KARACHI: Saudi Arabia and Pakistan on Saturday discussed unlocking the full potential of their strategic relationship, as the finance chiefs of both countries met ahead of the Emerging Markets Conference in AlUla, Saudi Arabia, according to an official statement.
Pakistan’s Finance Minister Muhammad Aurangzeb arrived in the Kingdom to attend the two-day conference, which begins on Sunday, at the invitation of his Saudi counterpart Mohammed Al-Jadaan.
The annual economic policy forum is organized by the Saudi finance ministry in collaboration with the International Monetary Fund (IMF) regional office in Riyadh. The event will bring together emerging market finance ministers, central bank governors, policymakers, public and private sector leaders, international institutions and academics.
“The meeting [between the two finance chiefs] underscored a shared commitment to build bridges of economic cooperation and advance mutual prosperity,” Pakistan’s finance ministry said in a statement after Aurangzeb’s interaction with Al-Jadaan.
“The discussions highlighted opportunities for enhancing bilateral trade, investments and financial collaboration, with both ministers expressing their dedication to unlocking the full potential of their countries’ strategic partnership,” it added.
Pakistan is navigating a fragile economic recovery under a $7 billion IMF loan program secured in September 2024, after implementing austerity measures and policy reforms to avert a sovereign default in 2023.
To facilitate Pakistan’s economic recovery, Saudi Arabia signed 34 memorandums of understanding (MoUs) worth $2.8 billion last October to boost private sector investment in key areas, including energy, infrastructure and technology.
During their meeting, the two ministers explored avenues for collaboration in infrastructure, energy, technology and finance, emphasizing the need for continued dialogue and joint initiatives to facilitate investment flows and economic opportunities that could benefit the broader region.
According to an earlier statement by Pakistan’s finance ministry, Aurangzeb is scheduled to participate in a high-level panel discussion titled “The Path to Emergent Markets,” hosted by IMF Managing Director Kristalina Georgieva.
The conference will feature nine sessions, with 200 participants and 36 speakers, focusing on economic resilience, financial policies for emerging markets and global economic challenges.
The discussions come at a time when the world economy is facing persistent shocks, trade tensions between major world powers, geopolitical instability and tight financial conditions.
“The conference will provide a unique platform for world leaders to discuss and analyze domestic, regional and global economic conditions and developments and to exchange ideas on solutions to global challenges,” the Pakistani finance ministry added.
Pakistani and Saudi finance chiefs discuss boosting strategic ties ahead of AlUla conference
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Pakistani and Saudi finance chiefs discuss boosting strategic ties ahead of AlUla conference
- Muhammad Aurangzeb brings up enhanced bilateral trade, investments and collaboration with his counterpart
- The ministers emphasize the need for continued economic dialogue, increased cooperation through joint initiatives
Pakistan highlights ‘positive’ IMF response as it seeks $1.5 billion in climate funding
- Finance Minister Muhammad Aurangzeb calls talks with the global lender ‘very constructive’
- The minister oversees the signing of Pakistan’s first green bond denominated in local currency
KARACHI: Federal Minister for Finance and Revenue Muhammad Aurangzeb said on Friday the International Monetary Fund’s (IMF) response to his country’s request for climate financing was “very positive,” as he oversaw the signing of Pakistan’s first green bond denominated in the local currency.
The IMF’s climate finance funding provides long-term, low-interest loans to help vulnerable countries tackle climate-related risks and transition to greener economies.
Pakistan, which has experienced extreme weather events like floods, droughts and heatwaves, is in talks with the Washington-based lender to secure as much as $1.5 billion in climate resilience funding.
The IMF is also reviewing Pakistan’s economic performance under its $7 billion Extended Fund Facility (EFF) program.
“Over the last few weeks, we have had very constructive discussions with the IMF with respect to the climate resilience fund,” the minister said while addressing an event in Islamabad, adding it was the first time his country had approached the global lender for climate financing and had got a “very positive” response.
“In the coming days, hopefully, we will get to hear more about it,” he continued.
Aurangzeb witnessed the signing of Parwaaz Green Action Bond, Pakistan’s first-ever rupee-denominated green bond to be listed on the stock exchange.
