EconSource: Fitch says Stable Turkish Government Could Help Reforms, Growth

Fitch Ratings said in a statement on Thursday that the formation of a stable government following Turkey’s parliamentary election on November 1 could benefit the implementation of structural reforms. Noting that commitment to fiscal discipline has received broad political support at a time of heightened political uncertainty, Fitch said, “If November’s election led to the formation of a stable government, structural reform and growth could benefit.” The ratings agency warned that large external financing requirements expose Turkey to shifting investor sentiment and remain a potential source of risk. “Turkey’s sovereign credit profile continues to mix high exposure to global financial market conditions and other structural weaknesses with strong public finances and a record of resilience to recent external shocks,” Fitch said, reflected in the stable outlook on Turkey’s ‘BBB-’ rating that was affirmed last month. Moody’s noted, “Turkey stands out as most vulnerable to external risks because of its high reliance on external capital and large stock of external debt due annually, combined with heightened political risks.” [Reuters, 10/22/2015]

Iraq budget deficit seen at 11.9 percent of GDP in 2016
Iraq’s fiscal deficit is expected to hit 11.9 percent of economic activity in 2016, Finance Minister Hoshiyar Zebari said on Wednesday. The government’s budget proposal, which awaits parliamentary approval, projects 106.9 trillion dinars ($95 billion) of expenditures and a 23.5 trillion dinar shortfall. More than 70 percent of expenditures will be used to pay salaries and pensions to the country’s public sector. Oil is expected to account for more than 80 percent of Iraq’s fiscal revenues in 2016, even as crude prices have more than halved in the past year. “Next year will not be an easy year. According to the estimates … and [given] the current price of oil, we expect it to be a difficult year for us,” Zebari said at the ministry’s headquarters. Moments before he spoke, ministry employees demonstrated inside the building against changes to the compensation system for public workers. Zebari said the revisions aimed at reducing inequities. He also said that Baghdad has started negotiating with the Qatar National Bank for a loan that could be used to help plug Iraq’s fiscal gap. [Reuters, 10/21/2015]

BP to invest in three new exploration blocks in Egypt
British Petroleum (BP) said on Wednesday it had been awarded three new offshore exploration blocks in Egypt and that it and its partners had committed to invest $229 million. BP said it would have 100 percent equity and operate the North al-Tabya block, located in deep waters north of its recent Salamat and Atoll discoveries. The North Ras al-Esh Block, located in shallow waters to the east of the Notus discovery, will also be operated by BP, with 50 percent equity. The third block at North al-Hammad, in which BP will have 37.5 percent equity, will be held by a subsidiary of Italy’s Eni. Eni will also hold 37.5 percent equity in the the third block, while France’s Total will hold 25 percent. BP North Africa Regional President Hesham Mekawi said of the investments, “BP will deploy its expertise and latest technologies to exploit the resources in these new blocks. This investment confirms our commitment to meet Egypt’s energy needs.” [Reuters, 10/21/2015]

Libya’s Tripoli government specifies eligibility for subsidy payments
Libya’s Tripoli government has issued some guidelines regarding eligibility for direct cash payments that are planned to replace subsidies for basic goods and fuel. Officials in Tripoli previously said that each adult Libyan citizen would receive LD50 ($40) per month once subsidies are removed. A direct subsidy paid to individuals would keep the cost of fuel and basic foodstuffs closer to market price and help curb smuggling across Libya’s borders. The government issued a decision on October 19 outlining details of eligibility for the monthly payment. The cash payments apply to those over eighteen years old, but with exceptions. For example, single Libyan mothers can claim the benefit for non-Libyan children, as long as they are permanent residents in the country. [Libya Monitor (subscription), 10/22/2015]

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