Following are excerpts from a CNBC interview with Mohammed Al-Jadaan, Finance Minister of Saudi Arabia and CNBC's Hadley Gamble and Karen Tso.
KT: Well, very important conversations being held here in Davos, and who better than our Middle East expert-,
KT: To draw the links for us, and make sense of some of the conversations.
HG: Absolutely, Karen, and it's fantastic to be here, we've been speaking to so many interesting folks already today, but I want to get a quick check on where oil prices are trading, sharply lower, amid growing concerns that the economic slowdown in China could temper demand. Fresh data also shows that Saudi Arabia's November crude exports hit their highest level in two years. Well, I'm very excited to say that we have the country's Finance Minister, Mr Mohammed Al-Jadaan, joining us, first on CNBC, sir, it's so wonderful to see you, yet again, this year. I want to kick off by asking you about the bonds. Describe for us what you see, going forward. Are you going to be issuing bonds in euro denominations? Are you going to be in US dollar bonds? We've already had a very, very successful bond raising 7.5 billion, I believe. Give us what the plan is, for bond issuances this year.
MA: Thank you very much. The plan is to move with our strategy, we have a debt strategy, that spans until 2023. We issued, in January, very successfully, we wanted 7 billion, we had a book of over 27 billion, so investor confidence is there, and-, and it is actually very widely subscribed, from Asia, to the US, to Europe. The plan is to look in to, potentially, another currency, euro is a possibility-,
HG: Is the yuan a possibility?
MA: Later this year, and we are continuing with our local issuances, on a monthly basis.
HG: Are you thinking about the yuan, as well?
MA: We are thinking about various currencies, but euro is our forecast now, and then we will think about yuan, and others.
KT: Since Hadley's brought up China, let me ask you about the slowdown. We've just had a glimpse of what it looks like, what the trade impact is for China, with the spat with the United States, growth at the lowest level, annually, since 1990. Does that concern you, that China is slowing down, one of the key consumers of your product, oil?
MA: Well, I think there are some slow, uh, growth, in China. I think we also see that they are consuming more oil in '18 than ever, so we believe there will be a demand, we don't think the possible slowdown in China is going to-, to have a severe impact, we have a strategy on our oil, also, in terms of diversification, in terms of oil to chemicals, and-, and some of my colleagues will be talking about that, in terms of the Aramco strategy on diversifying their demand.
KT: But that doesn't protect you in 2019, does it?
MA: Well, indeed it does, I think we are very comfortable with our forecasts, in terms of production and price, after all, we are a-, a very important player in the oil market, and-, and we believe what we forecasted is likely to happen.
HG: In terms of what's going to happen next, we've just announced, in Saudi Arabia, the-, the biggest budget in the country's history, and that does include substantial hand-outs, as well, which is something that you've seen growing, from 2018 now to 2019. My question would be, then, so many analysts are saying that you need $80 a barrel to break even. Is that right?
MA: Well, as a-, a very important player in the oil market, we don't speculate on price, we don't talk about what we expect, and what we budgeted for, but we are very comfortable, we-, we consult our house expert, the Minister of Energy, before we decide on the budget, and we are very comfortable, actually, with our forecasts. That said, we are also diversifying the economy, we are diversifying our income, our non-oil revenue have grown significantly in the last four years, three times, 300%, we intend to continue our fiscal reform, and control our deficit, and, so far, we have been very successful.
KT: Can we talk about the diversification? Because the Kingdom went on a fantastic image remake, pitching about technology, and how you were ready for the future, and then the news broke of the killing of journalist Jamal Khashoggi. That seemed to change perceptions, that were very welcome to the message from Saudi Arabia. How damaging do you think the affair has been for your country?
MA: It is very unfortunate, really, what happened to Jamal, an innocent human being, that we lost, and-, and the government made it clear that we will bring those who are responsible to justice. Actually, we held the first open court hearing, a couple of weeks back, and-, and-, and we'll leave that to the court, but the government is also determined to make sure that the system-, the fallout in the system is fixed, and-, and there is a lot of work in that direction. However-,
KT: But are you worried that investors don't believe the line they're getting from the Saudis, that there's been separation, and it doesn't really go all the way back to the Crown Prince? Are you happy that investors are confident that-, that the links are not there?
MA: I-, I believe the investors believe what we said. When we went to the market in January, the investors gave us a vote of confidence, in the economy, but also in our commitment to making sure that the reform continues, at all levels, legal, economic, fiscal, and, obviously, social, we have significant social reform taking place in Saudi Arabia, that is embraced by the people, and we are responding to the people's needs of Saudi Arabia.
HG: I have to ask you, you've just been in Lebanon, over the last couple of days, and we've just seen Qatar deciding to help Lebanon out, to the tune of some 500 million dollar bonds. I have to ask you, is Saudi Arabia prepared to make the same kind of commitment? Because obviously, there are a lot of questions, I know, in the mind of your government, about Qatar and its influence.
MA: I was there, in Lebanon, I headed the Saudi delegation to the summit, I had a very constructive discussion with Saad Hariri, the-, the Prime Minister. We are looking forward to him finalising the-, the government formation. Saudi have been, and continue to be, a very important catalyst of stability in Lebanon, we are interested to see stability in Lebanon, and we will support Lebanon all-, all the way.
HG: And in terms of that economic diplomacy, I mean, at the end of the day, what we all understand, particularly in the region, is that economic diplomacy speaks, nothing is for free, there are strings attached. Does it worry you, when you sit back and look at the growth forecast for the region, does it worry you, that the tensions in the region are going to impact the future of Saudi Arabia?
MA: We embarked on a significant reform, and the reform also deals with challenges, both internally, that we will need to deal with, and correct, along the way, it is not going to be a free ride, but also geopolitically, and-, and we are dealing with that, but we are also determined to making sure we play our role, as a catalyst of stability in the region. We are supporting the region, we are talking to our allies in the region, we are helping countries that need support, we are talking to Pakistan, Jordan, Egypt, Bahrain, Tunis, and other countries in the region, so we wanted to make sure that Saudi provides the stability that the region, and the hope that the region needs.
HG: So not-, you're not taking your foot off the gas.
MA: Definitely not.
KT: We've almost run out of time, I believe, but I want to ask you very quickly, because we're talking about some of the big issues around trade, here at Davos, and one of the biggest concerns in the room is that the US and China may not resolve their dispute. What would you say to both countries?
MA: I am very optimistic that a deal will be made in the next few months, I think it is in the interest of both countries, and the world, to avoid that kind of issue. We are determined to making sure that our country is open, and-, and Saudi Arabia is really open for investment, and we are welcoming international investors all the way, we have just signed a couple of deals with the private sector, two weeks ago, a third one, last week, and three-, three deals, in the next couple of weeks.
KT: Well, we wish you the best of luck for 2019-,
MA: Thank you very much.
KT: Thank you so much for joining us today, Mohammed Al-Jadaan, who is the Finance Minister of Saudi Arabia, and thank you very much to Hadley, for joining me here live on set today.