MENA countries weighed down by pandemic debts will struggle to grow – World Bank

MENA countries weighed down by pandemic debts will struggle to grow – World Bank
In early March UAE had the highest percentage of its population vaccinated, at 63.5%. (File/Reuters)
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Updated 04 April 2021

MENA countries weighed down by pandemic debts will struggle to grow – World Bank

MENA countries weighed down by pandemic debts will struggle to grow – World Bank
  • Average MENA debt to GDP rose 9 points since 2019 to 55% in 2021
  • Countries with low external debt can still borrow cheaply

WASHINGTON, D.C.: The outlook for the Middle East and North Africa has worsened considerably over the past year as countries accumulated debt to pay for pandemic relief measures, leaving them with less to invest in post-pandemic economic recovery, according to the World Bank.

Average debt to GDP in the MENA region rose by 9 percentage points since the end of 2019 to 55 percent in 2021, the World Bank said in a report Living with Debt: How Institutions Can Chart a Path to Recovery in the Middle East and North Africa released on Friday. Debt among the region’s oil importers is expected to average about 93 percent of GDP this year, it said.

MENA economic growth will rebound by 2.2 percent in 2021 after contracting 3.8 percent in 2020, but will be 7.2 percentage points, or $227 billion, lower by the end of this year than it would have been had the pandemic not happened, the World Bank estimates. Real GDP per capita will be 4.7 percent lower in 2021 than in 2019.

“The MENA region remains in crisis, but we can see hopeful signs of light through the tunnel, especially with the deployment of vaccines,” said Ferid BelHajj, World Bank vice president for the Middle East and North Africa. “We have seen the extent to which MENA governments borrowed to finance critical health care and social protection measures, which saved lives and livelihoods, but also boosted debt.”

As of the first week of March, the UAE had the highest percentage of its population vaccinated, at 63.5%, followed by Bahrain at 30% and Morocco at 12.2%, then Qatar at 11.4%, World Bank data shows. Saudi Arabia had a 2.2% vaccination rate.

MENA countries will need to keep on borrowing this year to prop up their citizens’ finances but will face high borrowing costs, particularly those with high debt and low growth, the bank said. However, those with low levels of public external debt, such as Saudi Arabia, Qatar and Morocco, could issue debt at lower rates, it said.

The remedy for the increasingly precarious situation of many of the region’s economies is faster growth that makes it easier to roll over existing debt, the World Bank said. Those that cannot roll over debt face potentially painful restructurings and should enter into negotiations before they hit crisis point, the report advised.

Of benefit to the whole region would be enhanced debt reporting transparency and financial market vulnerability monitoring, it said. MENA countries should reveal all their borrowing, including those from China, as should debt become exposed during periods of distress it will be added to the public tally just as they are negotiating with lenders, the report said.

“Economic growth remains the most sustainable way to reduce debt,” the report said. “Boosting economic growth requires deep structural reforms to raise the productivity of the existing workforce and to put idle working-age people in jobs. Many MENA countries that have characteristics associated with ineffective fiscal stimulus, such as high public debt and poor governance, could consider fiscal reforms early in the recovery from the pandemic.”


Red Sea Project uses smart light systems as it seeks dark sky accreditation

Red Sea Project uses smart light systems as it seeks dark sky accreditation
Updated 17 min 56 sec ago

Red Sea Project uses smart light systems as it seeks dark sky accreditation

Red Sea Project uses smart light systems as it seeks dark sky accreditation
  • Smart systems help reduce waste and minimize light pollution
  • Red Sea Project wants to be certified by the International Dark Sky Association

RIYADH: All Red Sea Project assets, including resorts, hotels and facilities, run through smart control systems that allow enough light as needed while being careful to save energy consumption and reduce waste, said Myriam Yaniz, director of lighting management at the company.

Red Sea Project is using the technology as it looks to be certified as an International Dark Sky Place by the International Dark Sky Association.

The company reviews different scenarios to know the adequate amount of lighting required during different times of the day and during the different seasons, Yaniz told Al Eqtisadiyah paper, during the World's Earth Day celebration on Thursday.

"At the design stage and during the first meeting of any destination project, our night vision is conveyed to our team of consultants and provided with our list of criteria to ensure that the work is carried out accordingly," she said.

Red Sea Project is a land and property development on Saudi Arabia’s Red Sea coast announced by the Saudi Crown Prince Mohammad bin Salman in July 2017.


