Mubasher: Sovereign borrowing across the Middle East and North Africa (MENA) region is forecast to increase by 20% in 2019, according to a recent report by S&P Global Ratings, Arab News reported.
The 13 countries in the MENA region plans to refinance long-term debt and cover fiscal deficits, S&P said.
The long-term borrowing in the MENA region is expected to reach about $136 billion in 2019, compared to $109 billion in 2018, when issuances registered a decrease of 38%, S&P Global noted, according to Arab News.
The rating agency has concluded Saudi Arabia, Egypt, Lebanon, Kuwait, and Morocco in its recent report about sovereign borrowing.
“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,” S&P’s report said, according to Arab News.
Kuwait, Egypt, and Iraq are projected to significantly raise their gross commercial long-term borrowing during 2019 when compared to 2018, S&P said.
It added, “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.”
During 2019, nearly 44% of the borrowing will go toward refinancing maturing long-term debt, resulting in an estimated net borrowing requirement of $76 billion, S&P expects, according to Arab News.
S&P’s report expects Saudi Arabia to have the highest level of commercial long-term borrowing across the region, with forecast borrowing of $29.3 billion in 2019, down from $29.6 billion in 2018.
Kuwait is forecast to register the biggest rise in commercial long-term borrowing of all the 13 countries in the MENA region.
“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,” S&P said, according to Arab News.
Egypt is expected to register a rise in borrowing up to $27.6 billion during 2019, higher from $17.7 billion a year ago, S&P said.
