EconSource: IMF Says Confident Gulf Oil Exporters Can Adjust, Urges Taxes

Lagarde said oil exporters would have to reduce state spending and increase government revenues, but that they had shown the ability to adjust in the past and could do so again. “Oil prices have fallen by two-thirds from their most recent peak but supply and demand-side factors suggest they are likely to stay low for an extended period,” she said. She estimated that oil exporters in the Middle East and North Africa lost more than $340 billion of revenues last year due to low crude prices, or about 20 percent of their combined gross domestic product (GDP). She said Gulf economies “need to strengthen their fiscal frameworks and re-engineer their tax systems by reducing their heavy reliance on oil revenues and by boosting non-hydrocarbon sources of revenues.” Lagarde called for the introduced of a “harmonized regional” value-added tax, which she said could raise revenues by as much as 2 percent of GDP. She also called for “greater emphasis” on corporate income, property, and excise taxes. [Reuters, AFP, The National, WSJ, 2/22/2016]

Iraq revives $2 billion bond plan, will likely seek IMF aid

Iraq may raise $2 billion in Eurobonds this year and is likely to ask the IMF for more aid. Iraq may tap international bond markets in the second half of 2016, Finance Minister Hoshyar Zebari said Monday. A planned sale was halted last year because investors demanded yields that the government deemed too high. The debt auction “is on the agenda,” he said. “We are in a better position this year to issue than last year, when interest rates were too high.” Zebari said the IMF and Iraq authorities will hold talks and that Iraq will “likely consider” asking for more assistance. He said it is too early to decide on the size of the possible loan. The IMF provided $1.25 billion in emergency assistance to Iraq last year. [Bloomberg, 2/22/2016]

Egypt signs $500 million facility agreement with Afreximbank to ease FX shortage

The African Export-Import Bank (Afreximbank) agreed to a $500 million facility with the Central Bank of Egypt (CBE) to help Egyptian importers facing a foreign currency shortage. The deal, which was signed on Friday, will provide trade liquidity facility to Egyptian importers with a focus on imports considered strategic to the Egyptian economy. In November, Afreximbank offered to arrange a facility of up to $1 billion to improve Egypt’s foreign currency liquidity. On Sunday, CBE Governor Tarek Amer said the bank will not devalue the Egyptian pound until foreign reserves increase to $25 billion to $30 billion from the current $16.48 billion. He said Egypt’s economy will not be negatively impacted by the foreign exchange crises. In other foreign assistance news, the African Development Bank said it will offer Egypt $140 million to fund the new Administrative Capital project. [Reuters, Ahram Online, 2/20/2016]

Libya’s NOC warns of more Islamic State attacks on oil facilities

Libya’s oil facilities are likely to suffer further attacks unless a UN-backed unity government is approved, Head of the National Oil Corporation (NOC) Mustafa Sanalla said Monday. “If there is no new government I think the situation will get worse. I believe there will be more attacks on the oil facilities,” he added. “We are urging the [House of Representatives] to approve this government to put an end to these troubles we have regarding security in the oil industry.” Total current oil production stands at 360,000-370,000 barrels per day (bpd), but production sometimes drops to around 300,000 bpd due to technical problems. Sanalla said he was “optimistic” that Libya’s total production could recover quickly under a unity government, with an additional 400,000 bpd or more coming the El Sharara and El Feel oil fields in south-western Libya. He also said the new government should set up a unified security force to protect facilities. [Reuters, 2/22/2016]

Turkey announces plan to bolster tourism sector

Turkish Prime Minister Ahmet Davutoğlu unveiled a plan to support Turkey’s tourism sector on Monday. The government will seek to postpone 288 million liras ($98 million) of debt spread over three years, Davutoğlu said. It will offer an additional 255 million liras ($87 million) to the tourism industry and exporter benefits to tourism companies with $700,000 or more in annual sales, he said. The costs will be met with spare budget funds from the Finance Ministry. “Nobody should expect Turkey to become introverted or change its axis amid many tensions around. On the contrary, we’ll open abroad more,” he added. Tourism revenues in Turkey dropped 14.3 percent in the final quarter of last year. Tourism revenues fell 8.3 percent over the entire year. Davutoğlu said he expects Russian tourists to keep coming to Turkey, despite calls by the Russian government telling tourists to stay away. [Reuters, Bloomberg, Daily Sabah, Hurriyet, 2/22/2016]

