Saudi Fund for Development Signs $77 Million Loan Agreement to Establish Solar Power Plant in Belize

Oct 29, 2023

The CEO of the Saudi Fund for Development (SFD), Sultan bin Abdulrahman Al-Marshad, signed on Saturday a development loan agreement with the Prime Minister of Belize, John Antonio Briceño. The agreement, provided by the Saudi Fund for Development for $77 million, aims to finance the construction of a solar power plant in Belize.

The signing ceremony was attended by Christopher Coy, the Belizean Minister of Finance, Economic Development, and Investment, along with several officials from both sides.

The agreement reflects the Fund's commitment to supporting sustainable development in developing countries and small island states globally. Since its establishment in 1975, the SFD has successfully implemented over 700 projects and development programs in 90 countries.

The project's primary objective is to build a 60-megawatt solar power plant, complete with the supply and equipment of solar panels, to reduce emissions in the energy sector by an estimated 60,000 tons of carbon dioxide annually through system efficiency and consumption. Moreover, the project is expected to have a significant impact on stimulating social growth and creating direct and indirect job opportunities. It will also enhance the quality of electricity and promote environmental sustainability by addressing climate change through the reduction of greenhouse gas emissions.

"The solar power plant project comes at the right time, as Belize deems it necessary to increase its production of solar energy due to economic inflation, and most importantly, the project is in line with our country's policy to focus on supporting renewable energy, and this brings many benefits to Belize including cost savings, energy independence, environmental sustainability, job creation, and improved access to electricity for rural communities,” The Belizean Prime Minister said.

For his part, SFD CEO Sultan bin Abdulrahman Al-Marshad said that the agreement strengthens the development cooperation between the Fund and Belize, “to contribute to the development of the clean energy sector in Belize, and to meet the basic needs of the population in enhancing access to electricity, and limiting the effects of global climate change, as well as promoting Belize's economic and social growth."

Egyptian Trade Minister Ahmed Samir said on Friday that the Turkish KOC Holding group intends to expand its activities in the Egyptian market in the coming period in the sectors of vehicles, medical products and new energy.

A statement issued by the Ministry of Trade and Industry, published by the Egyptian Presidency of the Council of Ministers on its Facebook page, said that Samir, who is currently visiting Türkiye, met with representatives of the group to discuss its future vision to increase investments in the Egyptian market.

The statement quoted the minister as saying that the group seeks to expand in the Egyptian market through the establishment of a factory for auto-feeding industries, and another for pharmaceuticals, in addition to cooperation with the Suez Canal Economic Zone in the field of new and renewable energy and wind energy.

The group also aims to cooperate in the field of yacht marinas as well as oven manufacturing with the Arab Organization for Industrialization, according to the statement.

Representatives of the Turkish Holding Group pointed to the importance of benefiting from Egypt’s position as a commercial and investment hub in Africa, as well as taking advantage of the preferential free trade agreements that Cairo has signed with the countries of the continent.

Meanwhile, Egypt’s sovereign dollar bonds rose on Friday, after an unexpected decision to raise interest rates on Thursday evening.

Longer-dated maturities gained the most, with the 2048 rising by up to 1.4 cents, according to Tradeweb data. Bonds maturing 2040 and beyond gained one cent or more, but the shorter-dated maturities up until 2031 rose between 0.5-0.9 cents.

Egypt’s central bank raised overnight interest rates by 100 basis points on Thursday in a surprise move, saying it sought to contain inflationary pressures and anchor inflation expectations, Reuters reported.

China and Saudi Arabia's stock exchanges are in talks to allow exchange-traded funds (ETFs) to list on each other's bourses, three sources familiar with the matter told Reuters, as the countries look to deepen financial ties amid warming diplomatic relations.

The talks are in the early stages, said the sources, and could mark a major first step by Beijing and Riyadh towards broadening cooperation beyond energy, security, and sensitive technology sectors.

The Shenzhen Stock Exchange, one of the two major bourses in the Chinese mainland, is in negotiations with the Saudi Tadawul Group (1111.SE), operator of the Saudi Stock Exchange, for ETF Connect, as the programme is called, two of the sources said.

For China, an 'ETF Connect' tie-up with Saudi Arabia will be the first such beyond East Asia and affirm a commitment to open up its trillions of dollars worth of financial markets to international investors.

Some of China's biggest ETF operators have been notified in recent months about the possibility of a cross-listing agreement with Saudi Arabia and some are considering the option, one of the sources said.

The China Securities Regulatory Commission, the Shenzhen Stock Exchange and the Tadawul Group did not respond to Reuters' requests for comment. The sources declined to be named as they were not authorized to speak to the media.

