EconSource: World Bank Expects to Pay $1 Billion Loan to Egypt

The World Bank expects to make a $1 billion development policy loan available to Egypt in December, the Bank’s Vice President for the Middle East and North Africa Hafez Ghanem said. Egypt has said it needs the money to help ease a foreign currency shortage caused by a slide in tourism revenues and foreign investment. “Our team was in Cairo over the weekend and I think they completed the negotiations,” Ghanem said, noting that the World Bank and Egyptian government still need to approve the final documents for the $1 billion installment. “There is an agreement in principle that this is a $3 billion, three-year program, but [the current] commitment is only for the first year,” Ghanem added. Meanwhile, Egyptian Prime Minister Sherif Ismail said Tuesday that the government is working with the Central Bank of Egypt (CBE) to ease downward pressure on the pound by boosting exports and regulating imports. On Wednesday, Egypt reshuffled the CBE board of directors ahead of Tarek Amer taking over as CBE governor on November 27. [Reuters, 11/18/2015]

Iraq to issue $2 billion Eurobonds in 2016 with World Bank guarantees
Iraq plans to issue $2 billion worth of international bonds in 2016 with World Bank guarantees for up to $1 billion, Central Bank Governor Ali al-Alak said Wednesday. The move comes after high yields forced the government to halt a bond issuance earlier this year. Alak predicted the new bond’s yield would be less than the 11.5 percent demanded by investors during a roadshow in Europe and the United States in September, but he did not speculate further. Alak said Baghdad had factored the bond into next year’s budget in order to finance a fiscal deficit estimated at $21 billion out of a roughly $95 billion budget. “[The bonds] will be $2 billion but [the World Bank] will guarantee let’s say 40 or 50 percent of that,” he said. “That will open the market more – make it wider – to attract more investors.” [Reuters, 11/18/2015]

IMF could conclude talks on a new program with Jordan by February
The International Monetary Fund (IMF) and Jordan could conclude negotiations over a new program by February to help advance reforms to boost private sector economic growth following the completion of a standby arrangement, the IMF Mission Chief Kristina Kostial said Tuesday. Jordan began talks this month on an Extended Fund Facility (EFF) to replace a three-year $2 billion standby arrangement that ended last August. The standby arrangement contributed to fiscal stability, but made limited progress in structural reforms, Kostial said. “We will be talking about specific reform elements,” said Kostial, adding that the IMF mission would return in January and by February to conclude the discussions. The new program could be sent to the IMF Executive Board for approval next April, she added. Kostial said the amount of assistance to be provided through the EFF will be less than the standby agreement due to Jordan’s improved fiscal position. Kostial said the new IMF deal would also address growing debt, good governance, and women’s participation in the labor market. [Reuters, 11/17/2015]

Saudi could buckle under oil shock, FX peg, investors warn
Saudi Arabia faces a crisis in the next three to five years if oil prices remain low and the country maintains large budget deficits and a rigid, pegged currency, participants in the Reuters Global Investment Outlook Summit said. “If Saudi Arabia buckles, we have a huge problem, on a scale that is not comparable to what we are contemplating at this point,” Founder of hedge fund SLJ Partners Stephen Jen said. The Saudi riyal is pegged to the rising dollar around SAR 3.75, which denies the economy a lift from a cheaper currency. “Saudi can be a problem in three to five years if they run a deficit of 20 percent plus,” Head of Emerging Markets at Pioneer Investments Mauro Ratto said. [Reuters, 11/17/2015]

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