Groundbreaking Decision by Saudi Crown Prince Salman: Foreigners Embrace Unprecedented Access to Mecca and Medina
Saudi Arabia is marking a significant shift in its investment landscape by allowing foreign investors to acquire shares and convertible debt in companies owning real estate in the holy cities of Mecca and Medina. This move, effective from Monday, January 27, reflects Saudi Arabia’s efforts to diversify its economy, traditionally reliant on oil revenues. Nevertheless, the ban on non-Muslims directly owning property in these cities remains in place.
Mecca and Medina are central to Islamic pilgrimage, attracting millions of devotees annually for Hajj and Umrah. This influx generates consistent revenue for the local hospitality and services sectors. However, Saudi Arabia’s economy continues to grapple with its dependence on oil, with the International Monetary Fund (IMF) estimating that the nation requires an oil price of $96 per barrel to balance its budget—a figure notably higher than current market levels.
Cognizant of these economic challenges, the kingdom has redirected its focus on domestic investments over international ventures. A testament to this, in 2024, the UAE’s Mubadala overtook the Public Investment Fund (PIF) of Saudi Arabia as the most active sovereign wealth fund globally. The PIF’s spending notably decreased by 37% to $19.9 billion, down from $31.6 billion the previous year, as reported by Global SWF, a research consultancy firm.
While direct foreign investment in Saudi projects has been limited, there is a robust appetite among international investors for Saudi debt instruments. Bloomberg reported that investor bids for a $12 billion bond issuance surpassed $30 billion, with Saudi Arabia raising $17 billion from international bonds, positioning it just behind Romania among emerging markets for bond sales.
These developments illustrate Saudi Arabia’s strategic initiative to attract foreign capital and diversify its economy amidst fluctuating oil prices, while also managing a complex interweaving of religious and economic considerations.
Original Source: https://www.india.com/news/world/big-move-by-saudi-arabia-crown-prince-salman-in-mecca-and-madina-allows-foreigners-to-7574602/
Category : World,IMF,madina,mecca,Saudi Arabia
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Publish Date: 2025-01-29 01:12:00
