IslamicFinance.de

In the face of plummeting oil prices, Saudi Arabia has announced an economic strategy to shake off Saudi overreliance on fossil fuels. In the 'Saudi Vision 2030' Deputy Crown Prince Mohammed bin Salman proposed changes to generate $100 bn in additional non-oil revenue by 2020. In order to do that, the 30-year-old monarch plans to restructure Saudi Aramco, the state oil company. Less than 5% of Aramco’s stake would undergo an initial public offering, with an expected value of $2 trillion. The ownership of the rest to the company would be transferred to Saudi’s sovereign wealth fund, known as the Public Investment Fund (PIF). Prince Mohammed also called for the private sector to grow to 60% from the current 40%. Government services like education, health care and airports will be transferred to the private sector. As the country adjusts to the transition, economic growth is expected to slow as private sector expands.

Development expert David Simms and Wharton University professor Tyler Wry discuss issues of microfinance and share insights on where the field is heading. Microfinance is a powerful tool that can transform communities by lifting the poorest individuals out of poverty. According to Simms the industry understands the power of microfinance and the ability to do that rural outreach, to drive costs down and to get training out is based on technology. The future is around the role of technology and banking coming together.

From Oman to Algeria, the MENA region is being hammered by low oil prices, which fell below $28 a barrel on January 18, a drop of more than 60% since June 2014. Some countries have been hurt particularly hard. In Libya, for example, the World Bank estimates that the fiscal deficit is more than 55% of GDP and the current account deficit is about 70% of GDP. In Saudi Arabia, central bank reserves have plunged from $732 billion to $623 billion in less than 12 months. Some 75% of the Saudi government’s budget comes from oil. Given the deficit, the International Monetary Fund (IMF) notes that Saudi Arabia needs to sell oil at around $106 a barrel to balance its budget. A regional country that could potentially do better in 2016 is Iran.