The Rs1 billion ($3.6 million) bond aims to mobilize capital for environmentally sustainable projects and strengthen Pakistan’s green investment ecosystem.
This is the second green bond after Pakistan issued the $500 million Water and Power Development Authority (WAPDA) bond, which was oversubscribed by six times.
Recalling the devastating effects of the 2022 floods and growing pollution, the finance minister said Pakistan was beginning to see and accept climate change as an existential threat.
He said out of a total 13,000 glaciers in Pakistan, 10,000 were receding and were expected to cause significant water disruptions.
He pointed out Pakistan needed financing to deal with such challenges for which it looked toward its multilateral and development partners. However, he emphasized the importance of building Pakistan’s own capacity “in terms of investable, bankable projects” in the context of increasing climate disasters.
“After the 2022 flood, the pledges which were made exceeded $10 billion,” he noted. “What we finally received in the country was one third of it.”
About Pakistan’s first rupee-denominated green bond, he said the country would require some key enablers, such as a proper bond yield curve, secondary market liquidity and a green taxonomy framework.
“Hopefully, as it gets sold out, it should encourage more people both locally and internationally to come up with the financing structures,” he added.
Saudi banks shift focus to debt markets during sukuk surge
RIYADH: As Saudi Arabia’s financial system turns increasingly to debt markets for funding, it will face new opportunities and increased risk in relation to its stability and resilience, experts told Arab News.
The growth of sukuk issuance and other debt market activities are essential to the Kingdom’s economic diversification targets and objectives set out in the Vision 2030 initiative.
Saudi Arabia raised SR2.64 billion ($704 million) through sukuk issuances in March, following the SR3.07 billion secured in February and SR3.72 billion in January.
A report by Fitch Ratings in February showed that the Kingdom holds the largest share of the Gulf Cooperation Council’s debt capital market — which itself surpassed the $1 trillion milestone at the end of January.
This represented a 10 percent year-on-year growth across all currencies.
Another report by Fitch earlier this year showed that Saudi Arabia became the largest dollar-denominated debt issuer in emerging markets — outside China — and the world’s largest sukuk issuer in 2024.
The Kingdom’s debt capital market grew by 20 percent year on year in 2024, reaching $432.5 billion in outstanding debt.
Funding uses
Saudi Arabia uses sukuk issuance as a mechanism to finance giga-projects such as NEOM, the Red Sea, and Qiddiya, which collectively require hundreds of billions of dollars in funding.
Ian Khan, a technology futurist and author, said this highlights the Kingdom’s commitment to Islamic finance as a driver of sustainable development.
“Sukuk aligns with Vision 2030 by attracting both domestic and international ethical investors, particularly from markets in Southeast Asia, the Middle East, and North Africa. Additionally, sukuk’s structure, which ties returns to tangible assets, ensures that funds are channeled into real economic activities such as renewable energy, infrastructure, and technology, all of which are cornerstones of Saudi Arabia’s diversification agenda,” Khan said.
“Furthermore, by developing its domestic sukuk market, the Kingdom reduces its dependence on oil revenues, which currently account for over 50 percent of GDP,” he said.
Khan emphasized that sukuk also supports green finance initiatives, with Saudi entities already issuing green sukuk to fund renewable projects such as the 300 MW Sakaka Solar Project.
Risks and rewards
According to Mohammad Nikkar, principal at Arthur D. Little Middle East, reports published by the Kingdom’s central bank highlight the capitalization strength of the Saudi banking system.
“However, an overreliance on external funding such as debt markets could potentially weaken the credit quality of the banking system, highlighting the need for more prudent risk management,” he said.
There is no doubt that as the focus shifts toward debt markets, new dynamics and opportunities emerge.
“As the sector progresses toward 2030 and beyond, the increasing reliance on debt markets necessitates continued regulatory vigilance and the implementation of robust risk management practices to maintain overall stability and resilience,” Nikkar said.
Khan said that the Kingdom’s sovereign bond issuances have been met with strong global demand, with oversubscriptions often exceeding several billion dollars, reflecting investor confidence in the country’s economic reforms.
“However, the increasing exposure to external debt introduces risks, particularly if global interest rates rise or oil revenues fluctuate significantly,” he said.
