Gulf states $50bn largesse supports Mideast sovereign ratings as geopolitical risk rises

People stroll in a traditional market in downtown Amman. Jordan is among the Middle East countries that has received aid from Gulf oil exporters. (AFP)
Updated 28 November 2018
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Gulf states $50bn largesse supports Mideast sovereign ratings as geopolitical risk rises

  • Fewer direct disbursements being sent from Gulf
  • Aid packages align with regional strategic interests

LONDON: The sovereign ratings of countries such as Bahrain, Oman and Jordan have been boosted by expectations of support from oil-rich Gulf donor states, according to a new report from S&P.
But actual disbursements may fall short of the promised amounts while budget grants are becoming less prevalent as deposits in central banks and other forms of conditional concessional funding are increasingly the norm.
“We anticipate that GCC sovereigns will likely prioritize funding to key regional partners in the context of volatile prices, weaker GCC net asset positions, and their respective domestic agendas of diversifying their economies awat from hydrocarbons,” S&P Global Ratings said.
Saudi Arabia, the UAE, Kuwait and Qatar this year pledged to give around $50 billion in total aid to 10 countries in the Middle East and Africa.
Beneficiaries included Jordan, Egypt, Bahrain and Morocco.
As a proportion of GDP, funding support from GCC countries has been highest in Jordan, where the economy has absorbed large numbers of Syrian refugees since the start of the Syrian conflict in 2011.
However in absolute terms, Egypt has received the most donor support, S&P said.
Gulf states have pledged large sums as geopolitical risks have increased in the form of tensions between Iran and Saudi Arabia and ongoing conflicts in Yemen and Syria as well as the boycott of Qatar by some of its neighbors.


Egyptian economy on right track after 5.6% growth in 2018-2019: prime minister

Updated 17 July 2019
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Egyptian economy on right track after 5.6% growth in 2018-2019: prime minister

  • Egypt is emerging from a three-year economic reform program tied to a $12 billion loan from the IMF
  • Egypt has been praised by international lenders for swift reforms implemented since 2016

CAIRO: Egypt’s economy grew 5.6 percent in the 2018/19 fiscal year and is “on the right track” as it completes IMF-backed reforms, Prime Minister Mustafa Madbouli said on Wednesday.
The budget deficit came in at 8.2 percent of GDP, he said, which was slightly below an official forecast of 8.4 percent.
Egypt is emerging from a three-year economic reform program tied to a $12 billion loan from the International Monetary Fund.
Madbouli said Egypt’s primary surplus stood at 2 percent for the fiscal year, which ended in June, and also pointed to a recent drop in inflation as positive signs. Economic growth was up from 5.3 percent in 2017/18 and in line with a government forecast.
“At the same time, it induces us to complete the implementation of reforms and the efforts exerted to achieve the targets for the new fiscal year,” Madbouli said in a statement said.
Egypt has been praised by international lenders for swift reforms implemented since 2016, though austerity measures and inflation have left many Egyptians struggling to get by.
The reforms included a sharp devaluation of the currency, the introduction of value-added tax and the elimination of subsidies on most fuel products.
Headline annual inflation dropped to 9.4 percent in June from 14.1 percent the previous month, though it is expected to rise over the rest of the summer as the impact of the latest round of fuel subsidy cuts kicks in.