EconSource: Egypt Stocks Drop after Russia Suspends Flights, Inflation Increases

Egypt’s benchmark stock index plunged 4.4 percent on Tuesday after steadily declining since Russia suspended flights to Egypt following the October 31 Russian plane crash in the Sinai Peninsula. The drop is caused by negative international and external factors, according to Global Head of Research at Mubasher Financial Services Amr Elalfy. “Internally, you have the Russian plane, the impacted tourism, and the countries that have suspended flights to Sharm el-Sheikh,” said Elalfy. The arrest of prominent Egyptian businessmen Salah Diab and his son Tawfik Diab on charges of possessing unlicensed weapons days after a corruption probe was launched against them also spooked investors, according to Chairman of Egyptian brokerage firm Acumen Securities Osama Mourad. Meanwhile, Egypt’s annual inflation rate accelerated to 10.3 percent in October compared to 9.2 percent in September, official statistics agency CAPMAS announced on Tuesday. Urban annual inflation rate reached 9.7 percent and rural inflation rate hit 10.9 percent. [AP, Aswat Masriya, Ahram Online, 11/10/2015]

Jordan appoints new Finance Minister in surprise move
Jordan named investment banker Omar Malhas as Finance Minister on Monday, replacing veteran economic policy maker Umayya Toukan, in a surprise move just days after the government began talks on a new aid program from the International Monetary Fund (IMF). No reason was given for the abrupt move. Toukan has held a number of senior posts over the past two decades, including governor of the Central Bank, and is widely respected within the IMF and donor community. Some officials suggested his departure was due to policy differences over the country’s proposed $12 billion 2016 budget that was approved by the cabinet this week and has set a deficit target of around 3 percent of gross domestic product. Malhas, a highly regarded Western-educated investment banker with nearly twenty years of experience in senior banking posts in the Gulf and Jordan has never held a government position. He will join a team led by Central Bank Governor Ziad Fariz that will handle negotiations with an IMF mission that arrived in Amman last week. [Reuters, 11/9/2015]

Saudi aims for first foreign bond as soon as next year
Saudi Arabia aims to start selling bonds in the international market as soon as 2016 as it looks to cover a budget deficit caused by low oil prices. Banking industry sources said authorities from the Saudi Arabian Monetary Agency (SAMA) had not yet finalized the plan but had made progress. A Saudi commercial banker said bankers were pitching to both the Finance Ministry and SAMA. “The ministry…is borrowing but SAMA would be the issuer. In my opinion, I don’t think there will be a mandate until next year,” he said. Another banker said Saudi Arabia’s first international issue would be a test case and would likely have a maturity of around ten years. After that, the country may consider longer maturities such as thirty years. The initial issue would likely be in the region of $1 billion to $2 billion, he added. In other news, the Saudi government said the country plans to diversify its economy to help combat climate change in a strategy that could avoid up to 130 million tonnes of carbon emissions a year by 2030. [Reuters, FT, 11/10/2015]

Minister says Qatar must urgently consider subsidy reforms, taxes
Qatar must urgently consider reforms to its subsidy and tax systems, Minister of Development Planning and Statistics Saleh Mohammed al-Nabit said on Monday. Nabit said in a speech that pressure on state finances means the government must to be more disciplined in spending on programs and projects. “It has also become an urgent need to consider issues such as the rationalization of support and providing it to target groups, development of the tax system, and supporting the revenue side of the budget,” al-Nabit said. His remarks suggested subsidies might in the future be provided to a smaller group of people. He did not elaborate on possible tax reforms. Nabit also said that despite lower energy prices, the government would press ahead with tens of billions of dollars worth of infrastructure and social welfare projects. He acknowledged that some projects may be delayed due to logistical difficulties, supply bottlenecks, and high costs. [Reuters, 11/9/2015]

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