EconSource: UAE, China Set up $10 Billion Joint Strategic Investment Fund

The United Arab Emirates (UAE) and China have established a joint strategic investment fund worth $10 billion. The agreement was finalized during a three-day visit by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan to China and follows a cooperation deal between state-owned oil companies in both countries. “The launch of this strategic fund with commercial goals builds on the next phase in our partnership in our quest to work in a close way to develop the economies of the two countries and take part in the growth of the global economy,” Sheikh Mohammed said. The fund, which will be financed equally by both countries, will pursue a range of opportunities in various asset classes including greenfield projects, in which operational facilities are built from scratch. The fund joins others set up by the UAE to invest with different countries, including Russia and France. It also comes after China National Petroleum Corp signed a strategic cooperation agreement on Sunday with Abu Dhabi’s Mubadala Petroleum to collaborate on upstream oil and gas investment and related projects outside the UAE. [Reuters, 12/14/2015]

Turkey to relaunch EU membership bid with economic talks
European Union (EU) foreign ministers are set on Monday to revive Turkey’s efforts to join the bloc by agreeing to open talks on the EU’s financial rules. Turkey’s Deputy Prime Minister Mehmet Simsek said he expects quick progress on bringing Ankara in line with the EU’s economic and monetary policy. “Turkey does not have major shortcomings regarding this chapter,” Simsek said. French Minister for European Affairs Harlem Desir said he expects to see a “willingness to implement reforms in Turkey that contribute to the modernization of Turkish society [and] the Turkish economy.” However, concerns remain over whether Turkey’s new government will curtail central bank independence. During the yearly economy review of Turkey’s EU candidacy in May, EU finance ministers expressed displeasure at President Tayyip Erdogan’s demands for lower interest rates. [Reuters, 12/14/2015]

Egypt central bank injects dollars into banks in special measure to ease shortage
The Central Bank of Egypt (CBE) injected more foreign currency liquidity into the banking system on Sunday, the latest in a series of steps aimed at ending a foreign exchange shortage. Bankers said the central bank announced the move suddenly and offered dollars at a rate of 7.7401 pounds, the CBE’s official selling price for dollars. It was unclear how much foreign currency the central bank had pumped out in total, as bankers said each bank was only aware of the share it would be receiving. “We were just told the central bank will sell dollars against Egyptian pounds to banks according to the outstanding credit of banks,” said one banker, suggesting the move was meant to cover outstanding dollar exposure at banks. A banking official said the CBE has repaid approximately 25 percent, or $1 billion of the total credit facilitations granted by banks for importers in the past period. Meanwhile, the CBE is offering treasury bills worth $1.1 billion on behalf of the finance ministry today. The CBE’s coordinating council for fiscal and monetary policies will hold its first meeting on Thursday after a recent reshuffle. [Reuters, 12/13/2015]

Saudi Arabia to announce spending cuts as part of strategy for era of cheap oil
Saudi Arabia’s government is expected to announce spending cuts and a drive to raise revenue from new sources as it lays out a strategy to cope with an era of cheap oil. The government has not yet revealed a detailed, comprehensive plan for how to deal with low crude prices that have pushed state finances deep into deficit. But in coming weeks, authorities will make their intentions clearer. The state budget for 2016 is expected to be released on or around December 21 according to official sources. In the following weeks, likely in January, the government will reveal a multi-year economic plan that may include longer-term reforms such as energy subsidies and new taxes. The budget will be the first drafted by the administration of King Salman and the first carrying the imprint of his son Mohammed bin Salman, who chairs a new Council of Economic and Development Affairs that now dominates the economic policy apparatus. [Reuters, 12/13/2015]

Government adviser says Iraq has no plans to lift fuel subsidies
The Iraqi government has no plans to lift subsidies on fuel and oil products as part of negotiations to secure a loan from the International Monetary Fund (IMF), according to the government adviser for economic affairs Mazhar Mohammed Saleh, dismissing local reports about a possible reduction in energy subsidies. “Under the program, the IMF will provide loans and assistance to Iraq to cover the (budget) deficit. There will be further talks on the subject in the second half of December. It is totally untrue that the IMF requested the lifting of oil subsidies,” Saleh told Zawya. Additionally, Iraqi Central Bank Governor Ali al-Allaq said the value of the IMF loan has yet to be determined. Saleh told Zawya in November that Iraq would start discussions with the World Bank and the IMF to secure loans worth $6 billion. [Zawya, 12/14/2015]

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