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.
North Africa/Middle East
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.
Middle Eastern carrier Etihad Airways has submitted a bid for a stake in India’s Jet Airways, the unit of State Bank of India (SBI) overseeing the sale of the stricken airline said on Friday, Reuters reported. SBI had invited binding bids for a stake in the airline, which is saddled with roughly $1.2 billion in bank debt. Binding offers were due by 1800 IST (1230 GMT) on Friday. Etihad, which already holds a minority stake in Jet, is interested in re-investing in the airline, subject to certain conditions, a spokesman for the Middle Eastern carrier said earlier on Friday.
Lebanon's president called on Tuesday for approval of the 2019 draft budget by the end of May in order to launch long-stalled economic reforms, though military veterans fearing pension cuts took to the streets, the International New York Times reported on a Reuters story. Wrestling with one of the world's heaviest public debt burdens and years of low growth, the Lebanese government has promised reforms which economists deem more pressing than ever. But it risks public anger if it trims wages, pensions or benefits in its massive public sector bill.
Arif Naqvi, the founder of buyout fund Abraaj Group, was denied bail by a London judge Friday after prosecutors said he may flee to Pakistan rather than face U.S. fraud charges, Bloomberg News reported. Judge Emma Arbuthnot denied Naqvi’s request after prosecutors said the 58-year-old wrote down the phone number of the Pakistani president when he was arrested earlier this month. Naqvi appeared at Westminster Magistrates Court for the latest stage of his extradition battle following his arrest this month on American charges of defrauding investors.
Iranian authorities have a new target in their bid to calm the country’s economic turmoil: meat-market manipulators, The Wall Street Journal reported. During the two-week celebration of the Persian New Year that ended April 5, Iranians found that putting food on their tables is far more expensive than before. The price of veal and beef increased 67% last year, while mutton had jumped 52% and chicken had become 63% more expensive, the Central Bank of Iran said.
A Saudi court has rejected two applications from conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB) to have its decade-long dispute with creditors resolved under the kingdom’s new bankruptcy law, AHAB said on Tuesday, Reuters reported. The case was seen as a key test of the kingdom’s new regime for handling insolvency disputes. Creditors have been pursuing AHAB and Saad Group, another Saudi conglomerate, since they defaulted on about $22 billion in combined debt in 2009.