The cross-listing of ETFs will allow investors in China and Saudi Arabia to trade funds tracking specific stocks or bond indexes listed on each other's stock exchanges.

China has launched 'ETF Connect' projects in recent years with offshore stock exchanges in Hong Kong, Japan, South Korea, and Singapore.

Industry insiders said trading volumes for these programs have not yet taken off, although some products have proved popular.

The ICBC CSOP FTSE Chinese Government Bond Index ETF, launched by China's CSOP Asset Management in 2020 under the 'ETF Connect' scheme with Singapore, is one of the largest ETFs domiciled in the city-state.

At the end of June, a total of 886 ETFs worth $256.8 billion were listed on the Chinese and Hong Kong bourses, according to Morningstar's data.

Saudi Arabia's ETF market is relatively nascent with only eight products listed on the exchange, although it is one of the biggest stock markets in emerging markets with a $2.7 trillion capitalization.

Hong Kong Exchanges and Clearing Ltd (HKEX) (0388.HK) is also in separate talks with its Saudi counterpart for a similar programe,said one of the sources and two people familiar with the matter.

HKEX signed an agreement with the Tadawul Group in February this year to explore cooperation in a number of areas, including cross-listings, for mutual benefit to the financial markets of both organisations, the Hong Kong bourse said at that time.

"We will update the market should there be any material developments in our cooperation," it said this week in response to a Reuters query.

Jackie Choy, director of passive investment ratings for Morningstar Asia, said the Saudi ETFs would offer "a very niche and small offering" for China and Hong Kong investors with their exposures in Arabic equity, bonds, gold and US equity.

"The local investors’ knowledge of the market under the scheme will also be key" before any investment, he said.

China is Saudi Arabia's top trading partner with trade worth $87.3 billion in 2021.

Saudi Arabia's Ministry of Investment has signed a $5.6 billion deal with Chinese electric car maker Human Horizons to collaborate on the development, manufacture and sale of vehicles, the Saudi state news agency said in June.

In March, oil giant Saudi Aramco (2222.SE) increased its multi-billion dollar investment in China by finalising and upgrading a planned joint venture in northeast China and acquiring an expanded stake in a privately controlled petrochemical group.

Abu Dhabi National Oil Company (ADNOC) said on Friday it would acquire a 30% equity stake in the Absheron gas and condensate field in the Caspian Sea off the coast of Baku, Azerbaijan.

The agreement would see Azeri state oil company SOCAR and TotalEnergies (TTEF.PA), which had each previously held a 50% stake in the field, both retaining a 35% share.

TotalEnergies announced first gas from Absheron in July. The French energy group confirmed on Friday it and SOCAR had each sold a 15% interest in the field to ADNOC, Reuters reported.

ADNOC's investment in Azerbaijan comes as part of a strategic plan to grow its international gas business.

ADNOC has sharpened its focus on the gas market as competition for LNG has ramped up following Russia's invasion of Ukraine in February 2022, with Europe in particular needing large amounts to help replace gas piped from Russia.

"With global gas demand expected to steadily increase over the coming decades, ADNOC will continue to responsibly meet the world's energy needs," Musabbeh Al Kaabi, executive director of low carbon solutions and international growth at ADNOC, said in a statement.

ADNOC listed its gas business in March after raising $2.5 billion from an initial public offering (IPO), which was the world's biggest in the first quarter.

Türkiye’s new-look economic team met for the first time with dozens of international investors on Friday and pledged to continue hiking interest rates, even as economic growth slows, to head off rebounding inflation, two sources said.

According to the sources and a draft program, the eight-hour meeting in Istanbul included Finance Minister Mehmet Simsek and Central Bank Governor Hafize Gaye Erkan discussing monetary and fiscal policy and the economic outlook.

The face-to-face meeting with more than 40 investors marks a more transparent market turn by the authorities, and comes two months after President Recep Tayyip Erdogan named Simsek and Erkan to the positions to orchestrate a U-turn toward more orthodoxy.

The two sources, who requested anonymity to discuss details of the private meeting, said Simsek stressed that reducing inflation was the priority and struck a confident tone that policy was returning to more normal settings.

He told investors that Erdogan fully supported the monetary tightening and that "gradual" rate hikes would continue, pinching credit and leading to somewhat slower economic growth but not a sudden stop, one of the sources said.

The central bank under Erkan has raised its key rate by 900 basis points to 17.5% since June, though the pace of tightening missed market expectations. Last week it more than doubled its year-end inflation forecast to 58%, meeting expectations.

