Falling oil prices forced Iraq’s cabinet to revise its draft 2015 budget and trim its forecast for oil to $55 a barrel from $60. According to a member of the parliament’s finance committee, spending was reduced to 119 trillion Iraqi dinars. Nonetheless, the budget deficit is expected to rise to 25 trillion dinars. The decision to lower the forecast oil price may satisfy some MPs who saw the previous estimate as unrealistic–currently Brent crude is still trading even lower than $50 a barrel.
[Reuters, 1/27/2015]
World Bank warning of Libya’s increased deficit and weaker currency
In its MENA Quarterly Economic Brief, the World Bank has warned that the collapse in international crude oil prices and Libya’s low oil exports could lead to an increased deficit, eroded foreign currency reserves and a weaker currency. The report explained that the economies of oil exporters could be hurt, as oil accounts for more than half their budget revenues. Oil exports constitute more than 90 percent of Libya’s total exports. [Libya Herald, 1/27/2015]
Strong demand for Tunisia’s $1 billion bond
Tunisia’s transition to democratic stability was underlined on Tuesday with the country’s first unassisted sale of government debt. International investors, keen to capitalize on the country’s recent presidential elections, put in orders of more than $4 billion for the $1 billion bond, allowing the country to borrow at a lower than expected rate of 5.875 percent over ten years. [FT, 1/27/2015]
Egypt on a mission to restore confidence in its economy
According to Egyptian Finance Minister Hany Dimian, Egypt will push ahead with plans to phase out a costly energy subsidy, as Cairo seeks to boost spending on social programs and bring down its budget deficit. Further cuts to fuel subsidies would be implemented “at the latest” during the fiscal year beginning in July, after the halving of oil prices since the summer provided “room to maneuver.” Cairo aims to almost completely end fuel subsidies within five years and use the savings to raise spending on health and education. [FT, 1/28/2015]
Also of Interest:
IMF outlook explains low oil price impact on Middle East | The Bakken
The New Suez Canal: A passage to economic recovery for Egypt | The Hill
Egypt’s market hits new six-year record after pound devaluation | Ahram Online
Tensions rise in Jordan ahead of budget bill debate | The Jordan Times
Syria raises fuel prices to snuff out black market, soothe unrest | Reuters