Financial discipline crucial while pursuing economic diversification efforts: Qatari minister

RIYADH: Sovereign debt risks, structural reforms, and trade policies take center stage as global financial leaders and policymakers convened in Saudi Arabia for the first AlUla Conference for Emerging Market Economies. 

The high-profile summit comes amid ongoing economic turbulence, with leaders seeking solutions to enhance financial stability and resilience. 

The two-day event, hosted by the Saudi Ministry of Finance in partnership with the International Monetary Fund, is being held from Feb. 16— 17 in AlUla. The historic site is fast becoming a venue for strategic economic dialogues, underscoring Saudi Arabia’s efforts to assert itself as a key player in shaping financial policies for developing economies. 

The conference aligns with the Kingdom’s broader efforts to solidify its role as a hub for global economic dialogue and under Vision 2030, it continues to lead economic diversification initiatives, emphasizing collaboration and innovation to navigate global economic shifts. 

Saudi Minister of Finance Mohammed Al-Jadaan highlighted the conference’s role in addressing common economic challenges and fostering a more inclusive and resilient global economy. 

“Today, we will explore ways to address our shared challenges so we can build a stronger global economy that is durable and inclusive for all nations,” he said. 

Al-Jadaan stressed the importance of international cooperation, adding: “There is no pathway more effective than broad multilateral cooperation, and that work starts with conversations like the ones we are having at this conference.” 

One of the key challenges addressed during the opening ceremony was sovereign debt, which Al-Jadaan described as a threat to economic progress. 

“Since we all share the benefits, we should also work together to address structural risks like sovereign debt, which threatens development gains,” he said, adding that innovative solutions, including improving global debt restructuring frameworks, are necessary. 

IMF Managing Director Kristalina Georgieva echoed Al-Jadaan’s statements, emphasizing the importance of emerging markets in global economic stability. “You, the leaders in this room, have weathered the shocks of the past few years remarkably well, and your economies have delivered two-thirds of global growth,” she said. 

Georgieva called for the need for agility and resilience in the face of economic uncertainty. “Emerging markets will need to be agile, adaptable, and resilient,” she added, pointing to key areas such as inflation, high debt, and structural reforms that require urgent attention to improve competitiveness and productivity. 

She also praised Saudi Arabia’s leadership in establishing a dedicated space for emerging markets to discuss critical policy issues. “Minister Al-Jadaan not only identified a gap in terms of space for emerging markets to discuss policy issues of common interest, but he decided to close it,” she said. 

Georgieva spoke of the IMF’s newly established regional office in Riyadh, emphasizing its pivotal role in realizing this vision. The office — the first of its kind in the Middle East and North Africa — was inaugurated on April 24 last year during the Joint Regional Conference on Industrial Policy for Diversification, co-hosted by the IMF and the Saudi Ministry of Finance. 

She stressed the importance of mobilizing more resources for the IMF’s Poverty Reduction and Growth Trust. “The IMF needs more capacity to help vulnerable countries and to continue to adapt to evolving challenges.” 

Looking ahead, Al-Jadaan called for global economic cooperation that benefits all stakeholders. “We should be laser-focused on improving the lives of our people.

“We must find common ground to serve the common good and seek win-win solutions, fostering productive cooperation between East and West, South and North, to create a positive spillover for our neighbors and trading partners.” 

The conference is expected to generate actionable recommendations that will support emerging economies in enhancing financial stability and sustainable growth. Discussions will also explore how artificial intelligence and digital transformation can drive economic progress in developing economies. 

Participants are set to discuss strategies for economic resilience, aiming to strengthen cooperation between emerging and advanced economies for a more equitable and sustainable future. 

RIYADH: Expatriate remittances from Saudi Arabia surged to SR144.2 billion ($38.45 billion) in 2024, a 14 percent increase over the preceding year, according to recent data.

Figures from the Saudi Central Bank, also known as SAMA, revealed that this figure is the highest in three years. In December alone, non-Saudi transfers totaled SR14.02 billion, a 31.7 percent increase on the same month last year.

Remittances sent abroad by Saudi citizens reached a two-year high in 2024, totaling SR68.61 billion — a 10.74 percent increase compared with 2023, according to SAMA data. 

In December, these transfers surged to their highest monthly value in more than seven years, reaching SR7.66 billion.

Thamer Al-Harbi, an expert on remittances, told Arab News that this significant surge can be largely attributed to the robust growth of the Saudi economy, driven by Vision 2030 projects.

He flagged up the “high demands to get (laborers) from different levels and skills and from many parts in the world,” adding that the statistics underline an increase in non-Saudi workers.

As these projects continue to expand, they require skilled and unskilled workers from all over the world, leading to a significant increase in the foreign workforce.

He also explained that expatriates sending money “to their loved ones” during the holiday season largely drove the 31.7 percent annual surge in December.

Reflecting on how economic and regulatory trends in Saudi Arabia and the recipient countries affect remittance fluctuations, he said: “It is playing a role. For example, the stability of their currency will reflect on remittance through banking channels as they trust the currency and they get a good rate.”

The expert said that the top destinations for remittances from Saudi Arabia align closely with the largest expatriate communities in the Kingdom. 

Citing data from the General Authority for Statistics, he noted that the five largest expatriate groups in Saudi Arabia are from Bangladesh, India, Pakistan, Egypt, and the Philippines.

These same countries are among the primary recipients of remittances, particularly for person-to-person transfers. The strong presence of these communities, coupled with family obligations and economic ties, continues to drive significant money flows to these destinations.

“The fintech post-COVID played a role in easing the customer experience, speeding up the movement of money to global bank accounts, and saving time by allowing senders to use the service at home without visiting centers or waiting in long queues,” Al-Harbi added.

“Today, most of the apps even provide the service in different languages, which gives customers the confidence to do this by themselves,” he said.

To explain the surge in transfers by Saudis, Al-Harbi said that the Kingdom’s citizens usually transfer to relatives abroad in Europe or the US to pay for tuition and bills related to their properties. 

Advances in blockchain technology and compliance solutions driven by artificial intelligence are enhancing the efficiency and security of cross-border transactions, according to a report by IBS Intelligence released in July. These innovations are crucial for improving financial inclusion and supporting the growth of the digital economy in the Middle East. Several fintech companies are driving this transformation, particularly in the realm of cross-border payments.

These include Careem Pay, a digital wallet service from the popular ride-hailing app, which facilitates peer-to-peer and bill payments, and international money transfers.

Other companies operating in this space are Mamo, a Dubai-based financial services company; PayMe, a fintech based in Egypt; and Saudi company urpay.

Al-Harbi said that, in general, the Kingdom offers lower transfer fees compared ith other GCC countries and regions such as Southeast Asia and Africa, particularly for major remittance corridors.

This can be attributed to the high volume of transactions and the presence of numerous remittance service providers, which create a competitive market and help keep costs relatively low for expatriates sending money abroad. 

Al-Harbi said that economic and regulatory trends in Saudi Arabia and recipient countries play a crucial role in shaping remittance flows.

One key factor is currency stability. When a local currency is stable, expatriates are more likely to send money through official banking channels, because they trust that their funds will retain value and that they will receive favorable exchange rates.

Additionally, regulatory policies in Saudi Arabia and recipient nations influence remittance trends. Policies that allow smooth and secure money transfers encourage more transactions through formal channels, while stricter regulations or economic instability in recipient countries may push some expatriates to seek alternative methods.