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Middle East & African Monitor – 29 November 2017

  • All Eyes On Upcoming OPEC Meeting.
  • Senior Saudi Prince Released From Detention – UK’s May Arrives In Riyadh.
  • Nigeria’s Economy Has Emerged From Recession But Reforms Remain Key To Future Growth.
  • Saudi Arabia Raises SAR 6.68 Bio From Bond Tap – FX Reserves Rise.
  • Egypt’s CB Removes FX Restrictions On Importers.
  • Raytheon Receives KSA License.
  • Ghana Lowers Key Interest Rate.
  • Kenya’s FX Reserves Dip.
  • Bombardier May Establish A Rail Manufacturing Plant In Morocco.
  • Abu Dhabi Introduces New Visa Service For Visitors.
  • Local Market Holidays.

REGIONAL COMMENTARY

All Eyes On Upcoming OPEC Meeting.
The oil markets remain focused on the outcome of tomorrow’s scheduled OPEC meeting, with hopes still high that the group together with a number of NOPEC countries will agree to extend the output reduction accord past its current March 2018 expiry. As mentioned in our previous commentaries we believe such an extension will take place, especially due to the fact that while all signatories want to prevent a reversal of crude’s recent gains, two key players namely Saudi Arabia and Russia have other important domestic reasons to keep prices firm such as Russian elections in March and the much awaited Aramco IPO.The only uncertainty revolves on whether the extension will be set at 6 or 9 months.

Senior Saudi Prince Released From Detention – UK’s May Arrives In Riyadh.
Saudi Arabia’s Prince Miteb bin Abdullah was reportedly released by the authorities early yesterday morning following his three-week detention as part of an ongoing anti-corruption investigation. The UAE’s National newspaper quoted a Saudi official as saying today that the Prince; "has been released and is at his home in Riyadh." Prince Miteb is the son of the Kingdom’s previous ruler King Abdullah, and was one of the most senior of the 208 figures detained by the authorities earlier this month. Meanwhile the UK Prime Minister Theresa May is due to arrive in Saudi Arabia for talks with Crown Prince Mohammed bin Salman today following a visit to Jordan yesterday. “We need to ensure that we’re building stable partnerships to ensure our security, and there’s no doubt in my mind that it’s in Britain’s national interest to work with Jordan and Saudi Arabia. It’s in their security interests but also in ours, we want to help them to address regional challenges but also to put through the reforms that they have to ensure their long-term stability,’’ May was quoted as saying yesterday.

Nigeria’s Economy Has Emerged From Recession But Reforms Remain Key To Future Growth.
A recent macro review of Nigeria, undertaken by Price Waterhouse Coopers Nigerian unit acknowledges the fact that the West African country finally exited recession during the 2nd quarter of this year, and that its economy is slowly expanding again, helped in large part by the rebound in oil prices and a strong performance from the agricultural sector. However the report also warned that a continued and sustainable recovery path will be dependent on both the future direction of oil prices and the active implementation of key economic reforms. For us the latter point is where the government is still under-delivering, and this issue was highlighted again recently by Moodys when its downgraded Nigeria’s debt rating from B1 to B2 due to the country’s continued heavy dependence on crude exports and the slow pace of reform. "The authorities' efforts to address the key structural weakness exposed by the oil price shock by broadening the non-oil revenue base have so far proven largely unsuccessful," the agency said in a statement published earlier this month, adding that this lack of reform leaves Nigeria’s finances "exposed to further economic or financial shocks, with interest payments very high relative to revenues and deficits elevated despite cuts in capital spending."

Saudi Arabia Raises SAR 6.68 Bio From Bond Tap – FX Reserves Rise.
Saudi Arabia re-opened an Islamic bond yesterday, raising SAR 6.68 bio which was spread over three tranches and split as follows: SAR 1.05 bio (2022), SAR 3.53 bio (2024) and SAR 3.53 bio due in 2027. The local currency Sukuk issuance was originally conducted last month, and according to the Finance Ministry yesterday’s tap attracted a total interest of SAR 19.80 bio. Meanwhile Saudi Arabia’s Central Bank reserves rose by US$8.3 bio last month to total US$485.90 bio.

