Moody’s Investor service said Tuesday that a projected long-term drop in oil prices will drive fiscal reforms in energy dependent Gulf states and spur public borrowing. “We expect that the impact of lower hydrocarbon revenues on [Gulf Cooperation Council members’] public finances will spur policy adjustments in 2016,” said Moody’s VP Senior Analyst Steffen Dyck. “These could include reductions in subsidy spending and measures to broaden the non-oil revenue base,” he added. Moody’s also said it expects that Gulf states will borrow to face budgetary shortfalls. “Overall government gross borrowing needs will likely average about 12.5 percent of regional GDP, or around $180 billion per year in 2015 and 2016,” Dyck said. Moody’s said it expects Gulf states to post a combined fiscal deficit of about 10 percent of gross domestic product (over $140 billion) in 2015 and 2016. [AFP, 10/20/2015]

Saudi regulatory agency may relax investor rules to join world indices
In his first interview with international media since his appointment in January, Chairman of the Saudi Capital Market Authority (CMA) Mohammed al-Jadaan said that Saudi Arabia would be open to relaxing its rules on foreigners investing directly in its stock markets in order to join global indices. Jadaan defended the limited trading so far by qualified foreign investors and said that the kingdom has already benefited from direct foreign access to its stock market. “One of our objectives is to ensure we are included in international indices and we will … look to ways to ensure we convince them that the market is ready to be placed in their indices,” Jadaan said in an interview at the market regulator’s offices in Riyadh. “We will do whatever is needed from a regulatory point of view to be ready,” he added. Joining an index could dramatically increase the amount of foreign money going into the kingdom. Some estimates put the figure at $50 billion.[Reuters, 10/20/2015]

United States approves $11.25 billion warship sale to Saudi Arabia
The US government has approved a $11.25 billion sale of four Lockheed Martin multi-mission warships and associated equipment to Saudi Arabia. The Pentagon’s Defense Security Cooperation Agency, which oversees foreign military sales, notified US lawmakers late Monday about the possible sale. Lawmakers have thirty days to block the sale, although such action is rare since potential deals are carefully vetted before any formal notification takes place. The approval allows Saudi Arabia and the US government to negotiate a formal contract for the ships, but the process is not expected to be completed before the end of the year. The sale marks the first major export of a newly built US-manufactured surface naval vessel in years and is expected to include training, radar, sonar systems, munitions, and fire-control systems. [Reuters, Bloomberg, 10/20/2015]

Egypt to buy Russian helicopters, hardware for new Mistral warships
The Kremlin’s Chief of Staff Sergei Ivanov announced on Monday that Russia will sell to Egypt helicopters and other hardware worth over $1 billion to equip the Mistral aircraft carriers that Egypt recently bought from France. “Russia will be, if you want, a subcontractor, who will supply the missing equipment without which the Mistral warships are just tin cans. And of course, all the helicopters,” Ivanov was said. The two ships are expected to arrive in Egypt by the summer of 2016. [Ahram Online, IBT, 10/19/2015]

IMF projects growth increase to 4.7 percent for Tunisia by 2020
Economic growth in Tunisia is projected to increase to 4.7 percent by 2020 and the country’s medium-term prospects are favorable, according to the International Monetary Fund (IMF). However, the IMF noted that these prospects “hinge on reduced security risks and easing of social tensions and the successful and quick implementation of comprehensive reforms that improve the business climate and foster private sector development.” Meanwhile, Tunisian and European experts met in Tunis on Monday ahead of the start of negotiations over a Deep and Comprehensive Free Trade Agreement. The negotiations began today and will continue until Thursday. [TAP, 10/20/2015]

Also of interest
Gulf oil producers cut prices for Asian buyers amid oversupply | The National
UAE September inflation eases to 4.3 percent | Reuters
Saudi-Kuwaiti joint oil firm appoints new chairman | Reuters
Saudi Arabia open to relaxing rules for foreign investment in stock market | Reuters
London oil producer cuts 2015 output forecast on Iraq payment delays | Reuters, Bloomberg
Analysts say forex pressures on Egypt likely to continue for years (analysis) | Aswat Masriya
Thirty-one investment requests submitted to Egypt’s Suez Canal Authority | DNE
Sisi, Eni CEO discuss establishment of gas hub in East Mediterranean | Cairo Post
Finance Minister Dimian says Egypt does not need to borrow from the IMF | AMAY (Arabic)
Dealing with Egypt’s economic crisis (opinion) | Ahram Online
Libya’s AGOCO outlines future exploration plans | Libya Monitor (subscription)
Turkey’s Hattat in talks on financing for $4 billion energy projects | Reuters
Investors hope Turkey’s election will give economic reformers more clout | Reuters