EconSource: Saudi Arabia to Cut Spending After Oil Price Decline

Saudi Arabia is cutting unnecessary expenses and delaying some projects to compensate for low oil prices, Finance Minister Ibrahim Alassaf said. His comments were the clearest official signal yet that Saudi Arabia is reducing expenditure in some areas. Alassaf said the country is well-prepared to cope with the plunge of crude prices, but that Saudi policymakers are taking the drop seriously. “We have built reserves, cut public debt to near-zero levels and we are now working on cutting unnecessary expenses while focusing on main development projects and on building human resources in the kingdom,” he said in an interview with CNBC Arabia. Alassaf did not provide details of how spending would be cut but insisted that spending on education, health, and infrastructure would not be affected. He said the government will continue issuing bonds and may sell Islamic bonds to finance specific projects. In addition, sources reported that Saudi Arabia is considering cutting gasoline subsidies, following on the heels of the United Arab Emirates last month. Meanwhile, Saudi Arabia’s King Salman met with senior US executives in Washington this weekend in an effort to attract foreign investment. According to a source, top Saudi officials met with representatives from General Electric, Chevron, JPMorgan, Boeing, Halliburton, Raytheon and Lockheed, and others. Finally, on Sunday, Saudi Central Bank Governor Fahad Al Mubarak said the country will stick with its currency peg as long as oil underpins the economy, dismissing speculation that the country’s currency system is coming under pressure. [Reuters, AFP, BBC, 9/6/2015]

Egypt to issue at least $1 billion international bonds in 2015
Egypt plans to raise between $1 billion and $1.5 billion from international markets by issuing bonds before the end of the calendar year, Samy Khallaf, Head of Debt Management at the finance ministry said Monday at the Euromoney Egypt Conference. The planned bond issuance is part of a $10 billion program, $1.5 billion of which was raised in June, according to Khallaf. In addition, Finance Minister Hany Kany Dimian said Egypt plans to issue Islamic bonds (Sukuk) to finance its budget deficit for the current fiscal year. The Sukuk will be issued in 2016, Dimian said at the Euromoney conference. Meanwhile, Investment Minister Ashraf Salman said at the conference that Egypt needs $51.1 billion in domestic investments and $10 billion in foreign direct investments to grow at a rate of 5 to 5.5 percent of gross domestic product. He added that the depreciation of Egypt’s pound “is no longer a matter of choice.” According to the Central Bank, Egypt’s foreign currency reserves fell to $18.096 billion at the end of August from $18.534 billion in July. [Ahram Online, Bloomberg, 9/7/2015]

Egypt and Tunisia seek to boost bilateral trade by $500 million
An Egyptian-Tunisian joint committee is working to increase trade between the two countries from $317 million in 2015 to $500 million. Egypt’s Ambassador in Tunis, Ayman Musharrafa, received a committee of Egyptian experts on Friday who will take part in joint Egyptian-Tunisian preparatory meetings ahead of a meeting between Egyptian Prime Minister Ibrahim Mahlab and his Tunisian counterpart Habib Essid. Musharrafa said the joint committee will tackle several political, economic, and cultural files, and that ten deals and memorandums of understanding will be discussed in a ministerial meeting with the committee. Meanwhile, on Monday, Egypt signed an agreement with a Chinese company on building and financing part of the planned new administrative capital and secured a $243 million fund from Japan for electricity. [Amwal Al Ghad, Al Bawaba, 9/7/2015]

Kurdistan preparing payments for oil companies
The Kurdistan Regional Government (KRG) said on Monday it had allocated $75 million of revenue from its independent crude sales to oil exporting companies that have gone unpaid for months. The figure represents just a fraction of what international oil firms in the region say they are owed, but the promise of regular payments could restore some confidence. Gulf Keystone Petroleum will receive $15 million, whilst DNO and TTOPCO – a joint venture between Genel and Sinopec’s Addax Petroleum – will each receive $30 million, the KRG’s Ministry of Natural Resources said in a statement. The payments will be wired to the companies’ accounts within seven days. “Regular payments will be needed to allow the exporting companies to cover their ongoing expenses and plan for further investment in the oil fields, which will in turn boost production and thus help the people of the Kurdistan region,” the statement said. Further payments will be made as shipments rise in 2016. [Reuters, FT, Bloomberg, 9/7/2015]

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