Egypt’s CB Removes FX Restrictions On Importers.
The Egyptian Central Bank announced yesterday that it was lifting the cap on foreign exchange deposit and withdrawals for local importers, in a move welcomed by the country’s business community and which was in-line with IMF recommendations. Previously importers of non-essential items were bound to operate within a monthly foreign currency deposit limit of US$50,000 and a daily withdrawal limit of US$30,000. This news also boosted the local bourse with the main index rising by 2.20% and closing at a record high on Tuesday. Meanwhile the CB’s Deputy-Governor, Rami Aboul Naga, was quoted by Bloomberg as saying that Egypt had received inflows totaling US$57 bio since November last year, although this amount does not include the loan tranches provided by the IMF or the funds raised by recent Eurobond issuances.

Raytheon Receives KSA License.
The US based defence contractor Raytehon, announced this week that it planned to actively assist in the proposed creation of an indigenous defence industry in Saudi Arabia, in-line with the Kingdom’s ‘Vision 2030’ program and that this would be supported by the fact that its local entity, Raytheon Saudi Arabia, is now commercially licensed there. “As part of the localization plan, Raytheon will generate billions of dollars in local defense revenue, and create 1,200 jobs for Saudis. Raytheon Saudi Arabia looks forward to partnering with Saudi industry, government agencies, foundations and universities to create a vibrant defense industry in the Kingdom,” the CEO of the company’s Saudi Arabian unit was quoted as saying by Arab News yesterday, adding that; “Commercial registration allows us to directly contribute to the Kingdom’s Vision 2030 by developing partnerships in the Kingdom that will create desirable jobs for Saudis.”

Ghana Lowers Key Interest Rate.
Ghana’s Central Bank yesterday reduced its main policy rate by 100bp to 20.00% as expected. The CB Governor, Dr Ernest Addison, stated afterwards that the decision to lower rates was driven by the fact that; “The indicators of economic activity and business and consumer confidence remain strong. Inflation expectations remain subdued with core inflation measures in line to achieving the medium term inflation objective.”

Kenya’s FX Reserves Dip.
Kenya’s foreign exchange reserves slipped to US$7.08 bio last week from US$7.54 bio in September.

Bombardier May Establish A Rail Manufacturing Plant In Morocco.
Canada’s Bombardier Inc is reportedly considering building its own manufacturing plant in Morocco if the company wins the contract to supply the country with new rolling stock. The proposed facility would not only perform engineering and maintenance work on the country’s rail network but also manufacture rail cars.

Abu Dhabi Introduces New Visa Service For Visitors.
Abu Dhabi International Airport has introduced a new visa-on-arrival service for those visitors to the capital who do not currently qualify for the visa-waiver program. A 96-hour transit visa will cost around AED 300 and can be used by travelers with planned trips departing from Abu Dhabi, or those with intermediate flights through Abu Dhabi en-route to their destination, if their layover exceeds a four hour period. Passengers can reportedly also ask for their transit visa to be switched to a tourist visa at the airport if they decide to extend their stay in the UAE capital. This move is a part of the government’s “Life in Abu Dhabi” initiative and to help boost tourism.

Local Market Holidays.
Please note a number of regional markets will be closed for a public holiday this week: Bahrain, Egypt, Jordan, Kuwait and the UAE are shut tomorrow (30th November 2017), whilst the Moroccan and Tunisian markets will be closed on Friday (1st December 2017).

29-11-2017

AND FINALLY…
Did you know that UAE’s National Day celebrations take place on December 2nd each year? This event marks the historic decision by Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain to join together and form the United Arab Emirates in 1971. Sheikh Zayed bin Sultan Al Nahyan was the united country’s 1st President.

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