The International Monetary Fund indicated that the UAE's economy continues to adjust to the mid-2014 oil price shock. It noted that activity in the non-hydrocarbon sector remains subdued due to ongoing corporate restructuring, a prolonged downturn in the real estate sector and tighter global financial conditions. It projected the UAE's real GDP growth to accelerate to 2.9% in 2018 and 3.7% in 2019, supported by higher oil production and increased government spending. It said that the government has started its economic stimulus plan amid large fiscal buffers, ample spare capacity, and rising investment needs for Expo 2020. It added that front-loading stimulus measures with a focus on productive spending would enhance the stimulus' impact on economic growth. It forecast the inflation rate to average 3.5% in 2018 due to the introduction of the value-added tax, but it noted that the inflation rate will moderate thereafter. It projected the current account surplus to exceed 7% of GDP in 2018-19.

Further, the Fund expected the fiscal deficit to remain at 1.6% of GDP in 2018, and to shift to a surplus in 2019. It considered that fiscal easing is necessary in the near term. However, it said that authorities should gradually return to a growth-friendly fiscal consolidation, as it forecast oil prices to moderate over the medium term. It noted that increased monitoring of contingent fiscal liabilities stemming from the borrowing by government-related entities (GREs), as well as from delays in payments and from public-private partnerships, would help mitigate fiscal risks. 
Source: International Monetary Fund

Jadwa Investment indicated that Saudi Arabia's 2019 preliminary fiscal budget revised the country's fiscal indicators for the 2018-21 period. It said that the 2019 budget estimated the fiscal deficit at 5% of GDP in 2018 relative to 7.9% of GDP previously, and is targeting a deficit of 4.1% of GDP in 2019 compared to an earlier forecast of 5.9% of GDP. It noted that the government increased its revenue estimate from SAR783bn to SAR882bn, or 30.1% of GDP in 2018, and raised its target revenues for 2019 by SAR135bn to SAR978bn, or 31.2% of GDP. Further, Jadwa indicated that the 2019 preliminary budget earmarked higher spending, mostly due to the reinstatement of allowances and to cost of living increases in 2018. It anticipated the public-sector wage bill to account for up to 45% of total expenditures by 2020. It projected capital spending to rise by SAR33bn, or by 15% year-on-year, to SAR250bn in 2019. In addition, Jadwa indicated that the government revised upwards its public debt projections to SAR576bn or 20% of GDP in 2018 and to SAR848bn or 25% of GDP by 2021. It added that the 2021 debt ratio will be below the government's 30% of GDP limit. It said that the government's debt stock will increase by SAR102bn in 2019, of which about 50% will come from domestic sources amid ample domestic liquidity, and the remainder from international issuances. In parallel, it noted that the Ministry of Finance expected real GDP growth to average 2.25% annually in the 2018-21 period.
Source: Jadwa Investment

Capital Intelligence Ratings upgraded from 'B' to 'B+' the long-term foreign currency ratings (FCRs) of National Bank of Egypt (NBE), Commercial International Bank (CIB), QNB Al Ahli Bank, Arab African International Bank, Banque du Caire, Arab International Bank, Bank of Alexandria and the Export Development Bank of Egypt. It revised the outlook on all the banks' ratings from 'positive' to 'stable'. It attributed its rating actions to its similar action on Egypt's sovereign ratings, as Egyptian banks' FCRs are strongly correlated with the sovereign's creditworthiness. Further, it affirmed the banks' Financial Strength Ratings, with a 'stable' outlook. In parallel, Fitch Ratings affirmed at 'B' the long-term issuer default ratings of NBE and CIB and revised the outlook on the ratings from 'stable' to 'positive', in line with the outlook revision on the sovereign ratings. It added that the 'positive' outlook reflects the improving operating environment for Egyptian banks. It also maintained at 'AA+' the national long-term rating of Crédit Agricole Egypt with a 'stable' outlook, reflecting the support from its French parent. Further, S&P Global Ratings upgraded from 'B-' to 'B' the long-term issuer credit ratings of NBE and Banque Misr, and revised the outlook from 'positive' to 'stable'. It also affirmed at 'B' the long-term issuer credit rating of CIB with a 'stable' outlook. It attributed the rating actions to the ongoing recovery in economic activity amid sustained reforms, rising foreign currency reserves, as well as to lower credit risks and a moderate level of problem loans in the banking sector. 
Source: CI Ratings, Fitch Ratings, S&P Global Ratings