Iraq plans to finance its balance of payments deficit by drawing its foreign exchange reserves down to $43 billion in 2016 from $59 billion at the end of October.
The deficit is expected to reach $14 billion in 2015 before narrowing to $11 billion in 2016, the government said, as part of a Staff Monitoring Program agreement that the International Monetary Fund (IMF) approved on Tuesday as a precondition for a loan. The agreement, which runs from November 2015 to December 2016, aims to help steady Iraq’s finances. It also paves the way for a possible funding program this year that would include conditions requiring Baghdad to reduce energy price subsidies and reform state-owned enterprises. Iraqi authorities agreed in November to have the IMF monitor their economic policies to help rein in spending and curb the budget deficit. [Reuters, 1/12/2016]
Egypt’s Central Bank Governor Tarek Amer said rules to curb what he described as unnecessary imports may save about $20 billion this year, helping to ease a foreign currency shortage. “The largest demand for foreign exchange comes from imports, so these measures are a quick fix to improve the balance of payments,” Amer said in an interview. “Egypt has been flooded with cheap, low-quality goods and we are trying to regulate this market.” Authorities have tightened rules to finance the imports of goods deemed non-essential and have asked importers to register their foreign suppliers with the government. “In a matter of a few months, we have succeeded in restoring confidence in the domestic market,” Amer said. [Bloomberg, 1/13/2016]
Saudi Arabia’s government will keep a controlling interest in state-owned Saudi Aramco if it decides on a share offering of the world’s largest oil firm, Chief Executive Officer Amin Nasser said. Aramco has crude reserves of about 265 billion barrels, over 15 percent of all global oil deposits. If it went public, it could become the first listed company valued at $1 trillion, analysts have estimated “A range of options are being considered, including the listing in the capital markets of an appropriate percentage of Saudi Aramco shares with the government retaining a controlling interest, as well as the option to list a bundle of downstream businesses and interests,” Nasser said. He cited the government’s privatization initiative and broader economic reforms as the two key drivers behind the move. [Reuters, 1/13/2016]
The United Arab Emirates (UAE) is expected to make around Dh10 billion to Dh12 billion in the first year following the implementation of a value added tax (VAT, according to Undersecretary at the Ministry of Finance Younis al-Khouri. “There was a study conducted in 2014 that showed that the [revenues] collected from the implementation of value-added tax for the UAE are between Dh10 billion to Dh12 billion, given that the tax will not be applied on some large industries like education, healthcare, and food staples,” al-Khouri said. He said the VAT is set to be implemented in 2018 and would range between 3 to 5 percent. While GCC countries have yet to finalize their implementation policy, al-Khoury said a tentative plan for implementation has already been approved by GCC leaders. [Gulf News, 1/13/2016]
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Iraq signs IMF monitoring program, will draw on foreign reserves
Iraq plans to finance its balance of payments deficit by drawing its foreign exchange reserves down to $43 billion in 2016 from $59 billion at the end of October. The deficit is expected to reach $14 billion in 2015 before narrowing to $11 billion in 2016, the government said, as part of a Staff Monitoring Program agreement that the International Monetary Fund (IMF) approved on Tuesday as a precondition for a loan. The agreement, which runs from November 2015 to December 2016, aims to help steady Iraq’s finances. It also paves the way for a possible funding program this year that would include conditions requiring Baghdad to reduce energy price subsidies and reform state-owned enterprises. Iraqi authorities agreed in November to have the IMF monitor their economic policies to help rein in spending and curb the budget deficit. [Reuters, 1/12/2016]
Egypt’s Central Bank Governor sees import rules saving $20 billion in 2016
Egypt’s Central Bank Governor Tarek Amer said rules to curb what he described as unnecessary imports may save about $20 billion this year, helping to ease a foreign currency shortage. “The largest demand for foreign exchange comes from imports, so these measures are a quick fix to improve the balance of payments,” Amer said in an interview. “Egypt has been flooded with cheap, low-quality goods and we are trying to regulate this market.” Authorities have tightened rules to finance the imports of goods deemed non-essential and have asked importers to register their foreign suppliers with the government. “In a matter of a few months, we have succeeded in restoring confidence in the domestic market,” Amer said. [Bloomberg, 1/13/2016]
Saudi government to keep controlling stake if it lists Aramco
Saudi Arabia’s government will keep a controlling interest in state-owned Saudi Aramco if it decides on a share offering of the world’s largest oil firm, Chief Executive Officer Amin Nasser said. Aramco has crude reserves of about 265 billion barrels, over 15 percent of all global oil deposits. If it went public, it could become the first listed company valued at $1 trillion, analysts have estimated “A range of options are being considered, including the listing in the capital markets of an appropriate percentage of Saudi Aramco shares with the government retaining a controlling interest, as well as the option to list a bundle of downstream businesses and interests,” Nasser said. He cited the government’s privatization initiative and broader economic reforms as the two key drivers behind the move. [Reuters, 1/13/2016]
UAE to see over 10 billion dirhams in revenues from VAT
The United Arab Emirates (UAE) is expected to make around Dh10 billion to Dh12 billion in the first year following the implementation of a value added tax (VAT, according to Undersecretary at the Ministry of Finance Younis al-Khouri. “There was a study conducted in 2014 that showed that the [revenues] collected from the implementation of value-added tax for the UAE are between Dh10 billion to Dh12 billion, given that the tax will not be applied on some large industries like education, healthcare, and food staples,” al-Khouri said. He said the VAT is set to be implemented in 2018 and would range between 3 to 5 percent. While GCC countries have yet to finalize their implementation policy, al-Khoury said a tentative plan for implementation has already been approved by GCC leaders. [Gulf News, 1/13/2016]
Also of interest
Saudi Arabia keeps February crude supply to Asia steady | Reuters
Saudi Aramco’s electricity capacity to exceed 12,000 MW by 2019 | Reuters
How Saudi Arabia’s currency could derail markets (analysis) | CNBC
Abu Dhabi wealth fund ADIA appoints private equities head | Reuters
Egypt’s stocks hit 25 month low as foreign traders exit | Reuters
Egypt’s Suez Canal saw more ships, less US-dollar revenues in 2015 | Ahram Online
Committee refutes claims that Egypt’s state bodies embezzled EGP 600 billion | Ahram Online
Egypt redraws investment zones to streamline administrative oversight | DNE
Tunisia’s trade balance deficit down 11.42 percent in 2015 | TAP