EconSource: World Bank to Lend Iraq $1.7 Billion

The World Bank will provide loans totaling $1.7 billion to Iraq, the country’s finance ministry said. The ministry added that $1 billion will take the form of a development policy loan, but did not specify what projects the loan would fund. A $350 million loan will go towards reconstruction in parts of the country recaptured from Islamic State (ISIS or ISIL) fighters, including Diyala province, northeast of Baghdad, and the area around Tikrit. Another $350 million will finance a road project linking the southern oil city of Basra to the Gulf port of Umm Qasr. Iraq has projected a budget deficit of around $25 billion this year, in a budget of roughly $100 billion. [Reuters, 7/2/2015]

Fitch Ratings says Sousse attack hits Tunisia’s growth
Fitch Ratings released a statement on Wednesday saying last week’s attack in Sousse highlights the risks terrorism poses to Tunisia’s economy. Fitch said, “An increase in security-related, social or political instability would put negative pressure on Tunisia’s ‘BB-‘ sovereign rating.” However, the ratings agency added that the country’s successful political transition could help support structural economic reforms that would increase growth in the medium term. Fitch affirmed its support for Tunisia’s political transition and called on the government to implement “growth enhancing” reforms in several sectors including investment and banking. [Fitch Ratings, 7/1/2015]

Egypt’s central bank lets pound weaken by 1.3 percent
Egypt’s central bank let the Egyptian pound depreciate for the first time in five months on Thursday, a move analysts said would please international investors. The bank said it sold $38.8 million at a cutoff price of 7.63 pounds per dollar at a regular auction, sending the currency to its weakest level since auctions began in December 2012. Letting the pound weaken in a controlled manner again after doing so over a few weeks earlier this year could boost exports and attract further investment, analysts said. At the same time, a weaker currency could raise Egypt’s large bill for imports, which many Egyptians rely on for fuel and food staples.[Reuters, 7/2/2015]

Saudi economy accelerates in Q1, may not be sustained
Saudi Arabia’s economy accelerated in the first quarter of 2015, however growth may slow as the government faces pressure to rein in spending. Saudi Arabia has attempted to offset the impact of oil’s price plunge by relying on heavy state spending and a strong private sector. Gross domestic product (GDP), adjusted for inflation, grew 2.4 percent from a year earlier in the first quarter. However, the kingdom may find it harder to sustain growth if oil prices stay below $70 a barrel. The International Monetary Fund (IMF) is projecting a state budget deficit of 20 percent, or about $150 billion due to cheap oil, and the bank’s net foreign assets have dropped $65 billion from August to May. The government may issue bonds, but economists expect it to become more cautious about spending. [Reuters, 7/2/2015]

Kuwait parliament approves budget with $27 billion deficit
Kuwait’s parliament on Wednesday approved a state budget for the current fiscal year with a budget deficit of 8.18 billion dinars ($27 billion)—nearly half total spending—because of low oil prices. The actual deficit may not turn out to be nearly as large, expected at about 4.5 billion dinars if oil prices stay in the mid-$60s, Finance Minister Anas al-Saleh told members of parliament. Nevertheless, the budget plan underlines the dramatic change in Kuwait’s finances due to last year’s plunge of oil prices. Kuwait is considering issuing bonds to finance the budget deficit, Finance Minister Anas al-Saleh said on Thursday. [Reuters, 7/2/2015]

Also of interest
As Saudis keep pumping, thirst for domestic oil swells | WSJ
Shell Chief says US. shale producers under pressure from Saudi Arabia | Reuters
Saudi’s Bahri to buy five more oil tankers from Hyundai Heavy Industries | Reuters
Saudi fund buys $1.1 billion stake in South Korean engineering unit | Bloomberg
Gulf retail investors help support stock markets | Reuters
UAE to finish drafting corporate tax, VAT laws this quarter | Reuters
UAE’s Gulf Petrochem acquires Kenyan oil company | Al Bawaba
Bahrain to start lifting subsidies in August | Zawya
Egypt stocks fall on security worries; Saudi market flat | Reuters
Sisi approves Egypt’s state budget for new fiscal year | Al Bawaba
Iraqi forces say most of Baiji town recaptured from ISIS | Reuters
Turkey sees gas price deal with Russia’s Gazprom in two weeks | Reuters