GCC faces pressure over $94bn of outstanding debt, says HSBC

Updated 29 February 2016
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GCC faces pressure over $94bn of outstanding debt, says HSBC

JEDDAH: The GCC is facing a $94 billion debt shortfall that it could struggle to meet amid low oil prices and regional economic insecurity, Arabian Business reported, citing HSBC.
In what the bank says is the first time it has compiled all GCC medium-term debt estimates, HSBC research claims sovereign, financial and corporate borrowers in the region must repay or refinance $94 billion in bonds and syndicated loans over 2016 and 2017 as GCC debt matures in the years to 2020.
However, slowing growth, rising rates and rating downgrades in the low oil price era “only adds to the scale of the region’s funding challenge” and could make it harder to repay the debts, the report warns.
It says the UAE makes up the biggest chunk of repayment or refinancing obligations over the 2016-2017 period, followed by sovereign debt in Bahrain and Qatar.
By sector, most of the debt is owed by financial institutions at 22 percent, followed by sovereign wealth funds and energy borrowers with 19 percent each.
According to Arabian Business, the report’s author Simon Williams, HSBC’s chief economist for the Middle East, said: “As we have noted at length in previous reports, the slump in oil prices looks set to leave the GCC oil producers with aggregate fiscal and current account shortfalls of $260 billion and $135 billion over 2016-17 respectively, the equivalent of 8.7 percent and 4.5 percent of GDP.
“The refinancing sum includes outstanding financial and corporate paper as well as debt issued by the sovereign, which is largely focused in UAE, Bahrain and Qatar.
“We remain confident that these funding gaps will be covered. However, expectations that they will be part-financed through the sale of sovereign US dollar debt will complicate efforts to refinance existing paper that matures over 2016-17.”
He noted that close to half of the maturities over 2016-17 center on the banking sector, suggesting any increase in costs at refinancing could contribute to a broader monetary tightening in the region.
Said Williams: “With the Gulf acting as a single credit market… the refinancing challenge will likely be much more broadly felt, with its impact compounded by tightening regional liquidity, rising rates and recent downgrades by international rating agencies.”


Can a hungry Mali turn rice technology into ‘white gold’?

Updated 20 October 2018
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Can a hungry Mali turn rice technology into ‘white gold’?

  • Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change
  • Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983

BAGUINEDA: When rice farmers started producing yields nine times larger than normal in the Malian desert near the famed town of Timbuktu a decade ago, a passerby could have mistaken the crop for another desert mirage.
Rather, it was the result of an engineering feat that has left experts in this impoverished nation in awe — but one that has yet to spread widely through Mali’s farming community.
“We must redouble efforts to get political leaders on board,” said Djiguiba Kouyaté, a coordinator in Mali for German development agency GIZ.
With hunger a constant menace, Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change.

 

Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983. It involves planting fewer seeds of traditional rice varieties and taking care of them following a strict regime.
Seedlings are transplanted at a very young age and spaced widely. Soil is enriched with organic matter, and must be kept moist, though the system uses less water than traditional rice farming.
Up to 20 million farmers now use SRI in 61 countries, including in nearby Sierra Leone, Senegal and Ivory Coast, said Norman Uphoff, of the SRI International Network and Resources Center at Cornell University in the US.
But, despite its success, the technique has been embraced with varying degrees of enthusiasm. Uphoff said that is because it competes with the improved hybrid and inbred rice varieties that agricultural corporations sell.
For Faliry Boly, who heads a rice-growing association, the prospect of rice becoming a “white gold” for Mali should spur on authorities and farmers to adopt rice intensification.
The method could increase yields while also offering a more environmentally-friendly alternative, including by replacing chemical fertilizers with organic ones, he said.
He also pointed out that rice intensification naturally lends itself to Mali’s largely arid climate.

FACTOID

Up to 20 million farmers now use rice intensification in 61 countries, including in nearby Sierra Leone, Senegal and Ivory Coast.