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Middle East & African Monitor - 09 January 2017

  • Death of Rafsanjani is setback for reformists in Iran
  • Nigerian militant group call for fresh attacks on oil facilities
  • Saudi security forces kill two extremists in Riyadh shootout
  • I’m ready to negotiate “on everything” – Syrian President
  • EIU sees better year ahead for the Egyptian Pound
  • Qatar’s fiscal deficit set to shrink – IMF
  • Kuwait considers tax on remittances
  • Oman could achieve 2% GDP growth target in 2017 – KPMG

REGIONAL COMMENTARY

Death of Rafsanjani is setback for reformists in Iran
A former Iranian President, Ali Akbar Hashemi Rafsanjani, passed away yesterday following an apparent heart attack. Despite controversy during his time in office, including allegations of corruption and his direct involvement in kick-starting Iran’s nuclear program, he was considered to be a political pragmatist and from 2009 became an important figurehead for the reformist movement particularly during Ahmadinejad’s tenure. He was also a key supporter of the current President, Hassan Rouhani, and of the historic decision to sign the P5+1 agreement in 2015. His unexpected death is thus a blow to ‘moderate’ forces within the Iranian regime and more specifically for Rouhani, whose administration is currently experiencing a strong challenge from hardliners ahead of Presidential elections in May. It is also worth noting that Rafsanjani was a senior member of Iran’s ‘Assembly of Experts’ the body responsible for selecting the country’s next Supreme Leader, and as such he was expected to support the appointment of a less conservative figure to succeed Ayatollah Ali Khamenei.

Nigerian militant group call for fresh attacks on oil facilities
One of the prominent militant groups operating within the oil-rich Niger Delta region, the ‘Niger Delta Avengers’ released a statement late last week saying that they were preparing to launch fresh attacks in the area because their attempts to negotiate with the authorities had failed. "It has been evidently clear that the Nigerian state is not ready for any form of dialogue and negotiation, On this note, we are declaring ‘Operations Walls of Jericho and Hurricane Joshua’ simultaneously to reclaim our motherland. All fighters and commands are hereby placed on high readiness in our webs of operations to hit and knock the enemy very hard.” the statement read. The threats come despite a series of discussions between local officials and various militant leaders over the past 6 months and recent reports that the government had resumed its issuance of stipends to those militant fighters, (including members of the NDA) who lay down their arms.

Saudi security forces kill two extremists in Riyadh shootout
Saudi Police officers reportedly killed two members of ‘Daesh’ during a shootout in the Yasmeen suburb of Riyadh this past weekend according to the Saudi Gazette newspaper. One of the men was Tayea Salem Yaslam Al-Sayari who had been sought by police on suspicion of masterminding bomb attacks on a mosque in Madinah and the Soliman Fakeeh Hospital in Jeddah last year. “Tayea Al-Sayari was a scholarship student in New Zealand in the past where he majored in engineering. He had gone to Syria to join Daesh fighters. Later on, he made his way to Turkey and then to Sudan and then to Yemen before coming back to Saudi Arabia to plot and design explosive devices that were used in two terror attacks last year,” an official from the interior ministry was quoted as saying.

I’m ready to negotiate “on everything” – Syrian President
The Syrian state news agency has published comments by Bashar al Assad this morning suggesting his government is open to negotiate “everything” including his position as President during proposed peace talks set to take place in Kazakhstan soon, adding however that any constitutional issue such as his post must be put to a national referendum. No date has yet been set for the meeting in Astana, but the US Secretary of State said last week that he was encouraged by the Russian/Turkish led bid to hold such discussions ahead of more formal UN led talks in Geneva next month.

EIU sees better year ahead for the Egyptian Pound
The chief economist of the EIU has been quoted in the institute’s latest newsletter suggesting that the Egyptian Pound could be one of this year’s best performers after a tough 2016. The EIU forecasts a potential 14% gain for the EGP against the US dollar in 2017 due to a reduction in imports, a rise in exports and an improvement in both remittance and investment inflows, following the recent decision to float the local currency.

Qatar’s fiscal deficit set to shrink – IMF
The IMF said last week that it expected Qatar’s fiscal deficit to shrink to 8.30% of GDP this year and to 6.10% next year on the back of a rise in non-oil related revenues and compared to a 9.10% deficit in 2016. “The drop in international oil and gas prices has put considerable pressure on the fiscal and external positions. However, the authorities’ policy response has been adequate, underpinned by cuts to current expenditures and renewed efforts towards increasing non-oil revenues," a statement issued by the IMF read, adding that it was comforted by plans for a further reduction in subsidies this year and the implementation of taxes such as VAT by 2018. With regards to the Qatari Riyal’s peg to the US dollar the IMF said; “The peg to the US dollar continues to serve Qatar well. Nevertheless, given that the Qatari economy is evolving towards more diversification, the pegged exchange regime should be periodically assessed over the medium term to ensure it remains the best option."

Kuwait considers tax on remittances
Kuwait is still reportedly considering a bill to tax remittances made by local expatriates by as much as 5%. This bill was originally proposed in May last year, and is one potentially less sensitive new revenue source for the government which is continuing to face somewhat of a backlash inside and outside parliament over its decision to increase petrol, electricity and water prices last year as a part of its austerity program. However the IMF has urged those GCC states considering such a tax on their expatriate populations to be cautious, suggesting that it’s a “regressive” policy whose economic benefits are likely to be minimal and could in fact raise a government’s administrative expenses. “The imposition of a remittance tax could raise production cost if it leads to higher pre-tax wages and production costs. This would lower competitiveness of the private sector, ” The IMF said adding that It may also encourage the use of unofficial channels to send money overseas.

Oman could achieve 2% GDP growth target in 2017 – KPMG
KPMG has said that Oman’s 2% GDP growth target for this year is achievable as long as the authorities continue to implement their proposed economic reforms. "The fact that within a year of the 5-year plan being issued, the government has revised its revenue and expenditure estimates downwards, basing its budget on a lower oil price of US$45 per barrel, suggests prudent fiscal management. GDP growth of 2% is achievable despite strong economic headwinds and shrinking government expenditure if the government expeditiously implements its Tanfeedh and privatisation programmes," KPMG was quoted as saying in a recent Reuters report.

09-01-2017

AND FINALLY…
Did you know that the father of modern algebra was the 9th century Arab scholar Muhammad Al Khwarizmi? In fact the word ‘algorithm’ is derived from the Latin translation of his name.

Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
MarketInsights&Strategy@nbad.com
Tel: +971 2 6110 127

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NBAD Middle East & African Monitor - 09 January 2017

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