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Bahrain government sends draft bill to parliament to approve VAT amendment

Bahrain’s government has officially sent a draft proposal to parliament for approval to amend value-added tax beginning on Jan. 1, 2022, according to the Bahrain News Agency.

In a report regarding the cabinet’s meeting on Monday, the Bahrain News Agency said that the government had approved taking constitutional and legal measures to refer a draft law amending some provisions of the value-added law to the legislative authority, which includes amending the value-added ratio starting Jan. 1, 2022.

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The report did not specify whether it would hike or reduce to the VAT, currently at 5 percent.

Several local reports on Sunday said Bahrain is considering doubling value added tax to 10 percent to boost state revenues and reduce its budget deficit.

A Bahraini parliamentary source and a source close to the government spoke to Reuters confirming local media reports on the 10 percent hike.

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Saudi Arabia targets reserves not falling below set GDP level: Finance Minister

Saudi Arabia’s policy on fiscal sustainability would ensure that reserves do not fall below a certain percentage level of the country’s gross domestic product, its finance minister said.
The world’s biggest crude exporter, whose economy is estimated at $1 trillion, said in its budget for 2022 that the Fiscal Sustainability Program aims to de-couple the economy from oil price fluctuations, realizing several economic benefits for the non-oil economy and the private sector.
“We are at a final stages of designing our fiscal sustainability policy,” Minister of Finance Mohammed al-Jadaan told Reuters on the sidelines of the World Economic Forum in Davos.
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“According to that policy, our reserves shall not fall below a certain percentage level of GDP. That figure would be in the double digits.”
Jadaan said excess money can go toward the Public Investment Fund (PIF), the country’s $600 billion sovereign wealth fund, and the National Development Fund (NDF).
“In the last five years, we have spent a trillion riyal from reserves and we are still replenishing them,” he said.
Foreign reserves shrank from a record high of $737 billion in August 2014 to $529 billion at the end of 2016 as the government liquidated some assets to cover the huge budget deficit caused by the fall in oil prices.
Saudi central bank’s net foreign assets stood at 1.63 trillion riyals ($434.57 billion) at the end of March.
Government reserves at the Saudi central bank were projected to hit 350 billion riyals at the end of financial year 2021, according to the budget document.
Jadaan said Saudi Arabia will “ultimately” consider cutting the rate of value-added tax (VAT), which was increased to 15 percent in 2020. The VAT rate was tripled then to shore up finances hit by low oil prices, as the pandemic hit global demand.
“We will ultimately consider cutting the VAT but at the moment we are still replenishing the reserves,” he said.
Oil prices have surged past $100 a barrel this year in the aftermath of the Russia-Ukraine conflict, resulting in a $15.33 billion budget surplus for Saudi Arabia in the first three months of 2022.
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EU summit unlikely to find solution on Russia oil embargo, von der Leyen says

European Union leaders are unlikely to strike a deal on an oil embargo against Russia at their summit on Monday and Tuesday, head of the bloc’s executive Ursula von der Leyen said.
“I don’t think the summit is the right place for that… We should not stare at the summit,” she told Reuters on the sidelines of the World Economic Forum in Davos, Switzerland on Tuesday. She added that negotiations with member states were ongoing.
Von der Leyen’s Commission has proposed phasing out Russian oil imports by the end of the year in most EU member states, while Hungary and others could be given more time.
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It would be the EU’s harshest sanction yet in response to Moscow’s February 24 invasion of Ukraine.
Hungary, however, has so far refused to lift its veto.
It says hundreds of millions of euros are needed to upgrade its refining and pipeline infrastructure so that it can cut out Russian oil, while a total modernization of its energy system would cost billions of euros.
Von der Leyen said the negotiations were mainly focusing on working out details now: “I don’t think that this will be a topic at the Council that will be decided there.”
She was echoed by an EU official.
“There is no way that such a technical subject could be negotiated by the heads of state and government at the summit,” the official said.
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Russian ruble firms past 57 to the dollar for first time in four years

The Russian ruble strengthened to levels not seen since March 2018 against the dollar on Tuesday, boosted by export-focused companies selling foreign currency to pay taxes and shrugging off a slight easing of capital controls.
The ruble has firmed about 30 percent against the dollar this year despite a full-scale economic crisis in Russia, making it the world’s best-performing currency.
The ruble is steered by capital controls imposed in late February to shield Russia’s financial sector after Moscow’s decision to send tens of thousands of troops into Ukraine prompted unprecedented Western sanctions.
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At 1110 GMT, the ruble was 2.5 percent stronger against the dollar at 56.36, hovering around this level for the first time in more than four years.
Against the euro, the ruble gained 3 percent to 58.24, its strongest in seven years.
“The ruble’s sharp gains again owed to tomorrow’s looming deadline for 600 billion rubles ($10.43 billion) in mineral extraction tax payments and the conversion of payment for gas exports into rubles,” Sberbank CIB said in a note.
“We think the local currency may have trouble prolonging its recent rally, as selling activity among exporters may begin to decline.”
The currency’s strength has raised concerns about the negative impact on Russia’s budget revenue from exports. On Monday, Russia cut the proportion of foreign currency revenue that exporters must convert into rubles to 50 percent from 80 percent.
Despite the slight relaxation in capital controls, the ruble could firm to 55 against the dollar in the near term, said Dmitry Polevoy, head of investment at LockoInvest.
“Current levels could be used to open long positions in foreign currencies by mid- and long-term investors,” Polevoy said.
The ruble may return to levels of 60-65 against the dollar in June, Sinara Investment Bank said in a note.
The ruble was weaker at banks. Russia’s largest lender Sberbank offered to sell cash dollars and euros for 58.20 and 60.38 rubles, respectively.
Russian stock indexes were mixed.
The dollar-denominated RTS index reversed earlier losses and gains 1 percent to 1,267.1 points. The ruble-based MOEX Russian index was 1.6 percent lower at 2,265.5 points, pressured by the ruble gains.
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