EconSource: World Bank says New Bond Scheme Seen for Middle East, North Africa by Spring

A new international bond and grant scheme to help countries dealing with the fallout of war and instability in the Middle East and North Africa (MENA) should be in place by spring, World Bank Vice President for MENA Hafez Ghanem said. Ghanem said the plan will target investment in education, infrastructure, and jobs and that the bond program is vital to address the region’s refugee crises. “The demand on our support is very high right now and it is going to increase, because as you bring peace through political or security measures, to make the peace hold, you need to give people opportunities and hope,” he said. “We are trying to raise more resources, that is why we have proposed this financing mechanism.” The World Bank, United Nations, and Islamic Development Bank announced the initiative last month, asking donor countries to provide guarantees for bonds raising money for projects focused on support for refugees and rebuilding. The proposal also asks donors for grants to cut the interest rate for states hosting refugees. “If we agree and succeed in putting this together, it’s not a one-shot deal. It’s something that will have to be done over several years, and the amount of work that is needed, the projects that will need to be implemented, none of us can implement them very quickly,” Ghanem said.[Reuters, 11/18/2015]

Wary investors await Turkish cabinet for clues on policy direction
After enjoying a brief relief rally when Turkey’s ruling AK Party won a snap election on November 1 election, investors are nervously awaiting a new cabinet and worrying about President Tayyip Erdogan’s meddling in economic and monetary policy. Turkey’s lira is down by nearly a quarter this year, making it one of the worst performing emerging market currencies. Many of the lira’s woes are home-grown, as Erdogan’s opposition to high interest rates has rattled investors and undermined confidence in central bank independence. Investors are waiting to see whether Prime Minister Ahmet Davutoglu’s new cabinet, which he is expected to name within days, will be composed of technocrats committed to fiscal discipline or Erdogan loyalists likely to pursue a more populist agenda. Particularly important will be the role of former Deputy Prime Minister Ali Babacan, previously in charge of the economy and seen as an anchor for market reforms and investor confidence. [Reuters, 11/19/2015]

Saudi says oil price slump should not stop investment
Saudi Oil Minister Ali al-Naimi called for sustained investment in new output capacity Thursday despite the slump in world prices. Naimi said global oil production lost four million barrels per day (bpd) due to natural depreciation and predicted an increase in demand of one million bpd. “The oil industry is required to add new production capacity of 5.0 million bpd to compensate for the natural loss in production and meet the growth in global demand,” he said. “Large investments are required to meet such needs. We must continue and even increase the pace of investments in the energy sector.” Naimi said that over the next decade, Arab countries would need to invest around $700 billion in energy projects to boost production. He also called for efforts to stabilize the energy market, saying that Saudi Arabia was prepared to work with Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers to support prices. [AFP, 11/19/2015]

Egypt’s stocks may rise after World Bank’s $1 billion loan promise
Egypt’s stocks rebounded on Thursday in the first hours of trading after the World Bank said it expects to make a $1 billion loan to Egypt next month. Egypt’s benchmark EGX 30 index was up 0.1 percent on Wednesday and close to 2.3 percent at midday on Thursday, recovering from a near two year low reached on Tuesday. The bourse’s main index had lost close to 12 percent of its value since the Russian Metrojet 9268 flight crashed in the Sinai on October 31. Egypt is suffering from a foreign currency crunch as it confronts declining tourism and foreign. Foreign exchange reserves fell to $16.41 billion in October, enough to cover only three months of food and fuel imports. [Reuters, Ahram Online, 11/19/2015]

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