Saudi Arabia’s gross domestic product (GDP) fell 3.8% year-on-year (YoY) in the fourth quarter of 2020 (4Q 2020), with flash estimates from the General Authority for Statistics indicating a 4.1% YoY projected decline in GDP for the full year 2020.  Whilst this is in line with estimates from the International Monetary Fund, it represents the sharpest decline in GDP experienced in over three decades. According to the media report, the decline in crude oil prices significantly reduced revenue, coupled with the spread of COVID-19-related restrictions on economic ac...

Financial institutions are rushing to meet investor expectations on how they account for climate-related financial risks as Covid strains their financial strengthA recent UK government-commissioned report brings a new issue onto the horizon of systemic risks to financial stability – biodiversityJust as the climate grew from an issue of concern to governments to a major financial stability risk, biodiversity could also quickly become a major issue for investors With Covid and climate change leading the global agenda, it may be easy for the financial sector to overlook the weighty...

Abdulhamid M Saeed Alahmadi, Governor of the Central Bank of the United Arab Emirates (UAE), has stated that although the economy of the UAE remains subdued in its activity, it is on its way to recovery. This recovery will be supported by the Government of the UAE’s efforts to fund infrastructure improvements, encourage private investments and diversify the economy.  According to Alahmadi, positive indicators of an economic recovery include an ‘upsurge’ in the Purchasing Managers Index (PMI), a 1.7% month-on-month improvement in the e...

Malaysian Rating Corporation (MARC) has downgraded MEX II’s MYR 1.3 billion Sukuk Murabahah Programme (Sukuk Murabahah) rating to BB-IS from BBB-IS, and its MYR 150 million Junior Bonds to B from BB, while maintaining the ratings on MARCWatch Negative.  MARC’s downgrade on the ratings is based on the rising likelihood that MEX II will be unable to establish a liquidity facility that it was originally expected to obtain by end of 2020 to meet a principal and profit payment of MYR 68.7 million due in April 2021. Although MEX II is still...

Saudi-based Riyad Bank has announced the completion of its issuance of a SAR-denominated domestic Tier 2 capital-eligible Sukuk (Tier 2 Sukuk) worth SAR 3 billion via private placement, according to a Tadawul statement released on the 9th of February 2021. The Tier 2 Sukuk issuance is part of Riyad Bank’s domestic SAR-denominated Sukuk issuance programme of up to SAR 10 billion, which was announced on the 19th of January 2021, in order to issue and offer Senior and/or Subordinated Sukuk.  The issuance amount was SAR 3 billion worth of T...

The Islamic Corporation for the Development of the Private Sector (ICD) has signed an Advisory Services Agreement with Turonbank in Uzbekistan, whereby ICD will take on the role of advisor for the launch of an Islamic banking window at Turonbank.  The planned Islamic Window will allow Turonbank to be amongst the leading providers of Islamic products and services in Uzbekistan. According to media reports, this launch will allow Turonbank to diversify its funding sources, its product portfolio and increase its profits. Commenting on...

Turkey has established a Participation Finance Department within the Presidential Finance Office to capitalise on the opportunities provided by the developing participation finance sector. This was announced in an Official Gazette issued on the 9th of February 2021.  According to the statement, the new department will concentrate on raising awareness towards participation finance and will also focus on strategy development in the field. In addition, the new office will be used to boost cooperation amongst institutions in the public and private sectors, universities, as well as...

The Government of Indonesia has raised IDR 12 trillion from its biweekly auction of State Shariah Securities (SBSN), also known as State Sukuk, held on the 9th of February 2021. The auction was conducted by Bank Indonesia acting as the SBSN Auction Agent, and matched the indicative targeted amount of IDR 12 trillion. The Sukuk will be settled on the 11th of February 2021.  According to a statement issued by the Directorate General of Budget Financing and Risk Management (DJPPR), Ministry of Finance, the total incoming...

Speaking at a parliamentary meeting of the Finance Committee on the 9th of February 2021, Bank Indonesia (BI) Governor, Perry Warjiyo, stated that there was capacity to lower interest rates further, as required. The Governor made this comment following the release of 2020 economic growth performance data in the first week of February 2021, which saw Indonesia post its first full-year contraction in over twenty years.  Gross domestic product declined 2.19% year-on-year in the fourth quarter of 2020, with full-year GDP for 2020 d...

Fitch Ratings (Fitch) cited that limited public awareness and lack of confidence in Shariah-compliance aspects of Islamic financial solutions are two of the main challenges facing the industry. In a statement released on the 8th of February 2021, Fitch acknowledged that this is particularly relevant where the industry has a niche presence in the market.Why it Matters:The level of awareness and confidence varies across jurisdictions. Fitch categorises these jurisdictions based on the level of awareness, penetration, confidence, as well as the development of the regulatory environment for Is...