NBAD Middle East & African Monitor – 20 March 2017
New Prime Minister in Morocco
King Mohammed VI of Morocco appointed Saad Eddine El Othmani to the office of Prime Minister last week and called on him to form a government. Othmani replaces the incumbent, Abdelilah Benkirane, who whilst also a member of the Islamist ‘Justice and Development Party,’ (PJD) has been unable to reach a consensus with the country’s other major political parties over the make-up of a coalition government since last October’s parliamentary elections. “The King took the decision in the absence of signs that suggest an imminent formation of a government, and due to his concern about overcoming the current blockage in political negotiations,” a Royal Office statement read. The PJD won 125 seats in last year’s election followed by the ‘Authenticity and Modernity Party’ with 102 seats, while the conservative Istiqal Party secured 46 seats. El Othmani previously served as the country’s Foreign Minister between 2011-2013.
Aramco resumes oil deliveries to Egypt
Egypt’s Oil Ministry announced yesterday that Saudi Aramco has begun shipping oil to the country again after an almost 5 month suspension. "On Friday and Saturday, we received the first two deliveries after a resumption of the contract with Aramco. We will receive another two deliveries on March 26th and 27th," a ministry spokesperson was quoted as saying by AFP.
Kuwait warned against imposing a remittance tax
The Vice-President of Kuwait’s Money Exchange Association, Talal Bahman, has warned that a proposal to implement a 4% tax on expatriate remittances, which was put forward by some MPs recently, is unlikely to raise significant revenues and would in fact be detrimental to Kuwait’s economy. “Lawmakers should be cautious when they propose economic legislation without thoroughly studying their impact and results on the country as a whole. Instead of punishing expats, Kuwait should be fostering an attractive environment for them which would encourage them to invest or save their money here, this means providing real investment opportunities which could raise levels of liquidity in the market which will stir up the Kuwaiti economy as a whole,” Bahman was quoted as saying by Gulf News. Late last year the IMF also criticized suggestions of a remittance tax in the region saying that it would have a very negative effect on the private sector’s competitiveness, it would create added administrative and operational costs , encourage a black market for offshore payments, and any potential revenue it generated would be minimal at best.
Saudi Arabia may grant expats investment rights
Saudi Arabia’s Ministry of Trade and Investment is reportedly considering allowing expatriates in the Kingdom to create and invest in start-up businesses without needing a local sponsor. The Investment & Trade Minister, Majed Al Qassabi, was quoted by Al Arabiya saying that such a move would “attract quality foreign investment to create new jobs and contribute to the transfer of knowledge to Saudi Arabia.” Such businesses would pay an annual income tax of 20%.
Nigerian CB likely to keep benchmark rate unchanged
Nigeria’s CB begins its monthly 2-day MPC meeting today but we expect the authorities to keep the country’s main interest rate unchanged at 14.00%. This despite a meeting held in Abuja yesterday to discuss the need for “monetary and fiscal collaboration” which was attended by officials from the CB and a number of key ministries, including finance, budget & planning, trade & investment as well as industry. According to the ‘This Day’ newspaper, the Minister for Budget and National Planning, Udoma Udo Udoma, claimed that both the monetary and fiscal authorities had no choice but to work together to ensure the country’s economic growth, adding that the path to a lower interest rate environment was through active government collaboration with the private sector. Most local analysts agree that a rate cut at this stage could reverse the CB efforts to soak up excess liquidity and rein in inflation.
Moodys lowers ratings outlook on Turkey
Moody’s Investors Service has kept its current Ba1 rating on Turkey unchanged, but has lowered its outlook from stable to negative citing continued political concerns. "The impact of ongoing political and geopolitical tensions on domestic confidence, and the heightened external pressures that led to a steep depreciation of the lira and high inflation, will suppress growth in the near-term relative to expectations last year," Moody’s said in a statement.
Regional banks hike rates following FED move
Five GCC states as well as Jordan have increased their benchmark interest rates in line with the 25bp FED hike last week as expected. Saudi Arabia raised its reverse repo rate to 1.00% but kept its repo rate unchanged at 2.00%, Kuwait increased its discount rate to 2.75%, Jordan shifted its main rate to 3.50%, Qatar increased its o/n lending rate to 5.00% but lowered the local banks required reserve ratio from 4.75% to 4.50%, the UAE raised its repo rate by 25bp to 1.25% along with its CD rates, Bahrain moved its one-week deposit rate to 1.25% and its one-month lending rate to 3.00%. The one GCC country still to announce its monetary policy decision following the FED decision is Oman.
AL Jasoor & Otokar win US$500 Mio defence contract in the UAE
A joint-venture between the UAE’s Al Jasoor and Turkey’s Otokar Land Systems has been awarded a AED 2 bio contract to build and supply amphibious infantry vehicles to the UAE’s Armed Forces.
Bidders line up for solar contract in Algeria
34 international firms have reportedly placed bids for a MW solar power plant contract in Algeria. These include; Japan’s JGC Corporation, ENGIE Fabricom SA of Norway and Italy’s Carlo Gavazzi Impianti Spa.
Did you know that it currently costs Saudi Arabia an average of US$8.98 to produce one barrel of oil compared to US$23.35 for US Shale? (Source – Rystad Energy).
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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