EconSource: Fitch Revises Saudi Arabia’s Outlook to Negative From Stable

Fitch Ratings revised its outlook on Saudi Arabia to “negative” from “stable,” citing lower oil prices and increased spending tied to the accession of King Salman. While the ratings agency affirmed its AA rating for the Kingdom, it forecast a general government deficit of 14.4 percent of gross domestic product in 2015. Fitch added that deficits in the mid-single digits are forecast for 2016 and 2017, but could remain in the double digits if there is no fiscal consolidation. “We expect deficit financing to erode Saudi Arabia’s substantial buffers, a key support for its rating. Drawing down government deposits at the central bank has accounted for virtually all deficit financing so far in 2015,” the ratings agency said. Fitch said cutbacks in public spending will “test the resilience” of the private sector, as oil production is expected to remain flat. [CPI Financial, The National, Reuters, 8/22/2015]

Egypt stock market falls to lowest level in almost two years
Egypt’s stock market fell to its lowest level in almost two years on Sunday. The 5.43 percent drop came after a steady fall last week amid an overall global slowdown. “It’s a global sell-off; there’s lack of foreign investments, given the macroeconomic headwinds,” said Amr Elalfy, Global Head of Research at Mubasher Financial Services. He added that despite the optimism following Egypt’s economic development conference in March, “People are realizing now that most of them have not yet materialized and that these reforms take time.” He also cited the delay in the formation of the parliament as contributing to doubt surrounding Egypt’s monetary policies and to what foreign investors see as an overvaluation of Egypt’s currency. [AP, 8/23/2015]

Algeria posts Jan-July trade deficit over $8 billion
Algeria posted a trade deficit of $8.041 billion for the first seven months of 2015, reversing a $3.9 billion surplus a year earlier, due to a sharp fall in energy earnings. Oil and gas exports, which accounted for 94 percent of Algeria’s total exports, fell about 42 percent n in the first seven months of 2015, official data showed. The value of overall exports during the period fell about 40 percent year-on-year, while imports declined 10.31 percent. Algeria has implemented several measures that seek to counter the global oil price drop, including restricting imports. [Reuters, 8/23/2015]

Eastern Libyan oil firm looks to discuss contracts with oil majors
The National Oil Corporation (NOC) set up by Libya’s internationally recognized government in Tobruk has invited foreign companies to meet its management in Dubai next month to discuss existing oil purchase contracts. The move is a fresh attempt by the Tobruk government to convince oil buyers to deal with its NOC in the east, as buyers have been going through the NOC in Tripoli in the west. The conference will take place three months after NOC Tripoli held a similar event in London to demonstrate its control of Libya’s oil reserves and to reassure customers that the country’s political conflict would not affect the state oil firm. Meanwhile, Libya’s state electricity firm is seeking assistance from Turkish firms to carry out badly needed maintenance work at Libyan power plants. A delegation from Tripoli recently visited Turkey to discuss security measures with Turkish companies in an effort to persuade them to return to Libya. [Reuters, Libya Monitor (subscription), 8/23/2015]

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