This presentation looks at foreign and trade policies with Middle Eastern countries including Saudi Arabia.

1. GOVERNMENT AND
ECONOMIC POLICIES –
SAUDI ARABIA – JULY 2017
BY: PAUL YOUNG, CPA, CGA
DATE: JULY 17, 2017

2. PAUL YOUNG - BIO
• CPA, CGA
• Financial Solutions
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

3. DISCLAIMER
• This presentation discusses Trade and Foreign policies between Canada and Saudi Arabia

4. AGENDA
• Saudi Arabia GDP
• Canada GDP
• Comparison between Canada and Saudi Arabia
• Foreign Relations
• Exports/Import Analysis
• Summary

5. SAUDI ARABIA - GDP
Saudi Arabia has been recording trade
surpluses since 1968 due to shipments of oil
(87 percent of total exports). Main imports
are: machinery, mechanical appliances and
electrical equipment; transport equipment
and parts thereof and base metals. Main
trading partners are: United States (14
percent of total exports and 12.6 percent of
imports), China (12 percent of exports and
13 percent of imports) and Japan (13
percent of exports and 6 percent of imports

6. SAUDI ARABIA – GDP -
• Source - www.forbes.com/places/saudi-arabia/

7. CANADA GDP
Analysis:
• Oil accounts fo 2% of
GDP
• Canada exports 70%
of goods/services to
USA
• Canada top three
trade partners are
CET, USA and China

8. CANADA AND SAUDI ARABIA
Saudi Arabia Canada

9. CANADA AND SAUDI ARABIA RELATIONS• Saudi Arabia buys our armored vehicles
• A London, Ont., company called General Dynamics Land Systems inked a $15-billion deal last year to sell armoured vehicles to Saudi Arabia. Susan
Truppe, a local Conservative MP, called the deal the “largest advanced manufacturing export win in Canada’s history.” She said it would create 3,000
jobs in Canada over 14 years. Prime Minister Stephen Harper greets King Abdullah bin Abdulaziz Al Saud at the G20 Summit in Toronto, on Saturday,
June 26, 2010. (The Canadian Press / Paul Chiasson) But many have questioned the sale. “That’s a lot of weaponry to a country that has a very
notorious human rights record,” says Alex Neve of Amnesty International Canada.
• Women Rights
• Women are still not allowed to drive. There are no political parties. Recently, a blogger named Raif Badawi was sentenced to 10 years in prison, 1,000
lashes and a fine of about $266,000 for criticizing Saudi clerics. His wife and family live in Canada.
• Doctor Training / Academics
• Saudi doctors train in Canada Canada has trained more than 4,000 Saudi physicians over the past three decades, including at least one Saudi Minister
of Health. In 2010, there were 900 Saudi doctors training in Canada – more than in any other country in the world, according to the Department of
Foreign Affairs and International Trade. It’s not just doctors. There are more than 15,000 Saudi students in Canada and Saudi Arabia is the fourth
biggest source country for international students in Canada.
Oil
• Saudi Arabia has more proven oil reserves than any other country in the world, according to the U.S. Department of Energy. Its reserves are so big that
analysts believe it can affect the global price of oil by changing how much it produces. The price of oil matters greatly to Canada, which has the third-
largest reserves. In fact, the Bank of Canada revised its outlook for the Canadian economy this week because of dropping oil prices.
Foreign Policy – Iran
• “The Saudi government plays an important role in promoting regional peace and stability,” according to the Government of Canada. Canada sees Saudi
Arabia as a counterbalance in the Middle East against Iran, which both view as a threat. John Baird, Canada’s foreign minister, fears that Iran is making
a nuclear weapon and has called out the country for its support of Hezbollah, which Canada considers a terrorist organization.

10. CANADA AND SAUDI ARABIA

11. SUMMARY
CBC – January 7, 2016
Justin Trudeau advised to
deepen ties with Saudi Arabia,
brace for change in Iran
Source - http://www.cbc.ca/news/politics/justin-trudeau-advised-to-
deepen-ties-with-saudi-arabia-brace-for-change-in-iran-1.3394669

