EconSource: Iraq to Seek Up to $500 Million in Loans from Islamic Development Bank

Iraq will seek up to $500 million in loans from the Jeddah-based Islamic Development Bank (IDB) to help cover its projected deficit and complement the country’s return to the international debt market. Baghdad is aiming to raise $6 billion in a series of dollar-denominated bonds, Iraq’s first in nine years, to fund salaries and infrastructure projects in the oil and gas, electricity, and transportation sectors. Iraq’s 2015 federal budget empowers the Ministry of Finance to draw additional financing from sources including the IDB. Of the $500 million from the IDB, $225 million would be used for the development and renovation of a major trade corridor linking Iraq with neighboring countries. The IDB originally approved the financing in October 2013 and held discussions with Iraqi government officials in May. [Reuters, 9/10/2015]

IMF advises Saudi to review public sector wage bill
The International Monetary Fund (IMF) has urged Saudi Arabia to reduce domestic energy subsidies and its public sector wage bill as the country struggles with plunging crude oil prices. Following consultations with the kingdom, the IMF forecast continued expansion of Saudi Arabia’s economy despite the oil price drop. However, while the government’s high level of reserves and low public debt mean it could continue to weather reduced oil revenue for several years, the IMF said the government should take steps now to control spending via economic reforms. The fund stressed the need for higher domestic energy prices, long-term reductions to the size of the civil service, an expansion of non-oil revenue via land and value added taxes and reforms to boost private sector employment. [AP, Reuters, 9/9/2015]

Turkish economy grows more than forecasts
Turkey’s economy grew 3.8 percent in the second quarter of the year, data showed on Thursday, an unexpected positive development for a government grappling with expectations of a slowdown in growth. However, the data was not enough to prevent the lira from hitting a record low on Thursday, underscoring investors’ chronic concerns about political uncertainty. The rapid expansion of Turkey’s economy was fueled by consumer spending, which soared to its fastest pace in two years, and rising government expenditure. Following the release of the data, Finance Minister Mehmet Simsek said the economy will continue to grow in the third quarter of the year. Simsek said political instability poses the biggest risk to the economy, citing potential damage to public finances and further pressure on budget and current account deficits. “Depending on the intensification of those risks, we think a sequential contraction of [the] Turkish economy might be on the cards,” he said. [Reuters, WSJ, Bloomberg, 9/10/2015]

Egypt achieves $3.7 billion surplus in balance of payments for FY 2014/2015
Egypt’s economic transactions during fiscal year (FY) 2014/2015 achieved a surplus of $3.7 billion in the balance of payments, according to the Central Bank of Egypt (CBE). This comes after a surplus of about $1.5 billion in FY 2013/2014. The CBE said the surplus resulted from capital and fiscal transactions that achieved a net inflow of about $17.6 billion due to increased foreign investments in Egypt. According to the bank, inflows of foreign direct investment in Egypt increased from $4.1 billion to $6.4 billion in FY2014/2015. A surplus in services and income balance also contributed to the overall surplus in the balance of payments. These developments follow a 13 percent increase in Egypt’s trade deficit in FY 2014/2015.[DNE, 9/9/2015]

Also of interest
Gulf firms turn to banks to fund big projects as state coffers squeezed | Reuters
Qatari minister says Gulf states will maintain oil investment | Reuters
Kuwait signs $385 million solar energy project | AFP
Gulf Petrochem to expand in East Africa | Reuters
Saudi Aramco to open office in India for crude oil sales | Reuters
Fitch says bank lending slowing in Saudi Arabia | Arab News
Egypt’s urban consumer inflation drops to 7.9 percent in August | Reuters
Egypt’s core inflation decreases to 5.61 percent in August | Reuters
Egypt gas find refires exploration plans but wider Mediterranean overlooked | Reuters
Tunisia trade deficit decreased by 9.9 percent | African Manager
Morocco oil refiner Samir loses $223 million in first half of 2015 | Reuters