Saudi bank deposit growth accelerated to 11-month high in February

Saudi bank deposit growth accelerated to 11-month high in February
Updated 49 min 37 sec ago

Saudi bank deposit growth accelerated to 11-month high in February

Saudi bank deposit growth accelerated to 11-month high in February
  • Bank deposit growth was the fastest since March 2020

RIYADH: Bank deposits in Saudi Arabia grew during February at the fastest pace since March 2020 as the economy continued to rebound from the coronavirus pandemic.

Deposits reached SR1.96 trillion ($522.5 billion) at the end of February, an increase of 1.83 percent, the most since the previous March’s 1.92 percent gain, Al Eqtisadiah reported, citing SAMA data.

On an annual basis, bank deposits in Saudi Arabia increased by 10.2 percent, or SR180.47 billion. Individual and corporate deposits, which made up 74.6 percent of total deposits, increased by 9.8 percent year over year.

Demand deposits increased 14.2 percent to SR1.29 trillion in the 12 months to the end of February, making up 88 percent of total deposits with savings and foreign deposits accounting for the rest.


Egypt and Russia agree to resume all flights, including to resorts

Egypt and Russia agree to resume all flights, including to resorts
Updated 23 April 2021

Egypt and Russia agree to resume all flights, including to resorts

Egypt and Russia agree to resume all flights, including to resorts
CAIRO: Egypt and Russia have agreed to resume all flights between the two countries in a call between their presidents, Abdel Fattah El-Sisi and Vladimir Putin, Egypt’s presidency said in a statement.
Flights to resort destinations Sharm Al-Sheikh and Hurghada were suspended after a Russian passenger plane crashed in Sinai in October 2015, killing 224 people.
The Egyptian statement did not specify a timeline for the resumption of flights, but Russia’s Interfax news agency reported this week that flights could resume in the second half of May.
An Airbus A321, operated by Metrojet, had been taking Russian holiday makers home from Sharm el-Sheikh to St. Petersburg in 2015, when it broke up over the Sinai Peninsula, killing all on board. A group affiliated with Daesh militants claimed responsibility.
The decision to resume flights followed “the joint cooperation between the two sides on this issue, and based on the standards of security and convenience provided for visits at Egyptian tourist destination airports,” the statement said.

Egypt raises domestic fuel prices for first time since subsidy reform

Egypt raises domestic fuel prices for first time since subsidy reform
Updated 23 April 2021

Egypt raises domestic fuel prices for first time since subsidy reform

Egypt raises domestic fuel prices for first time since subsidy reform
RIYADH: Egypt’s price-setting committee raised domestic fuel prices on Friday for the first time since it was formed in October 2019 following the completion of subsidy reforms, the petroleum ministry said in a statement.

Prices were last raised in July 2019 when Egypt, a net oil importer, finished phasing out subsides on fuel products as part of a reform program backed by the International Monetary Fund. Prices had remained stable over the past year after being lowered in April 2020 and October 2019.

The prices of 80-octane, 92-octane, and 95-octane fuel were raised by 0.25 Egyptian pounds each, to 6.25 Egyptian pounds ($0.40), 7.5, and 8.5 pounds per liter, respectively, the statement said.

The pricing committee’s mechanism links energy prices to international markets, and takes into account the exchange rate as well as the impacts of the coronavirus pandemic, the statement said.

Egypt lowered fuel prices in October 2019 following several rounds of price hikes as part of an austerity program that triggered discontent, including protests against President Abdel Fattah El-Sisi.

Saudi share of Gulf economy rose to almost 50% in 2020

Saudi share of Gulf economy rose to almost 50% in 2020
Updated 23 April 2021

Saudi share of Gulf economy rose to almost 50% in 2020

Saudi share of Gulf economy rose to almost 50% in 2020
  • Saudi GDP contracted 11.8 percent to $700.1 billion in 2020
  • UAE GDP fell 15.9 percent to $354.3 billion

RIYADH: Saudi Arabia increased its share of the GCC economy to almost half in 2020 as it weathered the COVID-19 pandemic better than its neighboring Arab states.

The Kingdom’s made up 49.8 percent of the bloc’s economy in 2020, up from 48.4 percent in 2019, Al Eqtisadiah newspaper reported, citing data from the International Monetary Fund (IMF) and Gulf statistical agencies.

Nominal gross domestic product (GDP) for the six GCC countries fell 14.3 percent in 2020 to $1.41 trillion, while Saudi GDP contracted 11.8 percent to $700.1 billion.

The UAE’s economy shrank 15.9 percent to $354.3 billion, representing 25.2 percent of GCC output.

Qatar had the third largest regional economy in 2020. It shrank 16.9 percent to $146.1 billion, representing 10.4 percent of GCC GDP.