Yemen slashes key interest rate

Updated 08 February 2013
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Yemen slashes key interest rate

SANAA: Yemen’s central bank cut its deposit rate, the key rate which it uses to adjust monetary policy, by 3 percentage points to 15 percent, the bank said in a statement carried by state news agency SABA.
The central bank last trimmed the rate, a benchmark for commercial banks taking deposits from their customers, in October, when there was a cut of 2 percentage points to 18 percent as inflation came down to single digits and the Yemeni rial stabilized following political turmoil.
An International Monetary Fund official said recently that Yemen had room to gradually reduce interest rates in order to support economic recovery as inflation continued to decline.
The official inflation rate in Yemen spiraled as high as 25 percent year-on-year in October 2011.
It subsided to 5.5 percent in November 2012, the latest central bank data show. The Yemeni rial tumbled to about 243 to the US dollar in 2011 during a year of political unrest.
The currency has now stabilized around 215.
Yemen’s economy should expand by around 4 percent this year, the IMF has forecast, after it stabilized in 2012.
It shrank 10.5 percent in 2011, the first drop since the 1990 unification of the north and south of the country.


Saudi Arabia’s economy in a ‘sweet spot’, says US bank

Updated 23 April 2018
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Saudi Arabia’s economy in a ‘sweet spot’, says US bank

  • Bank of America Merrill Lynch Global Research: “With a more entrenched current account surplus possible this year, FX reserves could increase.”
  • “Reforms are likely to broadly proceed, even at these levels of oil prices, although spending may increase further above baseline expectations.”

LONDON: The Saudi Arabian economy is in a “sweet spot”, with higher oil prices allowing the Kingdom to boost spending while not having a significant impact on the country’s fiscal balance, according to Bank of America Merrill Lynch Global Research.

“Our meetings on Saudi Arabia comfort us in our view that the economy is in a sweet spot. Higher oil prices are allowing the focus on boosting activity not to materially impact fiscal balances,” the note said, published following the IMF and World Bank Spring meetings held in Washington DC this month.

“With a more entrenched current account surplus possible this year, FX reserves could increase this year,” the note said.

The bank forecasts the country will continue to push forward with its reform process regardless of the rising price of oil. Many of Saudi Arabia’s reforms are part of its Vision 2030 that aims to diversify the country’s economy away from its reliance on oil.

Brent oil reached a three-and-a-half year high on 19 April, hitting $74.74 a barrel.

“Reforms are likely to broadly proceed, even at these levels of oil prices, although spending may increase further above baseline expectations,” the note said.

The bank was also upbeat about Egypt’s economic prospects, noting that the country’s “macro stablization” is continuing and that its reform program, which includes cutting fuel subsidies and reforming the tax system, remains “intact”.

“Authorities are on track to achieve a small 0.2 percent of GDP primary surplus this fiscal year. The target is to bring the primary surplus to 2 percent of GDP next fiscal year, and maintain it there going forward,” it said.