| Saudi Arabia could soon be in the midst of an economic growth spurt, in light of new incentives and initiatives taken by its government.
The SAR 5 trillion Shareek Program is another initiative unveiled in March to encourage greater private sector and foreign investment streaming into the economy.
In addition, Saudi Aramco announced a landmark deal with a consortium led by EIG Global Energy Partners, a major energy infrastructure investor, to lease usage rights of its crude oil pipeline network over a 25-year period for the sum of USD 12.4 billion.
The massive selling price speaks to the kingdom’s attraction as an energy powerhouse and class of assets that are prized by global investors.
“The transaction represents a continuation of Aramco’s strategy to unlock the potential of its asset base and maximise value for its shareholders,” Aramco said. “It also reinforces Aramco’s role as a catalyst for attracting significant foreign investment into the kingdom.”
Aramco will hold a 51% majority stake in the new entity while the EIG-led consortium will hold a 49% stake.
At the other end of the energy spectrum, the government signed power-purchasing agreements for seven new solar power projects in various regions in the kingdom. The output capacity of these projects, in addition to the projects at Sakaka and Dumat Al-Jandal, will amount to more than 3,600 MW, powering more than 600,000 households and reducing greenhouse gas emissions by more than 7 million tonnes.
The new developments will provide further impetus for an economy that is already gearing up for growth.
The International Monetary Fund expects the Saudi economy to close in growth levels of 2.9% this year and another 4% in 2022, in its latest forecast. Non-oil GDP will steadily grow 3.9% in 2021 and 3.6% as a number of the diversification projects under way start boosting economic activity.
Meanwhile, S&P Global Ratings affirmed the kingdom’s credit rating at A with a stable outlook.
The ratings firm expects the kingdom to return to a current account surplus and reduction of fiscal deficit ratios, driven by higher crude oil prices and an upturn in the global economy.
The stable outlook indicates that the kingdom's financial position and external net asset positions would remain strong enough over the next two years to support the ratings, S&P said. |
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