Thanks to Nasser Saidi’s Weekly Economic Reports, I will start sharing with all of you some of the GCC and UAE-focused Economic news.
GCC & Regional Developments:
- Bahrain privately placed a USD 435mn, three-year sukuk issue last week, with a profit rate of 325 basis points over mid-swaps; this is the second time in three months that the country has tapped the dollar bond market.
- Egypt’s cabinet approved “in principle” the long-awaited value added tax bill; this will now be referred to the Council of State (an advisory body to the government), and then sent to parliament for discussion.
- Egypt’s financing gap is estimated at around USD 30bn for the next three years, revealed the Minister of International Cooperation. It was also mentioned that the government is trying to diversify its sources of funding instead of relying solely on treasury bills.
- Unemployment rate in Egypt edged down slightly to 12.6% in Q1 this year, from 12.7% the previous quarter. Total labour force grew by 99k people in Q1 to 28.4mn people.
- The Islamic Development Bank (IsDB) has invested USD 3.7bn in Egypt, according to an official from the Islamic Corporation for the Development of the Private Sector.
- Iraq reached a stand-by agreement with the IMF, with a loan amount of USD 5.4bn at 1.5% annual interest rate. According to the finance minister, this will help Iraq secure an additional financial aid of around USD 15bn over the next three years, including via international bonds.
- Jordan’s trade deficit widened to 13% in Q1, as exports fell by 12.7% to JOD 1.16bn alongside a 4% pick-up in imports to JOD 3.5bn.
- The unemployment rate in Jordan touched 13% in 2015 – the highest since 2008; the number of unemployed Jordanians increased by 36k to reach around 209k.
- Fitch report on Jordan’s banks – which have a Negative Outlook rating – highlighted political risk, weak external finances and continued concern over the country’s public finances as constraints, even though the banks maintained healthy liquidity, adequate capital ratios and resilient profitability.
- Kuwait’s minister of social affairs stated that around 70% of the delay in development projects was due to the executors; often, unavailable land and budget issues were major constraints.
- The minimum capital requirement to register firms (except joint stock companies) in Oman has been scrapped.
- Oman’s total imports declined marginally by 1.0% yoy to OMR 11.15bn in 2015, from OMR 11.27bn a year ago, mainly on account of fall in commodity prices across the globe.
- According to EY, a 5% VAT in Oman could generate revenues in the order of OMR 250mn.
- An agreement to set up a China-Oman Industrial City in Duqm will be signed on Monday, paving the way for USD 10bn investments by 2020.
- Qatar reported a trade surplus of QAR 19.3bn in Q1 versus QAR 48.4bn in the same period a year ago. Asia remained the top trade partner, accounting for 73.1% and 33% of Qatar’s exports and imports respectively. GCC’s share in Qatar’s exports was 9.1% and 14.9% of imports.
- Reuters reported that Qatar mandated HSBC, JP Morgan, MUFG and QNB Capital as global coordinators on a potential US dollar bond.
- Traffic congestion in Qatar is estimated to have an economic cost of between QAR 5.2-6.8bn, according to a report by Qatar Mobility Innovation Centre. The report found that each commuter spent an average 102 extra hours due to congestion in 2015.
- Saudi Arabia held USD 116.8bn of US Treasuries as of Mar 2016, according to data revealed by the Treasury Department. This is about 20% of the country’s USD 587bn of foreign reserves, and roughly 10% of the stockpiles of China and Japan.
- The IMF lauded Saudi Arabia’s reform plan, though stating that “the reforms will need to be properly prioritised and sequenced, and the appropriate pace of implementation carefully assessed”. In the statement released after the conclusion of the 2016 Article IV mission to the country, real GDP growth was projected at 1.2% this year (2015: 3.5%). (More details: http://www.imf.org/external/np/sec/pr/2016/pr16230.htm)
- Saudi Arabia plans to sell five-, seven- and 10-year, fixed-rate riyal bonds this week, according to a banker and reported by Reuters. The bonds are to be priced on today and allocations to be made tomorrow (Mon).
- Saudi Arabia’s Labour Ministry revealed a national strategy for women’s employment – this will be launched in 2 months, is expected to create 50,000 job opportunities, and will continue for two years. Working from home, and part-time employment are also being considered as options.
- The construction firm Saudi Binladin Group secured a SAR 2.5bn loan from local banks to ease its financial pressures. This is being used to cover redundancy costs for workers it is laying off, back salaries and severance costs, according to banking sources.
- Privatisation plans in Saudi Arabia: 11 airports will be privatised by 2020, stated an official from the General Authority for Civil Aviation; the health ministry plans to privatize 295 hospitals and 2,259 health centers by 2030.
- Distressed asset sales are playing a more prominent role in M&A deal making in the MENA region, largely because of a tightening of capital, according to the EY Capital Confidence Barometer. EY expects MENA’s USD 50-60bn annual M&A market to remain unchanged in 2016.
- Jordan is expected to sign a MoU with the GCC Interconnection Authority allowing it to connect to the GCC power grid through Saudi Arabia. The project is expected to cost JOD 170-200mn, according to the Minister of Energy and Mineral Resources.
- It is estimated that nine out of 10 migrants and refugees entering the European Union in 2015 relied on “facilitation services”, according to a report by Interpol and Europol. Given that about 1 million migrants entered the EU in 2015, and most paid EUR 3,000-6,000, the average turnover for people smugglers was likely between USD 5-6bn.
- UAE Abu Dhabi Securities Exchange (ADX) disclosed that 64 out of its 66 listed companies had submitted financial statements for Q1 within the deadline of 45 days from the end of the fiscal period, achieving a 97% compliance rate.
- The ease of mobile and internet banking notwithstanding, a survey conducted by Abu Dhabi Islamic Bank (ADIB) revealed that 97% of respondents would still like to visit a branch and talk to a relationship manager. Transactions through ADIB’s banking app increased by 71% over the year while access via the internet increased by 25% during just one quarter last year.
- Dubai Parks and Resorts, which is raising money to fund its Six Flags Dubai theme park, announced that investors had subscribed to more than AED 1bn of its AED 1.68bn rights issue. Overall, the company is seeking to raise a total of AED 2.67bn, through a combination of debt and equity funding.
- DP World is offering to buy back almost half of its USD 1.5bn sukuk offering, due to mature in 2017; the company’s offer is to buy the sukuk at USD 10,555 when the face value is USD 10,000.
- Dubai-based real estate developer Limitless announced that it will make an early payment of AED 2.07bn to banks and trade creditors this month, following the recently concluded restructuring agreement. The outstanding bank debt amount of AED 4.45bn was to be paid in installments over Dec 2016, 2017 and 2018: this covers the first installment and 80% of the second.
Nasser Saidi & Associates provides briefs on international economic & financial developments, including MENA, UAE, and GCC, in addition to a section on recent articles relevant to our region and macroeconomic & financial developments.