Algeria’s energy earnings are forecast to fall to $26.4 billion and foreign exchange reserves to $121 billion as low oil prices cut into the country’s economy, Finance Minister Abderrahmane Benkhalfa said on Sunday. Algeria had previously said energy earnings would fall by 50 percent this year to about $34 billion. Algeria is considering higher taxes, import duties, and a hike in subsidized diesel and electricity prices to help cover its deficit, according to the country’s draft 2016 budget. “We have to be vigilant in the management of our money. We have to control public spending,” Benkhalfa told parliament. “We have to mobilize new resources. We have planned a reasonable increase in the prices of fuel and electricity to cover production costs.” Benkhalfa said overall spending on subsidies will rise 7.5 percent next year, including food, transport, housing, and public health coverage. [Reuters, 11/22/2015]

S&P cuts Oman credit rating as budget deficit widens
Credit rating agency Standard & Poor’s (S&P) has downgraded Oman’s sovereign debt, signaling growing pressure on Gulf Arab oil exporters’ finances. “We project that a period of sustained low oil prices will impair Oman’s fiscal and external balances more than we had previously expected,” S&P said, lowering its long-term local and foreign currency ratings to BBB-plus from A-minus. S&P also kept a negative outlook for Oman, citing risks over the next two years. “We could assess Oman as having insufficient fiscal and external strength to offset the concentration of its economy in the hydrocarbons sector and the resulting volatility.” S&P’s decision came after Oman’s finance ministry released data this week showing a government budget deficit of 2.93 billion rials ($7.62 billion) in the first nine months of 2015. Meanwhile, on Sunday Finance Ministry Under Secretary Naser al-Jashmi said Oman has started major reforms aimed at cutting spending and increasing revenues. He said the government is considering measures such as levying of taxes on expatriate remittances, increasing taxes on real estate rent contracts, and raising electricity tariffs. [Reuters, 11/21/2015]

Iraq to privatize two government banks
The Central Bank of Iraq (CBI) announced on Monday its intention to privatize the country’s two largest government banks. CBI Governor Ali al-Alaq said that CBE management is “moving to privatize al- Rafidain and al-Rasheed Banks or participate with the private sector,” noting that “the move is being coordinated with the World Bank after the cabinet approved this proposal.” In other news, the CBI rejected a proposal to distribute Iraqi employees’ salaries in dollars. “The Iraqi currency represents sovereignty and the dollar cannot be a substitute for the national currency,” the CBI said. [Shafaq News, 11/23/2015]

Siemens secures first financing for Egypt power plant project
Egypt has secured a first tranche of financing for a EUR 8 billion plan for power plants to be built by Siemens. A consortium of banks has agreed to supply credit for the Beni Suef natural gas-fired combined cycle power plant, the first of three planned plants, a spokesman for Siemens said Monday. Two agreements worth EUR 2 billion in total were signed by Siemens and El Sewedy Electric, according to Egypt’s Electricity Ministry. The project is expected to start operations in 2016, with full production by April 2018. Siemens signed the deal with Egypt in June to establish three high-efficiency natural gas power plants and wind power installations. The deal is designed to boost Egypt’s electricity generation by 50 percent. [Reuters, Ahram Online, 11/22/2015]

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