services would be increased flexibility on cloud usage and data residency rules,” he added.
US ready to reopen oil stockpile if petrol prices surge again, FT reports
BENGALURU: The Biden administration is ready to release more oil from the US strategic stockpile to stop any jump in petrol prices this summer, the Financial Times reported on Monday.
Senior Biden adviser Amos Hochstein told the newspaper that oil prices are “still too high for many Americans” and he would like to see them “cut down a little bit further.”
Hochstein, speaking to the FT said that the US would “continue to purchase into next year, until we think that the Strategic Petroleum Reserve has the volume that it needs again to serve its original purpose of energy security.”
The Energy Department this year has been buying about 3 million barrels of oil per month for the SPR after selling 180 million barrels in 2022 following Russia’s invasion of Ukraine. The move was an effort to curb gasoline prices that spiked to more than $5 a gallon, but it also reduced the reserve to its lowest level in 40 years.
Earlier this month, Energy Secretary Jennifer Granholm told Reuters that the US could hasten the rate of replenishing the SPR as maintenance on the stockpile is completed by the end of the year.
