EconSource: Egypt Central Bank Mounts War on Black Market
The Central Bank of Egypt (CBE) offered $1.5 billion to local lenders in an exceptional auction today to cover importers’ debts.

The auction brings the total amount of dollars injected into the banking system through special auctions in the past two weeks to $2.4 billion, equivalent to 15 percent of the CBE’s foreign reserves. The auction is part of an effort to “completely finish off the black market” and stabilize the pound, according to CBE sources. The CBE devalued the pound by about 13 percent on Monday and said it would use any tool to safeguard stability in its foreign-exchange market in the medium term. Meanwhile, consulting group IHC Inc. said Egypt’s move to devalue its currency and eliminate restrictions on foreign-currency deposits should boost liquidity in the banking industry. International Monetary Fund Mission Chief Chris Jarvis welcomed the move to a more flexible exchange rate, saying it “would improve the availability of foreign exchange, strengthen competitiveness, support exports and tourism and attract foreign direct investment.” [Bloomberg, 3/16/2016]
 
Moody’s Investors Service cut its outlook to negative from stable for Saudi Arabia’s banking system on concerns that low oil prices have negatively impacted economic growth and government spending. “With the prospect of lower oil prices for longer and a 14 percent reduction in public spending in 2016, we believe that the credit risks across the system are rising,” Moody’s Senior Credit Officer Olivier Panis said. Saudi Arabia’s gross domestic product growth is set to slow to 1.5 percent in 2016 from 3.4 percent last year, Moody’s said. Loan growth will likely deteriorate to between 3 percent and 5 percent this year from 8 percent in 2015 and 12 percent in 2014, the ratings agency said. The overall level of bad loans in the banking sector is likely to increase to about 2.5 percent from 1.4 percent last year. [Bloomberg, WSJ, 3/16/2016]
Lebanon’s fiscal deficit widened by 28 percent to $3.952 billion in 2015, as government finances continue to be hit by the war in Syria. The deficit grew despite a nearly $1 billion fall in energy costs, which reduced government payments to Lebanon’s electricity generator and distributor by 45 percent, figures showed. Lebanon’s economy grew by an annual average of 8 percent in the years leading up to 2011, when the conflict erupted in neighboring Syria. Since conflict erupted in Syria, Lebanon’s growth has fallen sharply. Growth stood at 1.4 percent last year. [Reuters, 3/16/2016]
 
Turkey ran a budget ran a surplus of 2.4 billion liras ($831) million in February, mostly as a result of tax hikes. “These results in the first two months [of 2016] indicate the government’s determination to maintain fiscal discipline despite the weak global economy,” Finance Minister Naci Ağbal said. “Fiscal discipline will be maintained in the coming period, and it continues to be one of the most important anchors for the stability of our economy,” he added. Turkey’s security and defense expenses almost doubled year on year to 105.7 million liras from around 52.4 million liras. The government’s expenses for health, pension, and welfare increased 18.9 percent year on year. In 2016, the Finance Ministry estimated that budget expenses for the fiscal year would reach 570.5 billion liras ($198 billion), while budget income would reach 540.8 billion ($187.5 billion). [Hurriyet, Daily Sabah, 3/16/2016]
 
