Middle East & African Monitor - 24 November 2016

  • “We will not stand idle if US sanctions are extended” – Khamenei
  • President Sisi rules out sending troops to Syria
  • Nigeria keeps rates unchanged as recession deepens – Shell faces environmental law suit
  • Moody’s amends ratings outlook pn Tunisia
  • GCC should consider “Profit” tax on businesses – IMF
  • Etihad Airways concludes successful US$1.5 bio Islamic bond issue
  • Saudi Arabia plans to sharply increase mining sector revenues


“We will not stand idle if US sanctions are extended” – Khamenei
Iran’s supreme leader, Ayatollah Khamenei, has warned the US that it would face serious consequences if the ‘Iran Sanctions Act’ was extended for a further 10 years. “If these sanctions are put into place, the JCPOA agreement has certainly been breached and they should be aware that the Islamic Republic of Iran will not stand by idly,” Khamenei stated yesterday. His comments follow the successful passage of the ISA bill through the US House of Representatives two weeks ago, which would potentially extend the remaining US sanctions on Iran for another decade. The bill still needs to pass through the Senate and even if it was approved there too, President Obama, whose administration has repeatedly argued that an extension of the ISA is not necessary, could veto it. However judging by apparent level of support for the bill on both sides of the political aisle, there is a risk that such a veto could be overturned by Congress. Meanwhile with the impending arrival of Trump in the White House a number of senior Republicans have publically re-highlighted their desire to introduce a series of new sanctions on Tehran next year including measures to address Iran’s recent spate of ballistic missile tests.

President Sisi rules out sending troops to Syria
The Egyptian President, Abdel Fattah al Sisi, has discounted recent rumours that his country may send peacekeeping troops to Syria, saying that restoring security there was the responsibility of the Syrian army. "Our priority is to support national armies, for example in Libya to assert control over Libyan territories and deal with extremist elements. The same with Syria and Iraq," he was quoted as saying by Al Jazeera and added; "Our stance in Egypt is to respect the will of the Syrian people, that a political solution to the Syrian crisis is the most suitable way, and to seriously deal with terrorist groups and disarm them.”

Nigeria keeps rates unchanged as recession deepens – Shell faces environmental law suit
Rising inflation (18.30% in Oct) was probably the main reason the Nigerian Central Bank decided to keep its benchmark rates unchanged following this week’s MPC meeting, despite a worsening recession which saw the country’s GDP shrink by 2.24% in Q3 this year, a 3rd consecutive contraction of the economy. The MPR rate remains at 14% while the cash reserve ratio for banks was also left at 22.50%. As oil revenues remain under pressure and the hard currency shortage continues, a draft bill has reportedly been drawn up by the Nigerian Law Reform Commission which suggests further amendments to country’s already restrictive foreign exchange regulations, including making it a criminal offence for an individual to hold foreign currency outside of the banking system. In response the Central Bank governor has said his institution would strongly oppose the introduction of any new law that could potentially jail people for holding on to their hard currency. Meanwhile lawyers representing the Ogale and Bille communities in the Niger Delta region, have filed a suit against Royal Dutch Shell in the UK High Court on allegations the company exposed the Ogoniland region to repeated oil spills which have not yet been cleaned up, and are responsible for catastrophic environmental damage.

Moody’s amends ratings outlook pn Tunisia
Moody’s Investor Service has affirmed Tunisia’s Ba3 rating but amended its outlook from stable to negative. Explaining the change in outlook, the ratings agency said it reflected Tunisia’s rising external vulnerabilities due to current account imbalances and the widening of its gross external debt. Meanwhile Tunisian lawyers began their second strike in less than a month yesterday in protest against a government proposal for them to pay a tax of between US$8-25 on every file they submit to a court. The proposal forms a part of the government’s wider plan to implement tighter fiscal controls, raise taxes and freeze public sector salaries.

GCC should consider “Profit” tax on businesses – IMF
The GCC states should consider implementing a 10-15% tax on business profits following the planned 2018 introduction of VAT, according to a recent IMF report which was outlined within an article published in the ‘Khaleej Times’ newspaper yesterday. "Over time, the GCC countries, which have intensified their efforts to diversify budget revenues as part of their broader fiscal consolidation strategies, should also move to introduce or expand the tax on business profits. This, together with VAT and other excises will help ensure efficient and progressive tax systems in the region and generate the bulk of non-oil tax revenues for most countries' budgets. This rate could be in the range of 10 to 15% (with an allowance for the deduction for those businesses paying Zakat), a relatively low rate when compared globally. A rate lower than a 10 to 15% range is likely to yield too little revenue and may not be cost-effective, while a rate higher than this range may make the GCC economies relatively less attractive as a business domicile. One option could be to set the rate at the higher end of the range and at the same time eliminate other levies that are imposed on business profits, except Zakat, thus further streamlining the tax system. The new business profit tax should apply to the profits of both foreign- and GCC-owned corporates and individual businesses," the report read.

Etihad Airways concludes successful US$1.5 bio Islamic bond issue
Etihad Airways concluded a 5 year, US$1.5 bio SUKUK issuance yesterday at a profit rate of 3.86%.  The UAE based airline has a credit rating of A by FITCH.

Saudi Arabia plans to sharply increase mining sector revenues
Saudi Arabia’s Energy Minister, Khalid al Falih, said yesterday that the government was close to finalizing a mining strategy which was aimed at increasing annual revenues generated by this sector from SAR 64 bio to SAR 240 bio by 2030.  The strategy which is set to be implemented in 2017, will focus on copper, gold, phosphate and uranium as well as the country’s currently untapped reserves of bauxite.


The UAE was born on December 2nd 1971, and is a federation of seven Emirates. These are: Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain.

Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127

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NBAD Middle East & African Monitor - 24 November 2016

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