The author went on to emphasize that to address these challenges, the Saudi Central Bank is likely to strengthen regulatory frameworks and risk buffers, ensuring that banks maintain adequate capital and manage foreign currency risks effectively.
According to Edmond Christou and Basel Al-Waqayan, analysts at Bloomberg Intelligence, the increasing reliance on debt markets will improve the resilience of Saudi Arabia’s banking sector by diversifying funding sources and providing more stable capital to support long-term project financing.
“With banks managing significant duration and liquidity risks, stable funding is critical for driving growth in key sectors aligned with Vision 2030. Senior unsecured paper, for instance, are issued at an average spread of 90 basis points above benchmark treasuries, while subordinated AT1 bonds range between 150–200 basis points,” the analysts told Arab News in a joint statement.
“In 2024, Saudi banks raised approximately $11.5 billion in debt markets, and they are on track to exceed that figure as they continue to finance major projects,” they added.
Martin Blechta, partner at Boston Consulting Group, explained that some of the largest and most recent issuances were done by AlRajhi Bank, Riyad Bank, and Banque Saudi Fransi, as well as Arab National Bank, Saudi Investment Bank, and Gulf International Bank, among others. For some, this was a first-time issuance.
“The increasing reliance on the debt market is an expected progression of the banking sector overall and very much on the strategic agenda of the Saudi Capital Market Authority aiming to expand the debt instrument market,” Blechta said.
“Additional Tier 1 capital plays an important role in the capital structure of leading international banks and the recent developments in the Saudi banking sector are very much in line with that.”
Vision 2030 alignment
From ADL’s point of view, Nikkar explained that by fostering a robust debt capital market, the Kingdom enables growth of alternative sources of funding — a pillar of its National Investment Strategy and aligned with Pillar 1 of the Financial Services Development Program.
The ADL partner added: “This expansion not only opens the country to more investments from international investors but also provides new opportunities for domestic investors to participate in the investment drive fueled by the country’s unprecedented infrastructure and flagship projects within Vision 2030.”
Christou and Al-Waqayan from Bloomberg Intelligence argued that growing focus on sukuk issuance and debt market activities is pivotal to support Saudi Vision 2030’s objectives of economic diversification and sustainable growth.
“A deeper and more developed local capital market attracts foreign investment flows, which are critical to supporting the Kingdom’s expanding economy. Initiatives such as last year’s Saudi ETF listing in Hong Kong and China, as well as the Lenovo deal are key to attract international capital,” the analysts said.
Blechta from BCG noted that banks are diversifying funding sources to match the changing nature of government and large corporate financing needs.
“The majority of large-scale projects are in need of very long-term debt that is typically USD-denominated, to increase international investor demand. Banks are accordingly matching this demand on their funding side. Interestingly, most recent Saudi bank debt issuances were heavily oversubscribed, which shows strong investor confidence in the Saudi banking sector overall,” the partner said.
“However, most demand for the SAR denomination was still domestic, while the USD titles have seen more international investor uptake,” he added.
Transformative effects on the Kingdom’s financial landscape
The accelerating trend of Saudi banks looking toward debt markets is set to transform the Kingdom’s financial landscape,
From ADL’s perspective, Nikkar believes that this shift is likely to deepen the capital markets, enhance liquidity, and introduce a wider array of financial instruments to market participants, thereby attracting a more diverse group of investors.
“The Saudi debt capital market is poised to exceed SR2 trillion outstanding over the next few years, driven by government projects under Vision 2030, deficit funding, diversification efforts, and ongoing reforms,” he said.
“This substantial growth indicates a maturing financial market capable of supporting large-scale economic initiatives. Collectively these developments will foster a more dynamic and diversified financial services ecosystem in Saudi Arabia,” the ADL representative added.
Additionally, the accelerated shift of Saudi banks toward debt markets will fundamentally transform the Kingdom’s financial landscape by enabling greater sophistication, resilience, and competitiveness.
From Khan’s point of view, Saudi banks hold an average capital adequacy ratio that provides a strong foundation for leveraging debt markets without compromising financial stability.
The shift coincides with the Kingdom’s efforts to develop the domestic capital markets, as evidenced by initiatives such as the Saudi Stock Exchange reforms and the Financial Sector Development Program.
Khan believes this trend is likely to have a transformative effect on the expansion of debt market instruments.
