MENASource|News, Analysis, Perspectives

January 19, 2016
Saudi Arabia plans to create a new sovereign fund to manage part of its oil wealth and diversify its investments. It has asked investment banks and consultancies to submit proposals for the project.
The new fund could change the way billions of dollars are invested and affect some of the world's leading asset managers. One source said the fund would focus on investing in businesses outside the energy industry, such industrials, chemicals, maritime and transportation. Sources also said managers of the planned fund may be able to invest directly in companies rather than channeling investments through foreign asset managers, which could maximize returns. Meanwhile, projections released by the International Monetary Fund (IMF) and HSBC Holdings Plc see Saudi Arabia’s economy growing at its slowest pace this year since 2002. In an update to its World Economic Outlook, the IMF said Saudi economic growth would slow to 1.2 percent in 2016 from 3.4 percent in 2015. Saudi Oil Minister Ali al-Naimi said he remains optimistic that crude prices will rise and bring stability to the global oil market. [Reuters, 1/18/2016]
 
China is expected to lend the Central Bank of Egypt $1 billion to help shore up its foreign reserves during a visit by Chinese President Xi Jinping this week, Egypt's Ambassador to Beijing Magdi Amer said Sunday. Al Masry Al Youm quoted a banking source as saying that China would lend Egypt $1.5 billion. Egypt and China are expected to discuss potential Chinese investments in various Egyptian projects during the visit, including a planned new administrative capital. Amer said China would also sign a $700 million agreement with the state-owned National Bank of Egypt to provide a line of credit to finance future projects as well as a $100 million loan agreement with Banque Misr aimed at financing small and medium-sized projects. Meanwhile, Minister of International Cooperation Sahar Nasr said Egypt is in negotiations with the Export and Import Bank of China to secure a $15 billion financing package for foreign exchange reserves support and projects in energy, transport and sanitation. Nasr said a separate deal would be announced with the Asian Infrastructure Investment Bank once Egypt's membership in the bank is ratified. [Reuters, 1/18/2016]
 
Egypt plans to list shares in state-owned bank and companies on the stock market, in a move aimed at jumpstarting investment and boosting economic growth. “The coming period will witness offerings of parts of the capital of successful Egyptian companies and banks on the bourse," Presidential Spokesman Alaa Youssef said. The statement follows a meeting between President Abdel Fattah al-Sisi and ministers to discuss the stock market's decline. The country's benchmark index, the EGX 30, has fallen 15 percent since the start of 2016. Central Bank Governor Tarek Amer said the offerings would not include the National Bank of Egypt and Banque Misr. He added that the central bank may offer a stake in one of its ventures to a strategic investor. [Reuters, 1/19/2016]
 
Turkey is well-placed to outperform its emerging market peers as it moves away from a period of political instability, Prime Minister Ahmet Davutoglu said. In a speech to investors at Bloomberg’s European headquarters in London, Davutoglu said the country’s economy would grow at 4.5 percent this year. The economy will be able to withstand challenges, including the spillover from war in Syria that has led to terrorist attacks in Turkey’s major cities in recent months, he said. Davutoglu added that the government has a "strong base" to implement reforms following its victory in the November 1 elections. He said the government is focusing on anti-inflation measures and lowering the current account gap, which has long been a key concern for Turkey’s economy. [Bloomberg, Reuters, 1/18/2016]
 
Iraq wants foreign oil companies to cut spending as it seeks to narrow a budget gap caused by lower crude prices, Oil Minister Adel Abdul Mahdi said Tuesday. "The ministry is discussing reducing financial spending by foreign companies," he told a meeting of the oil fields' joint management committees in Baghdad. Service agreements with foreign oil companies are putting Iraq's budget under strain. Meanwhile, Iraq's exports from its southern region have been running at an average daily rate of 3.297 million barrels per day (bpd) so far this month. All the fields are running normally, state-run South Oil Company’s Deputy Director General Salah Mahdi said. “Recent security operations in Basra are sending reassuring messages to international foreign oil companies,” he added. In other news, the Kurdistan Regional Government may sell parts of its electricity sector to raise funds to help plug a budget gap left by sinking oil prices. [Reuters, 1/19/2016]
 