Under the previous governor, the bank had slashed rates to 8.5% from 19% in 2021 in line with Erdogan's unorthodox belief that high rates fuel inflation. That sparked a currency crisis and the lira weakened 44% in 2021, 30% in 2022, and another 30% so far this year.

Inflation touched a 24-year peak of 85.5% last October. It subsequently eased but then rose sharply again in July to nearly 48%.

Reuters reported on Thursday that Wall Street bank JPMorgan was hosting the investors meeting.

The program obtained by Reuters showed Burak Daglioglu, head of the presidency's investment office, was to give a presentation on Türkiye as "your resilient investment partner".

Vice President Cevdet Yilmaz, Ziraat Bank CEO and Turkish Banking Association head Alpaslan Cakar, and the heads of Türkiye’s wealth fund and treasury debt office were also scheduled to speak, the program showed.

JPMorgan declined to comment on the meeting. The central bank and finance ministry did not immediately comment.

Some foreign investors have edged back into Turkish assets since Erdogan's re-election in May and subsequent U-turn, after a years-long exodus due largely to the unorthodox approach.

Since Erkan delivered a quarterly inflation report last week, investors have said they welcomed prospects of officials holding more regular meetings. The last in-person meeting with a Turkish central bank chief was in late 2022, they said.

The financial results of the Saudi Basic Industries Corporation (Sabic) - the largest producer of petrochemicals, fertilizers and steel in the Middle East - revealed that the company’s performance was affected during the second quarter of 2023 by the conditions of the global chemical markets and the decline in demand.

The company recorded an 85 percent decline in profits on an annual basis in the second quarter of this year, registering SAR 1.18 billion ($314.5 million), compared to SAR 7.93 billion ($2.1 billion) in the same quarter of 2022.

“The global economy is continuously slowing down as a result of tightening monetary policies to confront inflation, leading to weaker demand,” said Abdulrahman Al Fageeh, chief executive of SABIC.

He added: “In the second quarter, we maintained our sales volume despite the challenging economic environment with increased supply of our main products. We achieved the minimum target of our synergies with Saudi Aramco two years ahead of time by reaching $1.51 billion on a cumulative basis.”

According to the CEO, “the company is committed to innovation and sustainability as two main pillars of our growth.”

Al-Fageeh noted that in the second quarter, Sabic completed a project to convert oil from plastic waste into certified circular polymers, becoming the first company in the Middle East and North Africa region to adopt this method.

He added that the company has completed sending the first approved commercial shipments of low-carbon ammonia to India and Taiwan, which confirms its keenness to provide value solutions to customers and markets to achieve net zero emissions.

Over the course of the second quarter of 2023, Sabic announced many agreements and strategic developments that support the company’s goal of achieving carbon neutrality, and its vision of becoming the preferred global leader in chemicals.

Investment licenses are increasing steadily in Saudi Arabia, highlighting the Kingdom’s attractiveness as a destination that offers investors qualitative opportunities in a wide range of sectors.

Saudi Arabia issued more than 1,600 foreign investment licenses in the first quarter of 2023, an average of 25 licenses per day.

A recent report issued by Invest in Saudi Arabia, one of the initiatives of Vision 2030, showed that more than 1,600 foreign investment licenses were issued in the first quarter of this year, compared to 1,300 licenses in the last quarter of 2022, marking an increase of 2.3 percent.

The report expected the building and construction sector to continue to provide major opportunities for investors, in view of the giant and huge projects within the Kingdom’s development plans, especially in tourism and housing.

Construction topped the licenses granted in the first quarter of this year with 419, followed by manufacturing industries (345 licenses), and professional, scientific and technical activities (165), while the rest of the licenses was distributed to other sectors.

Foreign direct investment in Saudi Arabia during the first quarter of 2023 witnessed a year-on-year growth of 10.2 percent to reach SAR 8.1 billion ($2.1 billion).

According to a previous report by the Ministry of Investment, the Saudi government completed 104 investment deals during the first quarter of 2023, compared to 101 during the same period last year, registering an increase of about 3 percent.

The Kingdom's foreign direct investment balance also witnessed an increase of 0.7 percent during the fourth quarter of 2022 on a quarterly basis, recording more than one trillion riyals ($266 billion), which points to the effectiveness of efforts towards enhancing investment attractiveness, by developing the environment and providing incentives to investors.

Saudi Arabia’s non-oil revenues jumped 13 percent to $36 billion in the second quarter of 2023, while oil revenues recorded a decline of 28 percent.

