Turkish President Tayyip Erdogan renewed his call for lower interest rates on Sunday, saying they were too high to encourage investment and entrepreneurship. While Erdogan has repeatedly called for lower rates to spur growth, economists say Turkey’s Central Bank needs to hike rates to rein in inflation. The bank’s refusal to do so has sparked worries about political interference in monetary policy and led to record falls in the lira this year. “As long as the cost of money is on the rise, you can neither find young businessmen nor young businesswomen,” Erdogan said. [Reuters, 11/15/2015]
Saudi to start privatizing airports next year as budget squeezed
Saudi Arabia will begin privatizing its airports and related services in the first quarter of 2016, Chairman of the General Authority for Civil Aviation Sulaiman al-Hamdan said Sunday, as the kingdom seeks ways to support state finances due to lower oil prices. The announcement signals Saudi Arabia’s desire to manage the impact of lower oil prices on its budget. “The privatization program comes in line with the kingdom’s plan to improve the productive efficiency of airport systems and ease the financial burden on [the] state budget,” al-Hamdan said. King Khaled International Airport will be the first asset to be privatized in the first quarter next year. Air traffic control and information technology units will follow in the second and third quarters of 2016. Other units at the country’s international airports and local and regional airports will also be privatized, according to a schedule that runs until 2020. [Reuters, Gulf News, 11/15/2015]
UAE to reconsider investments as growth projected at 3 percent
The United Arab Emirates’ (UAE) economy is expected to grow 3 percent in 2015, Central Bank Governor Mubarak Rashid al-Mansouri said on Monday. He also said on the sidelines of a banking conference in Dubai that the country plans to reconsider any unnecessary investments. Mansouri also said there will be an “appropriate adjustment” in UAE interest rates following any hike in US rates. The UAE is closely monitoring the banking sector to ensure that risks such as lower oil prices and customer deposits do not escalate into a crisis. [Reuters, 11/16/2015]
S&P revises Egypt’s outlook, suggests Gulf support could falter
Standard and Poor’s (S&P) on Friday revised its outlook on Egypt from positive to stable and affirmed its ‘B-/B’ long and short-term foreign and local currency sovereign credit ratings. The ratings agency said its decision was based on the expectation that Egypt’s economic recovery will remain gradual amid persistent external imbalances and reduced financial support from the Gulf Cooperation Council (GCC) countries. “The stable outlook reflects our expectation that Egypt will largely remain politically stable, its economy will continue to progressively grow in the face of important macroeconomic headwinds, and that fiscal deficits will improve but remain at high levels,” S&P analysts said. “The economic recovery is supported by improved political conditions, a recovery in construction, manufacturing, services, and tourism.” However, S&P said that fiscal pressure on Gulf countries could affect support for Egypt, particularly in terms of grants. S&P said Egypt’s economic recovery would depend primarily on maintaining security and sociopolitical stability and addressing structural shortcomings in the energy and foreign exchange markets. [CPI Financial, Bloomberg, Aswat Masriya, 11/15/2015]
Egypt turns to Iraq to ease energy needs
Egypt signed a memorandum of understanding on Sunday to receive crude oil and natural gas from Iraq, said Egypt’s Minister of Petroleum Tarek al-Molla. A statement from the ministry said the agreement is part of a deal in which Iraq will supply Egypt and with surpluses of crude oil and natural gas. The agreement will also study how best to export Iraqi crude oil to Egypt and Jordan through a pipeline connecting the Iraqi city of Haditha to the Jordanian port of Aqaba. Molla added that increased domestic energy production in coming years could allow Egypt to re-export Iraqi oil as part of a larger plan to become an energy export hub. “We’re hoping that [from] 2020 to 2022 we will be able to become self-sufficient and decrease importing so that Egypt becomes a regional energy hub,” he said. [Reuters, Shafaq News, 11/15/2015]
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