12. SAUDI ARABIA BANKING SECTOR
• Source - https://www.moodys.com/research/Moodys-revises-outlook-on-Saudi-Arabias-banking-
system-to-negative--PR_345694
• We expect non-performing loans to increase to around 2.5% of total loans over our outlook horizon, from a very low
average 1.4% in September 2015 -- still lower than for most other Gulf countries," says Panis. "Banks will also continue
to remain exposed to event risks stemming from persistently high single-party exposures -- although we estimate that
around 10%-25% of banks' top 20 loans are either to the government or wider public sector.“
• Capital buffers are likely to remain solid, in Moody's view, with the sector's average tangible common equity (TCE) ratio
remaining broadly stable at around 15.7% by the end of 2016, up from 15.4% as of September 2015.
• Profitability is also likely to remain strong, despite increased funding costs and loan-loss provisions, according to the
rating agency due to the low cost of funding and the banks' lean cost structures and zero corporate tax rate. Moody's
expects that, with an average of 143% of non-performing loans covered by provisions, provisioning costs will still remain
one of the lowest in the GCC.
• "Tightening liquidity -- as public-sector deposit inflows and corporate profits moderate -- will likely expose banks to
greater funding volatility in line with regional pressures." explains Khalid Howladar, a Senior Credit Officer based in
Dubai, "However, we expect the local impact to be manageable and funding structures to remain relatively stable thanks
to a broad and growing depositor base." Moody's notes that deposits represented 90% of Saudi banks' non-equity
funding as of September 2015.
• Finally, although Moody's expects government support for the Saudi banking system to remain high, the rating agency
notes there are signs that authorities' policy stance may evolve in line with global practices. In addition, government
support assumptions could be further challenged on the basis of fiscal pressure for the Saudi government, signaling a
potential reduction of government capacity to support banks in case of need.

13. SAUDI ARABIA – DEFICIT/SURPLUS
• Source - http://www.reuters.com/article/saudi-imf-idUSL5N1F63Q9
• Jan 17 The International Monetary Fund praised Saudi Arabia's budget plans on Tuesday and said
Riyadh's goal of eliminating a huge fiscal deficit left by low oil prices by 2020 looked feasible.
• Late last month, Riyadh announced it had cut its deficit from a record 367 billion riyals ($98 billion) in
2015 to 297 billion in 2016, and released a budget plan projecting 198 billion for this year. For the first
time, it also laid out detailed guidelines for spending and raising new revenue over the next few years.
• Tim Callen, the IMF's mission chief for Saudi Arabia, said the gist of Saudi Arabia's plans was in line with
the IMF's recommendations and that eliminating the deficit by around 2020 appeared possible. He said
the medium-term guidelines for spending and revenues were particularly important because they would
reduce uncertainty in financial markets and the private sector, which the government wants to invest in its
projects now that oil revenues have shrunk.
• Among the implementation challenges that Saudi Arabia faces are administrative and legal issues surrounding its
plan to introduce a 5 percent value-added tax next year, Callen said.

14. SAUDI ARABIA – FOREIGN POLICIES
• Key Quote“. This sea of change proves how geopolitical fortune can turn around quickly. The catalyst
was the election of Donald Trump as President of the United States. The likely shift back towards
America’s usual allies in the Middle East including Saudi Arabia, Israel, and Egypt is going to un-do
Obama’s flawed strategy in the region.” - http://observer.com/2017/01/saudi-arabia-diplomatic-relations-
improving/ - or http://journal-neo.org/2017/01/27/saudi-arabia-on-the-cusp-of-fundamental-changes/

15. CANADA AND MILITARY SHIPMENTS
• https://www.theglobeandmail.com/news/politics/canada-now-the-second-biggest-arms-exporter-to-middle-east-data-
show/article30459788/?utm_source=twitter.com&utm_medium=Referrer:+Social+Network+/+Media&utm_campaign=Shared+Web+Article+Links

16. CANADA AND THE MIDDLE EAST
Source - http://www.canadianarabinstitute.org/publications/policy-briefs/canadas-economic-interests-middle-east1/
The Middle East has become an increasingly
important trading partner for the Canadian economy,
representing 1.4% of total Canadian trade, up from
0.6% in 2002. This growth has been primarily driven by
trade with the GCC countries, with total two-way trade
increasing by 325% over the past decade to a total of
$6.8B in 2011. The GCC region alone now accounts
for a greater percentage of Canadian trade (0.76%)
than the entire ME region did in 2002.
Interestingly, bilateral trade with the GCC rivals that of
other notable priority markets for Canada. For
example, in 2011 the GCC trading bloc held a higher
percentage of total bilateral trade with Canada than
the more highly sought after emerging markets of India
and Brazi