EconSource: Iraq Plans Pay Cuts as Economy Crisis Deepens

Iraq is planning unprecedented salary cuts for senior civil servants amid a financial crisis caused by a plunge in oil prices and the fight against the Islamic State (ISIS or ISIL). “The drop in oil prices and the country’s involvement in a war [against ISIS] that’s exhausting large amounts of money from the budget have put the government in financial difficulty,” Prime Minister Haider al-Abadi said. “Reforms have hurt some but we’ll reach a dead end if we don’t take such measures.” He promised to look for ways to soften the impact, such as reducing interest rates for those who have taken out loans. It is not yet clear if the salary changes require a vote in parliament, where Abadi could face opposition. Abadi’s Economic Advisor Mudher Saleh said that because the broader reform package has already been approved, a new vote might not be necessary. “It’s the first time since 2003 that we will carry out such deep, sweeping cuts to salaries,” Saleh said. [Bloomberg, 10/30/2015]

Kuwait economy shrinks on falling oil prices
Kuwait’s central bank said the country’s economy contracted last year for the first time since 2010 as a result of the global drop in oil prices. The country’s total gross domestic product (GDP) shrank 1.6 percent in 2014 and oil-generated GDP contracted 1.7 percent. The central bank said non-oil GDP grew 2.1 percent. Like other Gulf nations, Kuwait has been struggling to diversify its economy to compensate for oil price fluctuations. Kuwait has managed to weather past economic contractions, having built up about $600 billion in fiscal reserves. [AFP, 10/29/2015]

Egypt Central Bank leaves main interest rates unchanged
The Egyptian Central Bank (CBE) kept its benchmark interest rates on hold at a meeting of its Monetary Policy Committee (MPC) on Thursday as it balanced the need to keep inflation in check and the need to stimulate the economy. “The MPC judges that the key central bank of Egypt rates are currently appropriate give the balance of risks surrounding inflation and gross domestic product outlooks,” the CBE said. Thursday also marked the last MPC meeting that will be held under CBE Governor Hisham Ramez, whom Tarek Amer will replace on November 26. [Reuters, Ahram Online, DNE, 10/29/2015]

Tunisia PM calls for new methods of budget formulation and implementation
Tunisian Prime Minister Habib Essid said on Thursday that the new state budget law should contain measures for preparing, implementing, and controlling the budget. At an inner cabinet meeting, Essid said these measures should take into considering deadlines for implementation and transitional provisions. The meeting reviewed the failures of the current budget law, in particular the lack of flexibility in the management of funds, a statement by Essid’s office said. In related news, Development, Investment, and International Cooperation Minister Yassine Brahim said that Tunisia’s new draft investment code will be submitted to a cabinet meeting for adoption today. [TAP, 10/29/2015]

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