IMF revises Middle East and North Africa region outlook
The Washington-based IMF has made a downward revision to its projection for the Middle East and North Africa (Mena) region’s GDP in 2020 and 2021. The agency expects a 5 per cent contraction this year, with 3.2 per cent growth projected for 2021.
The IMF said in October it expects -5.4 per cent GDP growth in Saudi Arabia this year, an improvement over the -6.8 per cent forecast it made in July.
Projections for the UAE are bleaker, with a contraction of 6.6 per cent anticipated this year and 1.3 per cent GDP growth in 2021
Opec+ pushes for compliance with output reductions
The Joint Ministerial Monitoring Committee overseeing compliance with the Opec+ output restraint agreement reminded members of their commitments to production quotas in a meeting on 19 October.
Noteworthy agreement defaulters have been Nigeria and Iraq, both of which had been tasked with overachieving production cut targets from August due to their chronic overproduction earlier in the year.
Opec+ said it is on course to ease restrictions to quotas in January, from the 7.7 million barrel-a-day (b/d) production cuts that are in effect now, to 5.8 million b/d.
UN arms embargo lifted despite US objections
The UN’s arms embargo on the Iranian military was lifted after 13 years, despite protests from the US, allowing Tehran to buy and sell conventional weapons.
The embargo was lifted in line with the timeframe enshrined in the Iran nuclear deal of 2015.
Russia and China are among the sellers that are expected to approach Tehran for possible arms transactions.
The embargo placed on Iran by the EU and the UK will remain in place as longstanding concerns persist about Tehran’s nuclear power ambitions.
However, Iran’s defence ministry said in October that unconventional arms and weapons of mass destruction would not be a part of its arsenal.
Tel Aviv continues to deepen ties with Arab countries
Sudan became the third Arab country to normalise relations with Israel in the past two months.
Prime Minister Benjamin Netanyahu’s office tweeted last month that it would send $5m-worth of wheat to Sudan, while Khartoum said it planned to discuss trade and migration agreements with Tel Aviv.
Sudan’s normalisation pact follows similar developments in Bahrain and the UAE. Bahrain and Israel formally established diplomatic relations after signing a joint communique in Manama on 18 October.
The announcement came a month after the UAE and Bahrain signed the Abraham Accords during a ceremony led by US President Donald Trump at the White House on 15 September.
On 21 October, UAE-based Med-Red Land Bridge and Israeli state-owned Europe-Asia Pipeline Company (EAPC) signed a binding memorandum of understanding for collaboration on the EAPC pipeline network and storage tanks.
Muscat to introduce VAT on goods and services in April
Sultan Haitham bin Tariq issued a royal decree in October stating that Oman is to implement VAT at a rate of 5 per cent, effective from April 2021.
The planned tax will be imposed on most goods and services, but healthcare, education, financial services, basic foodstuff and supplies for people with disabilities will be exempt.
Muscat said it expects the tax to “provide an additional resource for the state’s public finances to ensure the continued quality of public services” and help the sultanate to reduce its “dependence on oil and other hydrocarbons products as main sources of its revenue”.
Oman’s economy has been under significant fiscal pressure this year due to the Covid-19 pandemic and low oil prices.
Tehran blamed for attacks on US presence in Iraq
The British Embassy in Baghdad says that Iranian-aligned rogue militia groups are responsible for indirect fire attacks targeting the US presence in Iraq, according to a British diplomatic source.
“It is almost certain these attacks are being conducted by Iranian-aligned rogue militia groups,” the source told MEED.
As of 17 September, there had been 51 indirect fire attacks targeting the US-presence in Iraq this year. Of these, 45 have taken place in Baghdad, with 24 targeting the International Zone (Green Zone).
The UK Foreign & Commonwealth Office has declined to make an official comment about the attacks.
Parliamentary elections poised to take place in December
Kuwait’s cabinet has approved a draft decree proposing that elections for the National Assembly be held on 5 December.
Newly appointed Emir Sheikh Nawaf al-Ahmad al-Sabah must approve the decree to formally confirm the date. The elections will be critical as Kuwait braces for the financial impact of plummeting oil revenues and expenditure linked to the Covid-19 pandemic.
Kuwait’s cabinet and parliament have historically shared a tenuous relationship that has hindered the implementation of economic reforms such as the long-awaited public debt law, which parliament continues to block.
Anti-government protesters return to streets of Beirut
Lebanese citizens marched through Beirut in October to mark one year since anti-government protests broke out. Protesters called for the resignation of Beirut governor Riad Salameh, and marched to the site of the Port of Beirut blast.
Socioeconomic turmoil has ravaged Lebanon amid the government’s failure to implement urgently needed reforms.
Prime Minister Hassan Diab resigned a week after the port blasts. His successor, Mustafa Adib, stepped down after three weeks in office. Saad Hariri has now been reappointed as prime minister, conditional on reforming a functioning cabinet.
New government formed amid economic turmoil
A new government headed by Prime Minister Bisher al-Khasawneh has been formed in Jordan as the country grapples with an impending economic crisis.
In a royal decree issued on 12 October, Al-Khasawneh was confirmed as both prime minister and minister of defence, while his cabinet appointments were also approved.
The new Jordanian cabinet includes 31 ministers, eight of whom have been retained from former Prime Minister Omar al-Razzaz’s government. These incumbents include Minister of Energy & Mineral Resources, Hala Zawati, and Minister of Finance, Mohamad al-Ississ.
The retention of Al-Ississ comes at a critical time as Amman contends with a deepening fiscal crisis. The finance minister played a vital role in negotiating Jordan’s four-year extended fund facility worth $1.3bn, which was approved with the Washington-based IMF in March.
The deal will allow Jordan to access $3bn in finance through concessionary loans and grants from major Western donors.
> The Algerian Ministry of Energy is planning urgent measures to mitigate the impact of Covid-19, including slashing the investment budgets of national oil and gas firms Sonatrach and Sonelgaz, with the aim of saving $1.16bn. The ministry also plans to cut their operating budgets by 17 per cent.
> Phase three trials of adenovirus-based vaccine Sputnik-V have commenced in the UAE under sovereign wealth fund Russian Direct Investment Fund’s partnership with Aurugulf Health Investment. The tests come after the UAE was chosen for Chinese firm Sinopharm’s phase three vaccine trials in July.
> Cairo expects $1bn-worth of investment in infrastructure serving the Suez Canal during 2020 and 2021. Minister of Planning & Economic Development, Hala Saeed, said investment in upgrading and expanding this infrastructure will continue despite disruption caused by the pandemic.
> Rabat has allocated 11 per cent of its GDP to revive the economy in the aftermath of the Covid-19 crisis. Seven per cent of the allocation will be earmarked for state guarantees and the rest for the newly formed Mohammed VI Investment Fund, which is expected to lean on banks to encourage public-private partnerships in Morocco.
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