“Saudi banks are increasingly involved in issuing corporate bonds, sukuk, and hybrid instruments to diversify their funding sources. This diversification reduces reliance on short-term deposits, thereby enhancing long-term stability,” Khan said.
The trend will also lead to greater integration with global markets, technology and innovation in finance, and enhanced environmental, social and governance alignment.
On integration with global markets, Khan said: “Participation in international debt markets has already attracted significant foreign investments. For instance, Saudi Arabia’s $10 billion green bond issued in 2023 was oversubscribed threefold, reflecting investor confidence. This global integration will help Saudi banks build stronger partnerships and access lower-cost capital.”
With regards to technology and innovation in finance, he believes the way debt instruments are issued and traded will be transformed, saying: “The Kingdom is embracing fintech to streamline debt market activities. For example, digital sukuk issuance platforms and blockchain-based systems are being explored to enhance transparency and efficiency.”
Khan added: “The rise of ESG-focused investments, particularly green bonds and sukuk, will push Saudi banks to prioritize sustainable finance. This aligns with Vision 2030 goals of achieving net-zero emissions by 2060 and attracting investors who prioritize sustainability.”
Bhavya Kumar, managing director and partner at BCG, believes that an increasing reliance on debt markets presents opportunities and risks for the Kingdom’s banking sector.
“While it supports Saudi’s broader economic goals under Vision 2030 by diversifying funding sources — reducing dependency on deposits, improving risk management practices required to meet international investor expectations, and fostering financial market development — it also introduces vulnerabilities related to market volatility, leverage, and systemic risks,” Kumar said.
Gold set for 3rd weekly gain as investors seek safe haven
- Gold hit record high of $3,057.21 per ounce on Thursday
- Silver, platinum, palladium poised for weekly declines
BENGALURU: Gold prices fell on Friday, but were poised for a third straight weekly gain, bolstered by safe-haven demand amidst geopolitical and economic uncertainties as well as anticipation of US Federal Reserve rate cut later this year.
Spot gold was down 0.3 percent at $3,034.02 an ounce as of 3:59 p.m. Saudi time. US gold futures eased 0.1 percent to $3,040.90. Bullion has gained 1.7 percent so far this week.
“It’s just a little bit of profit taking ahead of the weekend. Ongoing safe-haven demand, both based on trade concerns and geopolitical risks continues to be the primary driving force,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Gold has hit 16 record highs so far this year, amid geopolitical tensions and economic uncertainty, with four surpassing the crucial $3,000 mark and hitting an all-time peak of $3,057.21 per ounce on Thursday.
US President Donald Trump still intends for new reciprocal tariff rates to take effect on April 2.
The Fed held its benchmark interest rate steady on Wednesday as widely expected, but indicated two quarter-percentage-point cuts before the end of the year.
Traders are pricing in 71 basis points of easing this year from the Fed with at least two rate reductions of 25 bps each, with a cut in July fully priced in, LSEG data showed.
Israel announced an escalation in air, land, and sea strikes against Hamas in Gaza to pressure the release of remaining hostages, effectively abandoning a two-month ceasefire and launching an all-out air and ground campaign against the dominant Palestinian militant group.
Gold, traditionally viewed as a safe-haven investment during times of inflation or economic volatility, tends to do well in a low interest rate environment.
Spot silver slid 1.4 percent to $33.08 an ounce, platinum lost 1 percent to $974.90 and palladium shed 0.6 percent to $946. All three metals were poised for weekly losses.
Oil Updates — crude heads toward 2nd consecutive weekly gain on supply concerns
LONDON: Oil prices rose on Friday and were heading for a second consecutive weekly gain as fresh US sanctions on Iran and the latest output plan from the OPEC+ producer group raised expectations of tighter supply.
Brent crude futures were down 23 cents, or 0.3 percent, at $71.77 a barrel by 4:00 p.m. Saudi time. US West Texas Intermediate crude futures fell 13 cents, or 0.2 percent, to $67.94.
On a weekly basis, Brent was on track to rise more than 1.5 percent and WTI 1 percent, marking their biggest gains since the first week of the year.
The US Treasury on Thursday announced new Iran-related sanctions, which for the first time targeted an independent Chinese refiner among other entities and vessels involved in supplying Iranian crude oil to China.