The Saudi Ministry of Finance announced that the budget recorded total revenues amounting to about $83.7 billion in the second quarter of 2023, compared to total expenditures of approximately $85.3 billion in the same period last year.

The report showed a budget deficit of about $1.4 billion by the end of the second quarter of this year.

In the first half of this year, total revenues amounted to about $158.8 billion, compared to total expenses of about $161 billion, so the budget recorded a deficit of $2.1 billion in the first half of this year.

Saudi Arabia’s non-oil revenues jumped 13 percent to $36 billion in the second quarter of 2023, compared to about $32 billion in the same quarter of 2022.

Oil revenues in the second quarter dropped 28 percent year on year, to $47.9 billion, and made-up 57 percent of total revenue.

During the second quarter of 2023, spending was up nine percent year on year, while the budget deficit during the first half of this year was covered by external debt financing.

The Saudi Ministry of Finance announced that revenues during the first quarter amounted to $74.9 billion, while expenditures during the first quarter amounted to about $75.7 billion, and the deficit levels came at $776 million.

The United Nations food agency's world price index rebounded in July from two-year lows as vegetable oil markets jumped on renewed tensions over exports from war-torn Ukraine and concerns over global production.

The Food and Agriculture Organization's (FAO) price index, which tracks the most globally-traded food commodities, averaged 123.9 points in July against a revised 122.4 for the previous month, the agency said on Friday.

The June reading was initially given as 122.3.

The July score was nonetheless almost 12% lower than a year ago and 22% below an all-time peak reached in March 2022 following the start of Russia's invasion of Ukraine.

Saudi Arabia witnessed a strong business performance in July, despite the high cost of capital and intense competitive pressures, according to the Riyad Bank Purchasing Managers' Index (PMI).

In July, the index recorded its lowest reading since December 2022 at 57.7 points, down from 59.6 points in June, the bank announced in a statement.

According to the index, any PMI readings above the 50-mark show growth, and the latest reading was slightly above the long-run survey average (56.9) and signaled underlying solid business conditions, despite the slowdown since June.

The data signaled another strong performance for the non-oil private sector as favorable domestic economic conditions underpinned a sharp upturn in business activity.

Overall growth lost momentum since June, mainly reflecting the slowest rise in new work for seven months and a slightly weaker pace of job creation.

Weaker new order growth was the main factor holding back the headline PMI in July.

Although still sharp, the rate of new business expansion eased considerably after reaching its highest level for over eight years in June.

Moreover, the latest rise in new work was the slowest in seven months.

Survey respondents often commented on intense competitive pressures and subsequent price discounting to stimulate sales.

Output levels were supported by efforts to catch up on unfinished work in July. It was signaled by a reduction in outstanding business for the fourteenth consecutive month.

The rate of backlog depletion was only marginal and the slowest since April.

Chief Economist at Riyad Bank Naif al-Ghaith said the effects from tighter monetary conditions have started to be mildly felt across the Kingdome's private sector in July after a solid first-half performance.

Ghaith noted that the slowdown in business activity was expected due to business cycle dynamics and ongoing market repricing adjustments.

"Furthermore, the rising cost of capital and intense competitive pressures are among the factors holding back new business expansion," he added.

Saudi Arabia's economy grew by 1.1 percent in the second quarter annually, slower than 3.8 percent in the first three months.

However, the Kingdom maintained a 5.5 percent growth in its non-oil economy in the first two quarters of this year, according to rapid estimates by the General Authority for Statistics.

Abu Dhabi National Oil Company (ADNOC) said on Friday it would acquire a 30% equity stake in the Absheron gas and condensate field in the Caspian Sea off the coast of Baku.

The agreement would see Azeri state oil company SOCAR and TotalEnergies each holding a 35% stake in the field.

TotalEnergies had announced first gas from Absheron in July. Prior to Friday's agreement, it held a 50% stake alongside SOCAR.

ADNOC's investment in Azerbaijan comes as part of a strategic plan to grow its international gas business.

The Abu Dhabi state oil giant in March offered, with BP, to jointly acquire 50% of Israeli offshore natural gas producer NewMed Energy for about $2 billion, marking their entry into Israel's growing energy sector.

ADNOC sharpened its focus on the gas market as competition for LNG has ramped up since the Russian invasion of Ukraine in February 2022, with Europe in particular needing large amounts to help replace gas piped from Russia.

"With global gas demand expected to steadily increase over the coming decades, ADNOC will continue to responsibly meet the world's energy needs by developing and producing natural gas from world-class assets such as Absheron," Musabbeh Al Kaabi, executive director of low carbon solutions and international growth at ADNOC, was quoted as saying in a statement.

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