LONDON: Sovereign borrowing by 13 states in the Middle East and North Africa is set to rise by 20 percent this year, as states look to refinance long-term debt and cover fiscal deficits, a report by S&P Global Ratings found.
The countries’ long-term borrowing is estimated to hit about $136 billion in 2019 compared with $109 billion in 2018, when issuances fell by 38 percent, the ratings agency said.
Countries covered by the report include Saudi Arabia, Egypt, Lebanon, Kuwait and Morocco.
“Higher oil prices and fiscal consolidation measures in Gulf Cooperation Council (GCC) countries significantly reduced GCC sovereigns’ funding needs in 2018. However, lower oil prices in 2019 will not support a further reduction in GCC fiscal deficits,” it said in the report.
“We expect Kuwait, Egypt, and Iraq to significantly increase their gross commercial long-term borrowing in 2019 compared with 2018.
“Most GCC countries have been tapping international debt markets in recent years to meet their funding needs, diversify funding sources, and reduce liquidity pressures in the domestic banking systems.”
About 44 percent of the borrowing this year will go toward refinancing maturing long-term debt, resulting in an estimated net borrowing requirement of $76 billion, the report found.
That will see total outstanding debt hitting $892 billion this year, 11 percent more than in 2018.
Saudi Arabia is expected to have the highest level of commercial long-term borrowing of the 13 countries, with forecast borrowing of $29.3 billion this year, slightly lower than the $29.6 billion last year.
Kuwait is expected to see the biggest rise in commercial long-term borrowing of all the 13 countries in the study, S&P said.
“This is based on our expectation that the Kuwaiti government will pass a new debt law, raising the debt ceiling and authorizing extra borrowing. We anticipate this will result in Kuwait taking on $15 billion of long-term commercial borrowing in 2019, compared with no borrowing in the previous year,” it said.
Egypt is also forecast to see a significant rise in borrowing this year, S&P said. It expects borrowing to rise to $27.6 billion this year, up from $17.7 billion last year.