Fitch Ratings indicated that global government debt reached $66 trillion at the end of 2018, nearly twice its 2007 level and equivalent to 80% of global GDP. It said that government debt in Developed Markets (DMs) reached $51 trillion at end-2018, largely unchanged since 2012, while Emerging Markets' (EMs) government debt rose from $10 trillion to $15 trillion during the same period. It noted that 93% of global government debt carried an investment grade rating of 'BBB-' or higher at the end of 2018. It added that 11 'AAA'-rated sovereigns accounted for about 40% of global government debt, with the U.S. holding 32% of the total. Also, Japan and China, which are both rated in the 'A' category, held the second and third largest government debt stock of $12 trillion and $6 trillion, respectively, at the end of 2018. Further, Fitch pointed out that the number of sovereigns rated in the 'B' category or lower increased sharply in recent years, due to the downgrade of several 'BB'-rated commodity-exporting countries since 2014. It said that sovereigns in the 'B' category or lower accounted for 28% of the rated sovereigns, but that they accounted for only 3% of global government debt at end-2018. In parallel, the agency indicated that the credit quality of government debt deteriorated in recent years, as the debt-weighted average rating in DMs stood at slightly lower than 'AA' at end-2018, which is one notch below the average rating in 2011. It added that the debt-weighted average rating in EMs excluding China was slightly below 'BB+', its lowest level since 2005. In parallel, Fitch indicated that interest payments on the global debt reached a record high of $1.7 trillion in 2018, with investment-grade sovereigns paying 84% of the total. 
Source: Fitch Ratings

Global non-governmental organization Transparency International included 21 Arab countries on its 2018 Corruption Perception Index (CPI), which measures the perceived level of public sector corruption in 180 countries worldwide. The rankings are based on scores that range between zero and 100 points, with lower scores reflecting economies perceived as more corrupt. The UAE was perceived as the least corrupt Arab country and ranked in 23rd place globally. It was followed by Qatar (33rd), Oman (53rd), Jordan and Saudi Arabia (58th each), and Morocco and Tunisia (73rd each); while Libya (170th), Sudan (172nd) and Yemen (176th), Syria (178th) and Somalia (180th) were perceived as the most corrupt countries in the region. Arab countries received an average score of 34 points in 2018 relative to 33 points in the 2017 survey, lower than the global average of 43 points. The Arab economies' average score was higher than that of Sub-Saharan Africa (32 points), but it was lower than the average scores of the European Union & Western Europe (66 points), Asia Pacific and the Americas (44 points each), and Eastern Europe & Central Asia (35 points). Also, Gulf Cooperation Council (GCC) countries received an average score of 52 points in the 2018 survey compared to 50 in the 2017 survey, while non-GCC Arab countries had an average score of 27 points, unchanged from the 2017 survey. 
Source: Transparency International, Byblos Research

Bank of America Merrill Lynch (BofAML) expected Saudi Arabia's fiscal deficit to widen from $36bn, or 4.6% of GDP in 2018, to $61.5bn, or 7.7% of GDP in 2019, in case oil prices average $70 p/b during the year. It noted that the actual deficit in 2019 would miss the government's 2019 budget target of a deficit of $34.9bn, or 4.2% of GDP, as it considered that budgeted oil and non-oil revenues are difficult to reach. It said that budgeted oil revenues for 2019 are consistent with an average oil price of $80 p/b and oil production of 10.2 million b/d, without any changes in domestic energy prices. Also, it did not expect the government's decision to lower the value-added tax registration threshold to add significant revenues, while it anticipated proceeds from expatriates' levies to fall short of targets. Further, it said that spending remains tight, with a focus on capital expenditures to support the non-oil economy, while it considered that the budgeted drop in the public-sector wage bill is unlikely to materialize. In addition, it projected the fiscal breakeven oil price at $93.6 p/b in 2019, up by $8 p/b from 2018 and by $13 p/b from 2017. It said that the gradual and sticky increase in the fiscal breakeven oil price, along with the relative erosion of fiscal buffers since 2014, exposes the economy to a sustained drop in oil prices.

Further, BofAML expected the Kingdom's external financing needs at between $22bn and $33bn in 2019, in case oil prices average $70 p/b, which it plans to raise through bond and sukuk issuances, as well as through loans. It projected the country's external borrowing needs to increase to between $30bn and $46bn in 2019, in case oil prices averaged $60 p/b, as the fiscal deficit would reach 11% of GDP in this case. 

In parallel, BofAML projected real GDP growth at 1.6% in 2019, compared to the government's forecast of 2.6%, and anticipated non-hydrocarbon real GDP growth at 2.3% this year, unchanged from the preceding year.
Source: Bank of America Merrill Lynch