EconSource: UN, World Bank to Launch Refugee and Reconstruction Bonds

International agencies plan to raise billions of dollars to tackle the worsening refugee crisis in the Middle East and North Africa by issuing new bonds to help displaced people and support reconstruction in the region. The United Nations, World Bank, and Islamic Development Bank announced the proposal on Saturday after global policy makers met to discuss ways to ease the growing humanitarian and economic crisis stemming from conflicts in countries including Syria, Iraq, Yemen, and Libya. The two track initiative will ask donor countries to provide guarantees for bonds raising money for certain projects, ranging from support for refugees to rebuilding to allow displaced people to return home. Some would be Islamic bonds that would target investors in the region. Donors would also be asked for grants to cut the interest rate for countries hosting the bulk of refugees from commercial rates to as low as zero, said World Bank Vice President for Middle East and Europe Hafez Ghanem. A working group will finalize details of the proposed fund raising, which would also make resources available to other development agencies, by February. [Reuters, 8/10/2015]

Egypt expects $1.5 billion in loans from World Bank, AfDB by end of 2015
Egypt expects to receive $1.5 billion in loans from the World Bank and African Development Bank by the end of 2015, according to Prime Minister Sherif Ismail said. The loans aim to boost Egypt’s foreign currency reserves and bolster the economy. Egypt’s foreign currency reserves, which have more than halved since 2011, stood at $16.335 billion at the end of September. According to the Central Bank, Egypt’s external debt rose by 4.3 percent to $48 billion in the fiscal year ending on June 30. However, Egypt’s net foreign direct investments (FDI) rose by 54.6 percent in the fiscal year, reaching $6.37 billion. In September, Investment Minister Ashraf Salman said the country needs $10 billion in FDI and $51.1 billion in domestic investments to grow at 5 percent. Last week, Ismail formed a ministerial economic committee to examine a general framework for economic and monetary policies and the promotion of investment. Meanwhile, revenue from the Suez Canal rose to $462.1 million in August from $437.7 million in July, according to the Suez Canal Authority. [Reuters, 8/11/2015]

France, Saudi Arabia sign EUR 10 billion worth of deals
France and Saudi Arabia signed deals worth EUR 10 billion during a visit by French Prime Minister Manuel Valls, Foreign Minister Laurent Fabius, and Defense Minister Jean-Yves Le Drian. Valls announced the deals on Twitter on Tuesday. The deals include contracts and letters of intent between the two countries, including a Saudi order for thirty patrol boats. The deals also cover energy, health, food, satellites, and infrastructure, according to Valls’ office. A French official added that a military helicopter deal is also expected to be signed in Riyadh. On Monday, Valls opened the Saudi-French Business Opportunities Forum to promote commercial ties between firms from the two countries. “France is now the third largest investor in Saudi Arabia and there are opportunities for development for Saudi companies in France,” he said. About 200 French companies attended the forum. Prior to the visit, Reuters reported that Saudi Arabia had shown interest in purchasing flexible assault naval vessels and spy satellites, and that France was hoping to sell two pressurized reactors to Saudi Arabia. [AP, World Bulletin, RFI, 10/13/2015]

World Bank says revises up Turkey growth forecast
Turkey’s economy grew faster than expected in the second quarter of the fiscal year, prompting the World Bank to revise its 2015 growth forecast to 3.2 percent. While “private and public consumption continued to lose momentum,” according to the Bank, “private investment unexpectedly surged and became the main driver of growth.” Despite the upward revision, the bank said economic activity would decelerate in the second half of the year as political uncertainty and tensions in the southeast affect investment. “Businesses are likely to cut investment spending from the second quarter and postpone investment decisions until a new stable political equilibrium is reached,” the Bank said. The Bank also said that Turkey’s high current account deficit is unlikely to fall below 5.5 percent of gross domestic product without structural reforms, and that inflation would remain above target at around 7.5 percent by the end of the year. [Reuters, Hurriyet, 8/13/2015]

Iraq halts plan for international bond issue due to high price
Iraq has halted its plan to issue international bonds because the yield it would have to pay on the debt was too high, Deputy Finance Minister Fathil Nabi said on Sunday. “[Finance Minister Hoshiyar Zebari] ordered that the bond be halted because the interest rate is high,” Nabi said. He did not comment further and it was unclear if the plan will be revived. The Iraqi government had said it needed the proceeds of the bond to pay salaries and fund infrastructure projects in the oil and gas, electricity, and transportation sectors. However, investors demanded extremely high yields that would have been financially burdensome for Iraq. Zebari told members of the parliament’s financial committee last week that it was too difficult to accept paying an 11.5 percent yield in return for an $2 billion bond, the committee’s secretary Ahmed Haji Rashid said. “There was an expectations mismatch on the Iraq bond pricing,” said an official at a European investment firm. [Reuters, 8/11/2015]

Kuwait sovereign fund may sell assets to cover deficit
The Kuwait Investment Authority (KIA) considering selling assets to cover a state budget deficit caused by low oil prices, the country’s Al-Anba newspaper reported on Sunday, quoting unnamed sources. The KIA, which is estimated to have more than $500 billion of assets, is studying whether to liquidate assets that generate annual returns of below 9 percent, the newspaper said. The newspaper did not specify which asset classes might be sold, but said that the size of the sales was expected to be about 9 billion dinars ($30 billion). Officials believe the sale would be a relatively cheap method of covering the budget deficit and financing planned large infrastructure projects. Meanwhile, Oil Minister Ali al-Omair said Kuwait would not slow the development of its oil industry projects in response to the fall of crude prices. On Tuesday, Kuwait’s National Petroleum Company said it plans to sign the main contracts awarded to companies to build the Al-Zour oil refinery. [Reuters, 8/11/2015]

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