Palestinian finances are on the brink of ruin after the suspension of hundreds of millions of dollars of U.S. aid, the head of the Palestine Monetary Authority (PMA) said on Tuesday, Reuters reported. The mounting financial pressures on the Palestinians’ self-ruling entity have sent its debt soaring to $3 billion (£2.3 billion), and led to a severe contraction in its estimated $13 billion GDP economy for the first time in years, Azzam Shawwa told Reuters.
North Africa/Middle East
Three additional former executives of The Abraaj Group were charged in New York in a fraud investigation into the firm’s collapse last year that was the world’s biggest private-equity insolvency, Bloomberg News reported. Former Chief Financial Officer Ashish Dave, former Managing Director Rafique Lakhani and former Managing Director Waqar Siddique were charged with multiple counts including fraud and conspiracy, in an indictment unsealed Thursday. James Margolin, a spokesman for Manhattan U.S. Attorney Geoffrey Berman, declined to say whether any of the men are in custody.
The Dubai International Financial Centre (DIFC) has enacted a new insolvency law which it said meets international best practice guidelines, International Adviser reported. The new Insolvency Law and Regulations, which comes into effect on 13 June 2019, creates a new debtor in possession bankruptcy regime which it said will place the DIFC “at the forefront of complicated debt restructurings”. Essa Kazim, governor of DIFC, said: “Ensuring that businesses and investors can operate across the region with confidence is crucial to our role in connecting the economies of East and West.
Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum issued a new insolvency law on Tuesday for companies operating in the Dubai International Financial Centre (DIFC), the largest financial hub in the Middle East, Africa and South Asia, Reuters reported. The new law, due to come into effect in August, has been issued following the collapse of Dubai-based private equity firm Abraaj, which had a DIFC-regulated entity Abraaj Capital.
Lebanon’s plan to bring its budget deficit back into single digits is a step in the right direction, but it needs to regain market access to keep default concerns at bay, Fitch’s rating analyst said on Thursday, Reuters reported. Heavily indebted Lebanon’s government approved a 2019 budget on Monday including deep spending cuts to narrow its projected deficit to 7.6% from 11% of gross domestic product (GDP) and stave off a financial crisis. Fitch put a ‘negative outlook’ - effectively a downgrade warning - on its ‘junk’ B- Lebanon rating in December.
Heavily indebted Lebanon has unveiled an unprecedented plan to bring its public finances under control but faces an uphill struggle to restore investor confidence that is needed to stave off crisis, Reuters reported. After years of backsliding on reform, fear of economic catastrophe has forced action on Lebanese leaders who have overseen the post-civil war policies that landed the country with one of the world’s heaviest public debt burdens. Minds in Beirut have been focused by years of low economic growth and a slowdown in deposit growth in the banking sector.
A Saudi commercial court has accepted a filing by conglomerate AHAB to have its decade-long dispute with creditors resolved under the kingdom’s new bankruptcy law, and rejected a demand to liquidate the company filed by two of its creditors, sources familiar with the matter said, Reuters reported. The bankruptcy filing was seen as a key test of Saudi Arabia’s new law for handling insolvency disputes, which became effective last year as part of reforms aimed at making the country more investor friendly.
Egypt’s government debt surged to around $339 billion in the year to end-December, the central bank said on Tuesday, but economists say the borrowing remains within relatively safe limits, Reuters reported. The government’s foreign debt rose by 16.6 percent to $96.61 billion while domestic debt increased by 20.25 percent to 4.108 trillion Egyptian pounds ($242 billion). Economists say much of the foreign debt is relatively easy to roll over because it is owed to friendly lenders such as Gulf governments or the African Development Bank and the World Bank.
From retired soldiers fighting for their pensions to striking central bank staff, few in Lebanon feel they’ll be spared what the government is touting as the most austere budget in their country’s history, Bloomberg News reported. One of the world’s most indebted nations has little time to spare after decades of fiscal overreach and mismanagement of public finances.
Lebanon is eyeing the debt markets nervously. The country, which is lining up a $2.5bn bond sale partly to pay off $650m coming due on Monday, was hoping to capitalise on improved investor sentiment after it finally formed a government in February. But the timing is unfortunate — that new cabinet still has not come up with a budget for 2019. Emerging market investors are in a generally forgiving mood.