Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
Iran Boosts Military Budget.
This past Sunday the Iranian parliament voted in favour of a bill which provides for an additional funding allocation of IRR 20 trillion for an arm of the country’s Revolutionary Guards Force and its missile program. Following the parliamentary approval, which was supported by the Rouhani administration and includes some specific sanctions on US military and security related entities, the Deputy Foreign Minister, Abbas Araghchi said that "The bill has very wisely tried not to violate the nuclear deal and also gives no chance to the other party to manipulate it. This bill is an astute response to the enmity and wickedness of the United States against Iran." The bill will still need to be approved by a financial oversight committee but is expected to be implemented without any changes. Meanwhile the US Navy has reported another close encounter between an unarmed Iranian drone and its fighter jets on Sunday evening. “The Iranian drone flew without any warning lights during the encounter Sunday night with the USS Nimitz,” said a spokesman for the Bahrain-based 5th Fleet, adding that the craft did not respond to repeated calls over the radio and came within 1,000 feet of US Navy aircraft. That “created a dangerous situation with the potential for collision and is not in keeping with international maritime customs and laws.” This latest recorded event between the US military and an Iranian UAV was the second to take place in less than a week.
Iraqi Cleric Meets With Senior UAE & Saudi Officials.
The influential Shiite cleric, Moqtada Al Sadr met this week with various senior UAE officials including the Crown Prince of Abu Dhabi and Supreme Commander of the UAE’s armed forces, Sheikh Mohammed bin Zayed. The cleric’s visit to Abu Dhabi follows on from a similar meeting he held in Jeddah two weeks ago with the Crown Prince of Saudi Arabia, Mohammed bin Salman. Commenting on the latest discussions with Al Sadr the UAE’s Minister of State for Foreign Affairs, Dr Anwar Gargash said yesterday that “Sheikh Mohammed bin Zayed’s welcoming of Moqtada Al Sadr is part of the Gulf communication with Iraq. Our ambition is to see an Arab, stable and prosperous Iraq, it will be challenging but will be rewarding,” Gargash was quoted as saying by the National newspaper. Meanwhile the Saudi cabinet yesterday approved the formation of a joint Iraq/KSA trade council which would seek out opportunities to expand commercial trade between the two countries. Saudi Arabia is also reportedly preparing to officially re-open the Al Jadidah Arar border crossing between the Kingdom and Iraq for the first time in 27 years according to an article in the Saudi Makkah Daily.
Crude Production At Main Libyan Oilfield Disrupted Again.
Production at Sharara, Libya’s largest oil field, was reduced by 100,000bpd this past weekend over worker safety concerns following an alleged armed robbery, which according to a Bloomberg report resulted in the theft of two vehicles from the compound. This latest event follows a series of temporary shutdowns of the facility in June, July and for a few hours just last week on the back of salary related protests by workers.
Saudi Arabia’s Budget Deficit Shrinks.
Saudi Arabia’s budget deficit shrank by 51% to SAR 72.73 bio during the first half of 2017 compared to the same period last year. This improvement was driven primarily by higher than forecast oil prices and public spending cuts. The Finance Minister, Mohammed Al Jadaan said "Although the economic challenges are still existing, we are confident that we can meet our expectations for the fiscal deficit for 2017. The second quarterly report shows the effectiveness of economic reforms and measures in the National Transformation Program within the Kingdom's vision 2030. These reforms have contributed to creating more non-oil revenues and the improvement of spending efficiency leading to a fiscal balance as a strategic objective in the medium term which is positively reflected on the economy of the homeland and the welfare of its citizens."
Jordan Ponders Fresh US$ Bond Issue.
Jordan is reportedly considering a US dollar conventional or Islamic bond issuance soon. The issue is expected to be around US$500 mio in size and follows a similar amount raised via a tap of its existing 2026 issuance earlier this year.
Nigerian Naira Loses Ground In Parallel Market.
USD/NGN reportedly rose slightly to 367.00 in the unofficial ‘kerb’ market yesterday compared to 366.00 last week on the back of an increase in demand for hard currency. Meanwhile the Central Bank continues to provide liquidity weekly to its various FX windows in an attempt to maintain stability. It also auctioned US$100 million last Wednesday to try and clear a backlog of matured FX obligations covering raw materials and machinery, petroleum products, letters of credit and bills for collection. Meanwhile President Buhari, who is still receiving medical treatment in the UK for an undisclosed illness, was quoted by a government spokesperson as saying yesterday that he was ready to return home but awaiting his doctors permission to do so. “I feel I could go home, but the doctors are in charge, I've now learnt to obey orders, rather than be obeyed," Buhari reportedly stated.
Kenya’s FX Reserves Hit 5-Month Low.
Kenya’s foreign exchange reserves dipped to US$7.4 bio in July, their lowest level in almost 5 months. The drop has been attributed to increased CB support for the local currency after it came under pressure ahead of the country’s recent elections. However while outbreaks of violence and protests have been reported following the victory of the incumbent President Kenyatta, these are not expected to become widespread and thus foreign investor related inflows are expected to begin to return to the country in the coming months.
Kuwait To Issue US$1.2 Bio Solar Tender In 2018.
The Kuwaiti government plans to issue a tender for the construction of a US$1.2 bio solar-power plant during the 1st quarter of next year according to recent comments made by the deputy CEO of the Kuwait National Petroleum Company, Shukri AbdulAziz Al Mahous. The proposed 32-square-kilometer plant, which is due to be completed by the end of 2020, could replace the burning of 5.2 mio barrels of oil a year for domestic power needs and consequently reduce Kuwait’s carbon emissions by 1.3 million tons annually, Al-Mahrous was quoted as saying in a Bloomberg article.
Longer Term Egyptian T-Bill Yields Continue To Shift Lower.
The average yield on 5 and 10 year Egyptian T-Bills slipped by 65-80bp to 17.00% and 17.13% respectively during yesterday’s auction.
Did you know that Nigeria is home to second largest film industry in the world by number of movies produced annually ? “Nollywood” as its affectionally called produces an average of 50 films per week.
To the fullest extent allowed by applicable laws and regulations, National Bank of Abu Dhabi PJSC (the “Bank”) and any other affiliate or subsidiary of the Bank, expressly disclaim all warranties and representations in respect of this communication. The content is confidential and is provided for your information purposes only on an “as is” and “as available” basis and no liability is accepted for or representation is made by the Bank in respect of the quality, completeness or accuracy of the information and the Bank has undertaken no independent verification in relation thereto nor is it under any duty to do so whether prepared in part or in full by the Bank or any third party. Furthermore, the Bank shall be under no obligation to provide you with any change or update in relation to said content. It is not intended for distribution to private investors or private clients and is not intended to be relied upon as advice; whether financial, legal, tax or otherwise. To the extent that you deem necessary to obtain such advice, you should consult with your independent advisors. Any content has been prepared by personnel of the Global Markets division at the Bank and does not reflect the views of the Bank as a whole or other personnel of the Bank.