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Middle East & African Monitor – 20 December 2017

  • US Ambassador Again Accuses Iran Of Supplying Missiles To Houthi Militia.
  • Oil Prices Remain Firm Into Year-End.
  • Saudi Arabia Unveils Expansionary Budget For 2018.
  • SAMA Affirms Commitment To US$ Peg.
  • Production Begins At Egypt’s Strategically Important Al Zohr Gas Field.
  • Nigeria’s ACTN Calls On Central Bank To Adjust Its FX Policy.
  • NBK Plans To Expand Its Presence In Egypt & Saudi Arabia.
  • Petrofac Wins US$800 Mio Contract In Oman.
  • Morocco’s CB Keeps Rates Unchanged.

REGIONAL COMMENTARY

US Ambassador Again Accuses Iran Of Supplying Missiles To Houthi Militia.
The US ambassador to the UN, Nikki Haley, claimed that yesterday’s failed ballistic missile strike on Riyadh made by the Houthi militant group in Yemen, “bears all the hallmarks of previous attacks using Iranian-provided weapons,” adding that the administration would continue to provide the UN Security Council with detailed information on this issue. "If we do nothing about the missiles fired at Saudi Arabia, we will not be able to stop the violence,” she stated. Just last week the Pentagon displayed fragments of a short-range ballistic missile which it said was Iranian-made and which had been launched towards Riyadh’s international airport early in November this year. This particular missile had been successfully intercepted by Saudi Arabia’s air defence system, as was the case again yesterday. A Pentagon official was quoted by France-24 at the time stating that; “The U.S. has long believed that Iran is providing weaponry to proxies and partners and militias throughout the region, and what we have here to show you today is proof,” highlighting Iranian corporate logos on some of the fragments and the unique nature existing in the designs of such Iranian manufactured arms.

Oil Prices Remain Firm Into Year-End.
Oil prices remain steady and close to this year’s recent highs despite a further rise in US production, and the suspension of a threatened petroleum workers strike in Nigeria on Monday. The commodity’s continued positive tone has been partially driven by the surprise shutdown of an important 450,000bpd pipeline in the North Sea in order to repair a ‘hairline’ crack, and early indications that there was another major drawdown of US crude inventories last week.

Saudi Arabia Unveils Expansionary Budget For 2018.
King Salman bin Abdulaziz Al Saud yesterday unveiled Saudi Arabia’s official 2018 budget and which sees spending increase to a record SAR 978 bio (compared to SAR 890 bio in 2017) as the government looks to kick start the country’s economy. Despite this jump in expenditure and a decision to extend the earlier balanced budget target date from 2020 to 2023, the authorities still expect the overall fiscal deficit to continue to shrink, due to a predicted increase in revenues (firmer oil price/taxes etc..) and the implementation of certain domestic subsidy cuts including those linked to fuel and electricity. The government looks to reduce the deficit to 7.30% of GDP in 2018 compared to 8.90% this year and 14.20% in 2016.  “This budget continues to disburse on various development sectors in all regions of the Kingdom at high rates, it also includes allocations for housing, and a large expenditure of government funds that would contribute to push the economic wheel forward, and provide more employment opportunities for male and female citizens,” the King was quoted as saying by the Al Arabiya media outlet. On the funding side the government sees 50% coming from oil revenues, 30% from other non-energy related sectors, 12% from debt issuances and the remaining 8% from government balances. Meanwhile the Finance Minister, Mohammed Al Jardaan, said yesterday that preparations for the much awaited Aramco IPO in 2018 remained “on track.”

SAMA Affirms Commitment To US$ Peg.
The head of the Saudi Arabian Monetary Authority, Ahmad bin Abdulkarim Al Khulaifi, was quoted by Reuters this morning affirming his country’s commitment to maintaining its long standing US$ pegged FX regime, adding that this policy continued to ensure monetary and economic stability.

Production Begins At Egypt’s Strategically Important Al Zohr Gas Field.
Production at Egypt’s giant Al Zohr field finally began this week, an event that most likely marks the beginning of the country’s path towards complete self-sufficiency for its natural gas requirements. After completing an initial trial phase, output at the plant is set to rise steadily next year and is targeted to reach 1 billion cubic feet by early 2019. Overall the field itself is capable of producing an estimated 2.7 billion cubic feet per day and reportedly contains around 850 billion cubic metres of gas reserves.

Nigeria’s ACTN Calls On Central Bank To Adjust Its FX Policy.
The Association of Corporate Treasurers in Nigeria have called upon the Central Bank to halt its regular intervention in the domestic foreign exchange market, and rather now allow regular market forces to dictate the direction of the Naira. “We want a predictable market that aids planning, eliminates the multiplicity of forex rates and inhibits dollar leakages. The majority of inflows come in form of portfolio investments rather than as foreign direct investments,” the association was quoted as saying by the local ‘Punch’ newspaper. Meanwhile the divisional head of corporate planning at FMDQ OTC Securities, Kaodi Ugoji, reportedly claimed that; “It is better to allow the market to determine the value of the Naira. There is no reason the official rate should be different from the parallel market rate, there should be a level playing field for all operators.”

NBK Plans To Expand Its Presence In Egypt & Saudi Arabia.
The National Bank of Kuwait announced earlier this week that it plans to open a number of new branches in both Saudi Arabia and Egypt next year. “We started focusing our regional growth on more stable markets in the Middle East, namely GCC countries such as Saudi Arabia and the UAE, in addition to Egypt,” NBK’s CEO Isam Al Sager was quoted as saying by Bloomberg yesterday adding that; “We have one operating branch in Saudi Arabia and have just received the required approvals to open two more branches in the Kingdom.” The bank reportedly aims to establish a total of 60 branches in Egypt by 2020 compared to its current 43. 

Petrofac Wins US$800 Mio Contract In Oman.
UK based Petrofac Ltd has been awarded a US$800 mio contract for the development of a central processing facility at the Khazzan gas project in Oman.

Morocco’s CB Keeps Rates Unchanged.
Morocco’s Central Bank kept its main interest rate unchanged at 2.25% yesterday following its scheduled MPC meeting. The bank also said that the economy is estimated to have expanded by 4.10% this year against a previous forecast of 4.30%.

20-12-2017

AND FINALLY…
Did you know that the earliest known camel, called a ‘Protylopus’, lived in North America 40 to 50 million years ago and is considered to be the direct ancestor of all modern-day breeds of the mammal?

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