The Tunisian General Labor Union (UGTT) and its largest industry association reached agreement on Tuesday to increase wages for about 1.5 million private sector workers, a decision that could avert strikes and protests. The UGTT had threatened a general strike if the Chamber of Commerce and Industry (UTICA) refused to raise wages. "We signed with UTICA an agreement that includes an increase of 6 percent for private sector workers," senior UGTT official Bel Kacem Ayari said. UTICA Spokesman Adel Nakti confirmed the pay raise and said it was intended to “raise the purchasing power of workers and comes despite the economic difficulties of private companies.” [Reuters, 1/19/2016]
 
Also of interest
Gulf sovereign bond issues to surge as governments plug deficits | Reuters
Saudi Arabia's Kingdom Holding closes refinancing of EUR 350 million loan | Reuters
Oman building 25 million barrels of new oil storage | Reuters
Kurdish Deputy PM says economic 'tsunami' undermines war against ISIS in Iraq | Reuters
Moody’s says Egypt's regulations for SMEs are positive for economy, negative for banks | Ahram Online
Moody's praises Egypt's new measures to limit consumer loans | Ahram Online
Egypt gets $1.5 billion in FDI during Q1 of 2015/16, expects more later in year | Ahram Online
Minister says Egypt's tourism sector losing EGP 2.2 billion per month | Ahram Online, Egypt Independent
Egypt to connect 1.2 million homes with natural gas in FY2016-17 | Amwal Al Ghad
Egypt’s Investment Minister says raising cap on dollar deposits is unlikely | DNE
Egypt to hold international tender for 11 oil and gas blocks | Reuters
Egypt reveals five-year plan for oil sector | DNE
Customs duties lowered by 25 percent on Tunisian products exported to Russia | TAP
Libya's AGOCO exported 64 million barrels of crude in 2015 | Libya Monitor (subscription)
Pipeline south of Ras Lanuf hit by blast, NOC unable to empty tanks | Libya Monitor (subscription)
Algeria’s energy earnings drop 41 percent in 2015, trade deficit at $13.71 billion | Reuters

Saudi Arabia plans new sovereign wealth fund
Saudi Arabia plans to create a new sovereign fund to manage part of its oil wealth and diversify its investments. It has asked investment banks and consultancies to submit proposals for the project. The new fund could change the way billions of dollars are invested and affect some of the world's leading asset managers. One source said the fund would focus on investing in businesses outside the energy industry, such industrials, chemicals, maritime and transportation. Sources also said managers of the planned fund may be able to invest directly in companies rather than channeling investments through foreign asset managers, which could maximize returns. Meanwhile, projections released by the International Monetary Fund (IMF) and HSBC Holdings Plc see Saudi Arabia’s economy growing at its slowest pace this year since 2002. In an update to its World Economic Outlook, the IMF said Saudi economic growth would slow to 1.2 percent in 2016 from 3.4 percent in 2015. Saudi Oil Minister Ali al-Naimi said he remains optimistic that crude prices will rise and bring stability to the global oil market. [Reuters, 1/18/2016]

China to lend Egypt’s Central Bank $1 billion during presidential visit
China is expected to lend the Central Bank of Egypt $1 billion to help shore up its foreign reserves during a visit by Chinese President Xi Jinping this week, Egypt's Ambassador to Beijing Magdi Amer said Sunday. Al Masry Al Youm quoted a banking source as saying that China would lend Egypt $1.5 billion. Egypt and China are expected to discuss potential Chinese investments in various Egyptian projects during the visit, including a planned new administrative capital. Amer said China would also sign a $700 million agreement with the state-owned National Bank of Egypt to provide a line of credit to finance future projects as well as a $100 million loan agreement with Banque Misr aimed at financing small and medium-sized projects. Meanwhile, Minister of International Cooperation Sahar Nasr said Egypt is in negotiations with the Export and Import Bank of China to secure a $15 billion financing package for foreign exchange reserves support and projects in energy, transport and sanitation. Nasr said a separate deal would be announced with the Asian Infrastructure Investment Bank once Egypt's membership in the bank is ratified. [Reuters, 1/18/2016]

