EconSource: IMF Lifts Outlook for Saudi GDP, Sees Bigger Budget Gap this Year

Saudi Arabia’s economy will keep expanding this year, showing little effect from the oil price drop, but growth will slow in 2016 as lower oil revenues hit state spending, the International Monetary Fund (IMF) said after talks with Saudi officials. Gross domestic product (GDP) is projected to grow 3.5 percent in 2015, unchanged from 2014, but slow to 2.7 percent growth in 2016. The IMF also predicted that the government will run a fiscal deficit of around 20 percent of GDP in 2015, the biggest deficit since 1999. Government deposits with the Saudi central bank have dropped in recent months to finance the deficit. The IMF said this was an appropriate policy for the moment, but the government will eventually need to restrain spending and issue debt. [Reuters, AFP, 6/2/2015]

Libya edges closer to economic collapse as currency dives
Libya’s public finances, wracked by a dramatic loss in oil revenue that has been exacerbated by a power struggle between rival governments, are foundering. The crisis has prompted the authorities in the western Tripoli government to plan cuts to petrol subsidies, delay public salary payments, and ban certain imports. The Tripoli government has also been forcing the central bank to burn through its foreign reserves. Civil servants say they have not been paid for at least two months and accuse the central bank, which has frozen infrastructure projects and limited spending, of not providing local lenders with liquidity to issue paychecks. [Reuters, 6/1/2015]

HSBC: Egypt’s GDP to grow 5.6 percent annually between 2020 and 2030
Egypt’s gross domestic product (GDP) and exports are projected to grow, boosted by increasing foreign investment, HSBC Bank Egypt said in a report. HSBC said Egypt’s GDP is expected to grow at a rate of 5.6 percent annually from 2020 to 2030. The figure is lower than the government’s projections, which estimate annual GDP growth at 6 percent. In its Trade Forecast Report, HSBC said Egypt’s growth forecasts have improved significantly over the last year due to economic reforms. HSBC said, “If this commitment [to reform] is sustained and political stability continues, then growth should continue to accelerate, helped by continued GCC [Gulf Cooperation Council] and Western support.” HSBC also said it is considering financing Egyptian projects in the energy, infrastructure, petrochemicals, and construction investments sectors. [DNE, Cairo Post, 6/1/2015]

New Iraqi crude meets cool reception in Asia
Asia has given Iraq’s launch of its new Basra Heavy crude oil grade a poor reception after the second largest producer in the Organization of Petroleum Exporting Countries (OPEC) seems to have misjudged demand by supplying too much, too soon. Sellers of the new grade have struggled to find buyers, while others have complained about a lack of pre-marketing and slow delivery of technical details to refineries. The problems, which have increased shipping and marketing costs for term buyers and Iraq’s equity partners in its southern oilfields, may hamper the country’s efforts to ramp up exports and could lead Asian buyers to look closely at Iranian oil if sanctions are lifted. [Reuters, 6/1/2015]

Also of interest
Saudi oil minister says OPEC strategy working | AFP
Oil prices boosted by dollar, Saudi comments | WSJ
Lower Saudi oil receipts won’t stem record arms imports (analysis) | Bloomberg
Qatar stocks rebounds further; other Gulf markets edge up | Reuters
Egypt’s petroleum imports up 95 percent in March | Ahram Online
Egypt’s external debt down to $39.58 billion in Q3 of FY2014/15 | Ahram Online
Syria regime raises fuel prices again | The Daily Star