EconSource: Saudi Arabia Plans Major Economic Shakeup Amid Oil Slump

Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman has privately outlined plans to reshape the economy to withstand low oil prices. The strategy, which includes state spending reforms and privatizations, was presented at a meeting this week with senior officials, businessmen, and economists.

The plans, expected to be made public in the next few weeks, represent a shift of authority over economic policy to bin Salman, the Council of Economic and Development Affairs that he chairs, and the Ministry of Economy and Planning, sources said. Under the reforms, the government would become more cautious about spending. The Ministry of Finance would fund new projects only with the approval of the economic council and decisions would be closely tied to the government’s financial situation. Some state bodies would be privatized in an effort to spur growth, create jobs, and reduce the financial burden on the public sector. The creation of nonprofit organizations would also be encouraged, especially in health care and education, and a system of water and electricity subsidies would be restructured. Ministries and state agencies will regularly be given “key performance indicators” and officials will be held accountable if they do not meet these targets. [Reuters, 12/19/2015]

Egypt to receive $1.5 billion from Arab funds for Sinai development
Egypt will finalize loans worth a total of $1.5 billion with Arab funds to finance development projects in the Sinai region. Director of the Kuwait Fund for Arab Economic Development Abdel Wahab Badr said Sunday that his fund’s contribution to Sinai’s development would come from the $1.5 billion that was allocated in April to be spread over five years, delivering $300 million per year. “The project in Sinai aims to bring the Peninsula’s development up to par with the rest of the country,” Badr said. Egypt’s Minister of International Cooperation Sahar Nasr said Arab funds have expressed “full readiness” to support Egypt in its plans to develop Sinai. She said the funds will focus on housing, road construction, agriculture, and education. Meanwhile, an unnamed Saudi businessman is in talks with Egyptian authorities over a $4 billion tourism resort in Sharm al-Sheikh, according to Minister of Tourism Hisham Zaazou. He said the project would be the largest resort in Sharm al-Sheikh. [Ahram Online, 12/21/2015]

Libya’s eastern oil company says signs shipment deal with Egypt
The National Oil Corporation (NOC) branch set up by Libya’s eastern government in Tobruk says it has reached agreements with six international buyers to export crude from the Messla and Sarir fields as it continues its efforts to sell oil independently of Tripoli. The crude will be shipped via the Hariqa terminal in Tobruk. Tobruk NOC Chairman Nagi al-Magrabi said Sunday that agreements with “six international firms had been reached.” One of the agreements includes a sale of 2 million barrels of crude to Egypt. A delegation from the Tobruk NOC headed by chairman al-Moghrabi had visited Egypt and signed a deal for the crude shipment, training, and exchanges related to the oil industry, NOC Advisor Mohamed al-Menfi al-Menfi said. Egyptian officials were not immediately available to confirm the agreement. [Reuters, Libya Monitor (subscription), 12/21/2015]

Tunisia, IMF to discuss new fund arrangement
International Monetary Fund (IMF) Mission Chief for Tunisia Amine Mati announced that “discussions about a new Fund arrangement with the IMF are expected to be held over the coming weeks.” In a statement Friday at the conclusion of an IMF visit to Tunisia, Mati said, “[It is] now essential to move forcefully on reforms to accelerate growth and create jobs.” Mati said Tunisia’s forthcoming five-year economic and development plan “gives the authorities an opportunity to foster internal consensus and set priorities for comprehensive economic reforms.” He added, “[The IMF] will remain engaged with the Tunisian authorities” and ready to support efforts to ensure macroeconomic stability and address structural vulnerabilities “through economic policy advice, financial support and technical assistance.” He noted that the Tunisia’s economic outlook remains challenging due to negative shocks, persistent unemployment, and vulnerabilities. [TAP, 12/19/2015]

Iraq says OPEC will stick to policy on no output cuts
The Organization of the Petroleum Exporting Countries (OPEC) will stick to its December 4 decision to maintain production despite the drop in global prices, Iraq’s Oil Minister Adel Abdul Mahdi said. He added that any output reduction aimed at boosting prices would have to be coordinated with non-OPEC members. “We are in a real world, OPEC is not the only producer or the only player. So we have to see what the decisions of others should be – Russia and the United States and other producers,” Mahdi said. He hopes that oil prices will rebound in 2016 as a result of improved global economic growth. “There is big hope that, in the first half or by the end of next year, oil prices would return to what they were,” he said without specifying a price level. “The resumption of normal economic growth rates in China, together with growth in Asia and Europe and higher economic growth in the US could contribute to an increase in demand for energy and to higher prices,” Mahdi said. [Reuters, 12/21/2015]

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