Egypt plans to sell shares in state-owned companies
Egypt plans to list shares in state-owned bank and companies on the stock market, in a move aimed at jumpstarting investment and boosting economic growth. “The coming period will witness offerings of parts of the capital of successful Egyptian companies and banks on the bourse," Presidential Spokesman Alaa Youssef said. The statement follows a meeting between President Abdel Fattah al-Sisi and ministers to discuss the stock market's decline. The country's benchmark index, the EGX 30, has fallen 15 percent since the start of 2016. Central Bank Governor Tarek Amer said the offerings would not include the National Bank of Egypt and Banque Misr. He added that the central bank may offer a stake in one of its ventures to a strategic investor. [Reuters, 1/19/2016]

Turkey premier promises stability in 2016 amid global turmoil
Turkey is well-placed to outperform its emerging market peers as it moves away from a period of political instability, Prime Minister Ahmet Davutoglu said. In a speech to investors at Bloomberg’s European headquarters in London, Davutoglu said the country’s economy would grow at 4.5 percent this year. The economy will be able to withstand challenges, including the spillover from war in Syria that has led to terrorist attacks in Turkey’s major cities in recent months, he said. Davutoglu added that the government has a "strong base" to implement reforms following its victory in the November 1 elections. He said the government is focusing on anti-inflation measures and lowering the current account gap, which has long been a key concern for Turkey’s economy. [Bloomberg, Reuters, 1/18/2016]

Iraq wants foreign oil firms to cut development spending
Iraq wants foreign oil companies to cut spending as it seeks to narrow a budget gap caused by lower crude prices, Oil Minister Adel Abdul Mahdi said Tuesday. "The ministry is discussing reducing financial spending by foreign companies," he told a meeting of the oil fields' joint management committees in Baghdad. Service agreements with foreign oil companies are putting Iraq's budget under strain. Meanwhile, Iraq's exports from its southern region have been running at an average daily rate of 3.297 million barrels per day (bpd) so far this month. All the fields are running normally, state-run South Oil Company’s Deputy Director General Salah Mahdi said. “Recent security operations in Basra are sending reassuring messages to international foreign oil companies,” he added. In other news, the Kurdistan Regional Government may sell parts of its electricity sector to raise funds to help plug a budget gap left by sinking oil prices. [Reuters, 1/19/2016]

Main Tunisian union, industry association agree to wage hike in private sector
The Tunisian General Labor Union (UGTT) and its largest industry association reached agreement on Tuesday to increase wages for about 1.5 million private sector workers, a decision that could avert strikes and protests. The UGTT had threatened a general strike if the Chamber of Commerce and Industry (UTICA) refused to raise wages. "We signed with UTICA an agreement that includes an increase of 6 percent for private sector workers," senior UGTT official Bel Kacem Ayari said. UTICA Spokesman Adel Nakti confirmed the pay raise and said it was intended to “raise the purchasing power of workers and comes despite the economic difficulties of private companies.” [Reuters, 1/19/2016]

Also of interest
Gulf sovereign bond issues to surge as governments plug deficits | Reuters
Saudi Arabia's Kingdom Holding closes refinancing of EUR 350 million loan | Reuters
Oman building 25 million barrels of new oil storage | Reuters
Kurdish Deputy PM says economic 'tsunami' undermines war against ISIS in Iraq | Reuters
Moody’s says Egypt's regulations for SMEs are positive for economy, negative for banks | Ahram Online
Moody's praises Egypt's new measures to limit consumer loans | Ahram Online
Egypt gets $1.5 billion in FDI during Q1 of 2015/16, expects more later in year | Ahram Online
Minister says Egypt's tourism sector losing EGP 2.2 billion per month | Ahram Online, Egypt Independent
Egypt to connect 1.2 million homes with natural gas in FY2016-17 | Amwal Al Ghad
Egypt’s Investment Minister says raising cap on dollar deposits is unlikely | DNE
Egypt to hold international tender for 11 oil and gas blocks | Reuters
Egypt reveals five-year plan for oil sector | DNE
Customs duties lowered by 25 percent on Tunisian products exported to Russia | TAP
Libya's AGOCO exported 64 million barrels of crude in 2015 | Libya Monitor (subscription)
Pipeline south of Ras Lanuf hit by blast, NOC unable to empty tanks | Libya Monitor (subscription)
Algeria’s energy earnings drop 41 percent in 2015, trade deficit at $13.71 billion | Reuters

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