According to a recent report by S&P Global ratings, “The Middle East and North African region with thirteen major countries have forecasted a major upsurge in their long-term borrowings to be at a whopping 25 percentage touching an aggregate $136 Billion (Dh499.5Bn) in 2019.” These would support all the governments to finance the ongoing fiscal deficits and as well as curb the debt levels in the region.
According to S&P Global ratings, Saudi Arabia kingdom, its largest economy will emerge as the leader with a whopping 22 percent of the overall kingdom’s long-term borrowings valued at a whopping $29bn in 2019. Egypt followed the leader close behind at long-term borrowings worth 20 percent and valued at $28bn, wherein Lebanon comes close third with an overall 14 percent surge.
These measures have now restored the fiscal deficits for the first time since the oil-powered Arab world economic incomes tanked in 2014.
This also has curbed the diminishing liquid reserves to maintain ample liquidity in regions, diversification of funding resources, as well the demand and supply chain. Thus, the Mena region would refinance the maturing long-term debt at 44 percent Sovereigns ($136Bn) in 2019, with a surge of total estimated net worth borrowing demand worth $76Bn.
S&P Rating agency also stated that “Qatar, Bahrain, Oman under GCC central governments have focussed their economic policies centered around debt issuance strategy rather than Asset-based machinery.”
Although Saudi Arabia has been the undisputed leader while it comes to maintaining huge reserves of long-term borrowings for near future, they have an unlikely dispute when it comes to issue debts and keep liquid part of the assets background. However lesser known emerging regions like Abu Dhabi and Kuwait are opportunistically and optimally issuing liquid assets to curb the deficits.
According to S&P global Mena regions long-term borrowing ratings, they have placed Oman, Qatar, Abu Dhabi, and Kuwait in AA-rated sovereign bond category as they have huge expectations especially with Kuwait’s new debt law that will surge its current debt ceiling. This will allow these regions to issue 18 percent of the long-term sovereign, up by eight percentage shares in the fiscal year 2017-18.
Kuwait, however, will enact another law as previously quoted with an overall forecasting of issuance of $15bn long-term commercial debts as in comparison with zero borrowing debt and maintain surplus liquidity ratio by 2019-2020.