Also of interest
April oil freeze meeting likely to go ahead without Iran | Reuters
Saudi raises home buyers’ loan-to-value limit to 85 percent | Reuters
New guard rises in Saudi Arabia as oil crisis forces rethink | Bloomberg
Kuwait’s Gulf Bank gets approval for up to 100 million dinar bond | Reuters
Dubai passes law to improve management of government budgets | Gulf News
Iraq preparing to push Islamic State away from oil region | Reuters
Iraqi auditors say $130 billion missing from arms deals | Rudaw
Egypt says pound devaluation won’t impact budget deficit | Aswat Masriya 
Tunisia, Italy discuss economic cooperation | TAP
Tunisia increases tourism budget for countries without travel warnings | TAP
Morocco January-February trade deficit rises 10.1 percent | Reuters
Egypt Central Bank mounts war on black market 
The Central Bank of Egypt (CBE) offered $1.5 billion to local lenders in an exceptional auction today to cover importers’ debts. The auction brings the total amount of dollars injected into the banking system through special auctions in the past two weeks to $2.4 billion, equivalent to 15 percent of the CBE’s foreign reserves. The auction is part of an effort to “completely finish off the black market” and stabilize the pound, according to CBE sources. The CBE devalued the pound by about 13 percent on Monday and said it would use any tool to safeguard stability in its foreign-exchange market in the medium term. Meanwhile, consulting group IHC Inc. said Egypt’s move to devalue its currency and eliminate restrictions on foreign-currency deposits should boost liquidity in the banking industry. International Monetary Fund Mission Chief Chris Jarvis welcomed the move to a more flexible exchange rate, saying it “would improve the availability of foreign exchange, strengthen competitiveness, support exports and tourism and attract foreign direct investment.” [Bloomberg, 3/16/2016]
 
Moody’s lowers credit outlook for Saudi banks 
Moody’s Investors Service cut its outlook to negative from stable for Saudi Arabia’s banking system on concerns that low oil prices have negatively impacted economic growth and government spending. “With the prospect of lower oil prices for longer and a 14 percent reduction in public spending in 2016, we believe that the credit risks across the system are rising,” Moody’s Senior Credit Officer Olivier Panis said. Saudi Arabia’s gross domestic product growth is set to slow to 1.5 percent in 2016 from 3.4 percent last year, Moody’s said. Loan growth will likely deteriorate to between 3 percent and 5 percent this year from 8 percent in 2015 and 12 percent in 2014, the ratings agency said. The overall level of bad loans in the banking sector is likely to increase to about 2.5 percent from 1.4 percent last year. [Bloomberg, WSJ, 3/16/2016]
 
Lebanon’s 2015 fiscal deficit widens to $3.95 billion
Lebanon’s fiscal deficit widened by 28 percent to $3.952 billion in 2015, as government finances continue to be hit by the war in Syria. The deficit grew despite a nearly $1 billion fall in energy costs, which reduced government payments to Lebanon’s electricity generator and distributor by 45 percent, figures showed. Lebanon’s economy grew by an annual average of 8 percent in the years leading up to 2011, when the conflict erupted in neighboring Syria. Since conflict erupted in Syria, Lebanon’s growth has fallen sharply. Growth stood at 1.4 percent last year. [Reuters, 3/16/2016]
 
Turkey runs budget surplus in February
Turkey ran a budget ran a surplus of 2.4 billion liras ($831) million in February, mostly as a result of tax hikes. “These results in the first two months [of 2016] indicate the government’s determination to maintain fiscal discipline despite the weak global economy,” Finance Minister Naci Ağbal said. “Fiscal discipline will be maintained in the coming period, and it continues to be one of the most important anchors for the stability of our economy,” he added. Turkey’s security and defense expenses almost doubled year on year to 105.7 million liras from around 52.4 million liras. The government’s expenses for health, pension, and welfare increased 18.9 percent year on year. In 2016, the Finance Ministry estimated that budget expenses for the fiscal year would reach 570.5 billion liras ($198 billion), while budget income would reach 540.8 billion ($187.5 billion). [Hurriyet, Daily Sabah, 3/16/2016]
 
Also of interest
April oil freeze meeting likely to go ahead without Iran | Reuters
Saudi raises home buyers’ loan-to-value limit to 85 percent | Reuters
New guard rises in Saudi Arabia as oil crisis forces rethink | Bloomberg
Kuwait’s Gulf Bank gets approval for up to 100 million dinar bond | Reuters
Dubai passes law to improve management of government budgets | Gulf News
Iraq preparing to push Islamic State away from oil region | Reuters
Iraqi auditors say $130 billion missing from arms deals | Rudaw
Egypt says pound devaluation won’t impact budget deficit | Aswat Masriya 
Tunisia, Italy discuss economic cooperation | TAP
Tunisia increases tourism budget for countries without travel warnings | TAP
Morocco January-February trade deficit rises 10.1 percent | Reuters