Also of interest

Gulf loses steam as optimism over oil producer deal fades | Reuters

Gulf Keystone says Iraqi Kurdistan authorises oil export payment | Reuters

Qatar plans 1,000 MW of solar power via joint venture | Reuters

Moody’s says Gulf banks under pressure from low oil prices | AFP

Yemen central bank stops guarantees for rice, sugar imports | Reuters

Nigeria’s President Buhari to talk oil in Saudi, Qatar | Reuters

Egypt’s Sisi opens Africa investment conference | AP, Ahram Online

Central bank of Egypt says it will float United Bank of Egypt | Reuters

Egypt says strategic wheat reserves to last until start of June | Reuters

Eni completes authorization process for Egypt’s Zohr gas field | Reuters

Egypt’s new import regulations frustrate traders | Al Ahram Weekly

World Bank cancels $38 million loan for Egypt sanitation projects | Amwal Al Ghad

Tunisia’s announces five-year program for 24 governorates | TAP

Tunisia joins Enterprise Europe Network, European delegation says | TAP

Morocco annual inflation eases to 0.3 percent in January | Reuters

Turkey to repair sabotaged oil pipeline next week | Reuters

Jordan to begins construction of $2.2 billion oil shale power plant | Petra

IMF says confident Gulf oil exporters can adjust, urges taxes

International Monetary Fund (IMF) Managing Director Christine Lagarde said Monday that she is confident the Gulf Cooperation Council (GCC) economies can implement the large fiscal adjustments they need to cope with low oil prices. Lagarde said oil exporters would have to reduce state spending and increase government revenues, but that they had shown the ability to adjust in the past and could do so again. “Oil prices have fallen by two-thirds from their most recent peak but supply and demand-side factors suggest they are likely to stay low for an extended period,” she said. She estimated that oil exporters in the Middle East and North Africa lost more than $340 billion of revenues last year due to low crude prices, or about 20 percent of their combined gross domestic product (GDP). She said Gulf economies “need to strengthen their fiscal frameworks and re-engineer their tax systems by reducing their heavy reliance on oil revenues and by boosting non-hydrocarbon sources of revenues.” Lagarde called for the introduced of a “harmonized regional” value-added tax, which she said could raise raise revenues by as much as 2 percent of GDP. She also called for “greater emphasis” on corporate income, property, and excise taxes. [Reuters, AFP, The National, WSJ, 2/22/2016]

Iraq revives $2 billion bond plan, will likely seek IMF aid

Egypt signs $500 million facility agreement with Afreximbank to ease FX shortage

Libya’s NOC warns of more Islamic State attacks on oil facilities

Turkey announces plan to bolster tourism sector

Turkish Prime Minister Ahmet Davutoğlu unveiled a plan to support Turkey’s tourism sector on Monday. The government will seek to postpone 288 million liras ($98 million) of debt spread over three years, Davutoğlu said. It will offer an additional 255 million liras ($87 million) to the tourism industry and exporter benefits to tourism companies with $700,000 or more in annual sales, he said. The costs will be met with spare budget funds from the Finance Ministry. “Nobody should expect Turkey to become introverted or change its axis amid many tensions around. On the contrary, we’ll open abroad more,” he added. Tourism revenues in Turkey dropped 14.3 percent in the final quarter of last year. Tourism revenues fell 8.3 percent over the entire year. Davutoglu said he expects Russian tourists to keep coming to Turkey, despite calls by the Russian government telling tourists to stay away. [Reuters, Bloomberg, Daily Sabah, Hurriyet, 2/22/2016]

Also of interest