Mubasher: S&P Global Ratings said that sovereign borrowing in the Middle East and North African (MENA) region may decline by 6% in 2018 following a drop of 30% in 2017.
Titled " Sovereign Debt 2018”, S&P’s report said it expects borrowing in the MENA region to shrink to $181 Billion.
“Fiscal consolidation measures in all Gulf Cooperation Council (GCC) countries and higher oil prices will likely reduce GCC sovereigns' funding needs,” S&P noted.
S&P projects that the 13 MENA sovereigns to borrow about $181 billion this year from domestic and international commercial sources; this amount is down $11 billion when compared to 2017.
This decrease seen attributed to fiscal consolidation measures across the GCC and the uptick in oil prices, which will likely push down net-oil-exporting governments' financing needs.
S&P expects Egypt to remain the largest borrower with $46.4 billion, or 26% of the MENA region's gross commercial long-term borrowing, followed by Iraq with $35 billion or 19% of the total, and Saudi Arabia with a borrowing of $31 billion or 17% of total.
“We expect MENA sovereigns' absolute commercial debt will increase by $21 billion to about $764 billion at year-end 2018, up 3% from 2017,” S&P said.
Nearly 40% of MENA sovereigns' $181 million of gross borrowing this year will be allocated for refinancing maturing long-term debt, resulting in an estimated net borrowing requirement of $108 billion.
Total debt is forecast to reach about $860 billion, a year-on-year increase of $13 billion, or 2%. However, the share of non-commercial official debt may decline to 11% of total sovereign debt as of year-end 2018, from 12% in 2017.
“We expect that outstanding short-term commercial debt will fall to $131 billion by the end of this year,” S&P said.
