Tunisian political chaos threatens IMF deal

Tunisian political chaos threatens IMF deal
Tunisia could face the fate of Lebanon, where the currency has plummeted and savings have been wiped out.
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Updated 27 May 2021

Tunisian political chaos threatens IMF deal

Tunisian political chaos threatens IMF deal
  • Power struggle between president, PM, parliament
  • Pandemic sends national debt to 91% of GDP

TUNIS: Tunisian politicians and officials warn of an economic collapse if the government cannot agree a new International Monetary Fund (IMF) loan this summer, but political paralysis could scotch that effort.
Tunisians are used to last-ditch financial talks that pit the demands of foreign lenders against public opinion, but this time a power struggle between the president, prime minister and parliament has added new complications.
“The political situation is blocked in Tunisia,” said former prime minister Youssef Chahed. In an interview with Reuters, he said “there is no serious debate” in the political class about fixing the economy.
After the COVID-19 pandemic cut output by 8.8 percent last year and sent the national debt to 91 percent of gross domestic product (GDP), the stakes are high and urgent.
Central Bank Governor Marouan Abassi told parliament last week that if the government tried to use the bank to finance the deficit instead of agreeing an IMF deal, inflation would hit three digits in a “Venezuelan scenario” .
Former finance minister Hakim Hamouda told Reuters the crisis “threatens to bankrupt the state” and former reform minister Taoufik Rajhi, who negotiated an earlier IMF loan for Tunisia, called the talks “a last chance to avoid imminent collapse.”
Both warned that Tunisia could face the fate of Lebanon, where the currency has plummeted and savings have been wiped out, leading to social unrest.
An IMF program may unlock more financial support to help prop up the lone democratic success story of the Arab Spring — and an important partner for Europe on security and migration.
Tunisia’s 2021 budget forecast borrowing needs at $7.2 billion, including about $5 billion in foreign loans. It put debt repayments at $5.8 billion including $1 billion due in July and August.
The IMF talks are expected to last through the summer. Prime Minister Hichem Mechichi has told Reuters he wants $4 billion, though few people think any sum higher than $3 billion is likely.
A bilateral loan may be needed to meet the summer debt obligations. Tunisian politicians say privately that Qatar or Libya may provide money.

CREDIBLE REFORMS
Diplomats say international goodwill for Tunisia may buy leeway in talks. But they are also frustrated at what they see as chronic misspending and the IMF wants Tunisia to offer credible reforms.
Chahed said foreign support, especially in the US and France, boosted the chances of a deal but only if Tunisia could commit to change. “We need to quickly take advantage of this context and immediately present a detailed plan,” he said.
But the chief reforms — subsidy cuts, restructuring state-owned companies and reducing the public sector wage bill — are opposed by the UGTT union and some political parties who say Tunisians are sick of seemingly endless sacrifices.
Public discontent showed in the 2019 elections with the rejection of established politicians, and more recently in January protests that could foreshadow the response to further economic woes.
Such internal divisions will make it hard for the government to assure the fund and other foreign lenders that it can implement any reforms it promises.
When elements of its proposal to the IMF were leaked this month, the UGTT said it had not been aware of the details and rejected them — contradicting previous government statements that they had struck an agreement on reform.
An agreement must be approved by the deeply fragmented parliament, where Mechichi’s government is supported by a narrow majority, but in which no party has more than a quarter of seats.
It would also have to be signed by President Kais Saied, who is at odds with both Mechichi and the parliament speaker. He has blocked a proposed reshuffle and rejected the assembly’s efforts to appoint judges to the Constitutional Court.
Disputes inside parliament, and between it and Saied, have already delayed efforts to fix the fiscal problem. Last year Tunisia had three separate governments so was unable to start talks.
“If we had started earlier... we could have had an easier negotiation,” said Chahed, the former PM.


Egypt to issue $604m of treasury bonds

Egypt to issue $604m of treasury bonds
Updated 17 sec ago

Egypt to issue $604m of treasury bonds

Egypt to issue $604m of treasury bonds

CAIRO: The Central Bank of Egypt will issue 9.5 billion Egyptian pounds ($604.3 million) in treasury bonds on Monday to finance the country’s budget deficit.

The T-bonds will be issued in coordination with the Finance Ministry.

In a statement posted on its website, the central bank said the value of the first offering is 8 billion pounds for two years. The value of the second offering is 1 billion pounds for 5 years and the value of the third offering is 500 million pounds for a period of 10 years.

The government borrows through bonds and treasury bills and government banks are the largest purchasers of these financial instruments.

The Ministry of Finance estimated the financing gap for the state’s general budget during 2021/2022 at about 1.06 trillion pounds, compared to 997.733 billion pounds during the last fiscal year, an increase of 6.31 percent, which will be financed through borrowing and issuance of securities.

Egypt had received $2.7 billion from the International Monetary Fund.

The Monetary Policy Committee of the Central Bank of Egypt decided to keep the overnight deposit and lending rate and the central bank’s main operation rate unchanged at 8.25 percent, 9.25 percent, and 8.75 percent, respectively.

Last month, the committee announced that the interest rate would be fixed for the seventh time in a row this year.


Saudi Fund for Development signs two agreements with Pakistan worth $4.2 billion

Saudi Fund for Development signs two agreements with Pakistan worth $4.2 billion
Updated 29 November 2021

Saudi Fund for Development signs two agreements with Pakistan worth $4.2 billion

Saudi Fund for Development signs two agreements with Pakistan worth $4.2 billion

RIYADH: The Saudi Fund for Development on Monday signed two agreements worth $4.2 billion with Pakistan. The deals aim to support the Pakistani economy.