New US sanctions against Iran’s oil exports triggered Thursday’s rally in oil prices along with the OPEC+ pledge to compensate for overproduction, said PVM analyst Tamas Varga.
Thursday’s announcement marked Washington’s fourth round of sanctions against Iran since US President Donald Trump in February promised “maximum pressure” on Tehran and pledged to drive the country’s oil exports to zero.
Analysts at ANZ Bank said they expect a 1 million barrels per day (bpd) reduction in Iranian crude oil exports because of tighter sanctions. Vessel tracking service Kpler estimated Iranian crude oil exports above 1.8 million bpd in February.
Oil prices were also supported by the new OPEC+ plan for seven members to cut output further to compensate for producing more than agreed levels. The plan would represent monthly cuts of between 189,000 bpd and 435,000 bpd until June 2026.
OPEC+ this month confirmed that eight of its members would proceed with a monthly increase of 138,000 bpd from April, reversing some of the 5.85 million bpd of output cuts agreed in a series of steps since 2022 to support the market.
“While the group shares a plan for compensation cuts, it certainly doesn’t mean members will follow it. A handful of members have consistently produced above their target production levels,” ING analysts said in a note on Friday.
Closing Bell: Saudi main index closes in green at 11,760
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 50.89 points, or 0.43 percent, to close at 11,760.32.
The total trading turnover of the benchmark index was SR5.89 billion ($1.57 billion), as 123 of the listed stocks advanced, while 109 retreated.
The MSCI Tadawul Index increased by 6.13 points, or 0.41 percent, to close at 1,490.20.
The Kingdom’s parallel market Nomu dipped, losing 162.11 points, or 0.53 percent, to close at 30,521.53. This comes as 43 of the listed stocks advanced while 31 retreated.
The best-performing stock was Rabigh Refining and Petrochemical Co., with its share price surging by 9.87 percent to SR7.68.
Other top performers included Retal Urban Development Co., which saw its share price rise by 4.96 percent to SR16.50, and Ades Holding Co., which saw a 4.38 percent increase to SR16.70.
The worst performer of the day was Sinad Holding Co., whose share price fell by 6.91 percent to SR12.40.
Gulf General Cooperative Insurance Co. and SICO Saudi REIT Fund also saw declines, with their shares dropping by 6.19 percent and 5.18 percent to SR9.55 and SR3.66, respectively.
On the announcements front, Amwaj International Co. announced its financial results for 2024, with net profits reaching SR6.3 million, down by 60.1 percent compared to the previous year.
In a statement on Tadawul, the company attributed the decrease to restructuring inventory and marketing mix to accommodate new technology, which has a higher demand level and profit margin than before.
“The addition of new products will positively impact sales and results for 2025 and will boost cash flow,” the statement said.
In another announcement, Gulf General Cooperative Insurance Co. revealed its annual financial results for 2024.
The company’s insurance revenues in 2024 reached SR414.3 million, up from SR315.6 million in the previous year, marking a 31.2 percent surge.
This was principally driven by business growth and an increase in the motor line of business, according to a statement by the firm.
In today’s trading session, the group’s shares traded 6.19 percent lower on the main market to close at SR9.55.
Saudi Printing and Packaging Co. also announced its annual financial results for last year.
The company’s net loss surged to SR219.4 million from SR132.3 million in the previous year due to establishing a provision for credit losses in trade receivables and recording impairment in fixed assets, inventory, and goodwill.
In Thursday’s session, the firm’s shares traded 2.43 percent lower on the main market to close at SR10.42.
On another note, Saudi Industrial Investment Group has announced that its board of directors has recommended a share buyback of up to 11 million ordinary shares, subject to approval by the Extraordinary General Assembly.
In a statement on Tadawul, the group said that the buyback aims to hold 10 million shares as treasury while allocating 1 million shares to the company’s long-term employee incentives program.
The repurchase will be financed through internal resources, and the acquired shares will not carry voting rights in General Assembly meetings.
SIIG will comply with regulatory solvency requirements, with a solvency report from external auditors to be included in the EGA approval process.
In today’s trading session, SIIG’s shares traded 1.72 percent higher on the main market to close at SR15.36.