The first agreement includes a $ 3 billion deposit to the State Bank of Pakistan to support the country’s foreign currency reserve levels and mitigate the impact of the coronavirus disease pandemic. The second deal seeks to support Pakistan in financing oil derivatives trade with $1.2 billion.

Related


Thailand plans to boost tourism through bitcoin holders: Crypto wrap

Thailand plans to boost tourism through bitcoin holders: Crypto wrap
Updated 29 November 2021

Thailand plans to boost tourism through bitcoin holders: Crypto wrap

Thailand plans to boost tourism through bitcoin holders: Crypto wrap

RIYADH: The Tourism Authority of Thailand is working with the country’s regulators to make it easier and more convenient for visitors to spend cryptocurrency in the country, Bloomberg reported.

Thailand is laying the groundwork for becoming a positive crypto community with the aim of attracting cryptocurrency holders and promoting tourism in it.

The country is also hoping to recover some of the $80 billion in tourism revenue lost due to the COVID-19 pandemic and subsequent lockdown.

The plan is already being discussed with the Thai Securities and Exchange Commission, the Bank of Thailand, and Bitkub Online Co., the largest crypto exchange in the country.

The authority will create a new unit next year to handle the issuance of its crypto tokens, produce a wallet, and build a new tourism ecosystem, according to Bitcoin.com.

However, Thailand does not currently recognize cryptocurrencies as legal tender.

Adoption

Robert Kiyosaki, the author of Rich Dad Poor Dad, has revealed that he is buying more Bitcoin and ether in response to the alarming rise he sees in inflation.

Meanwhile, Blockchain protocol Moonlift has unveiled a new name and a new product release as part of a large-scale rebranding initiative.

The blockchain project will be known as MoonLift Capital and will launch a decentralized exchange that will enable token exchange and liquidity mining features, Bitcoin.com reported.

MoonLift is a community-driven project that aims to provide users with passive income using blockchain technology.

The blockchain protocol also provides a one-stop solution for upcoming crypto projects across marketing, fundraising, and community building services.

MoonLift Capital is also backed by numerous partners and advisors. One of the biggest names is the DeFi startup guide LaunchZone.

MoonLift Capital will offer new projects to Launchzone, providing them with a favorable position to launch their tokens via IDO.  

Daily trading

Bitcoin traded higher on Monday rising by 4.75 percent to $56,926 at 6:38 p.m. Riyadh time.

Ether traded at $4,313, up 5.80 percent, according to data from CoinDesk.


Oil demand expected to reach pre-pandemic levels despite omicron fears: Aramco CEO

Oil demand expected to reach pre-pandemic levels despite omicron fears: Aramco CEO
Updated 29 November 2021

Oil demand expected to reach pre-pandemic levels despite omicron fears: Aramco CEO

Oil demand expected to reach pre-pandemic levels despite omicron fears: Aramco CEO

Dhahran: Aramco’s CEO is optimistic about oil demand growth next year despite fears over the new COVID-19 variant omicron. 

Oil demand will be over 100 million barrels per day in 2022, reaching pre-COVID19 levels, Amin Nasser told Arab News during a media briefing at the company's headquarter today.

On COVID-19’s new strain, he said that “the markets overreacted,” adding that the impact of omicron on demand cannot be measured without a full medical assessment.  

Nasser’s remarks came during a ceremony in Dhahran to kickoff development of the unconventional gas field Jafurah. 


Economic sentiment in the EU drops slightly; inflation on the rise in Germany and Spain: Economic wrap

Economic sentiment in the EU drops slightly; inflation on the rise in Germany and Spain: Economic wrap
Updated 29 November 2021

Economic sentiment in the EU drops slightly; inflation on the rise in Germany and Spain: Economic wrap

Economic sentiment in the EU drops slightly; inflation on the rise in Germany and Spain: Economic wrap

The EU’s Economic Sentiment Indicator slipped marginally by 1.1 points to reach 116.5 in November, the European Commission said.

The drop was attributed to a noticeable fall in consumer confidence, although among other sectors such as industry and services it remained the same. At the same time, confidence in the retail trade and construction sectors improved.

Germany, the Netherlands and Spain were among the countries that experienced a downward trend in their economic sentiment, with the latter undergoing the largest decline.

On the other hand, France had the biggest improvement in economic sentiment during the month. Italy and Poland were another two countries that had more favorable sentiment.

Inflation in Western Europe

Annual inflation rate in Spain reached 5.6 percent in November, according to preliminary estimates in a press release issued by Spain's National Statistics Institute. 

The inflation rate predicted for November will be the highest since September 1992. The increase was mainly driven by higher food prices.

In addition, the monthly inflation rate is expected to reach 0.4 percent in November.  

Meanwhile, Germany’s consumer prices are expected to rise in November by 5.2 percent from a year ago, data from Germany’s Federal Statistics Office showed. This is higher than October's 4.5 percent.

Energy costs surged by 22.1 percent while food prices went up by 4.5 percent, according to preliminary estimates.

The monthly inflation rate is expected to be a negative 0.2 percent in November.

Mexico’s unemployment

The Mexican jobless rate decelerated to 3.9 percent in October from 4.2 percent in the prior month, according to the country’s official statistics agency, INEGI.

The number of unemployed persons eased to 2.3 million, declining by 288,000 from a year earlier, the INEGI report showed.

On a seasonally adjusted basis, the jobless rate remained at 3.9 percent.