The Institute of International Finance projected Sudan's real GDP to retreat by 1.4% in 2019 following a contraction of 1.1% in 2018 due to subdued domestic demand, and then to expand by 2.3% in 2020, in case a new leadership reduces political uncertainties, and if investment and net exports pick up. The IIF said that, in the absence of access to international capital markets and of support from official sources due to longstanding sanctions, the government resorted to the monetization of the deficit, which led to an average inflation rate of 64.7% in 2018. It pointed out that the sharp depreciation of the Sudanese pound has exacerbated the increase in prices and forecast the inflation rate to average 36.5% in 2019 and 30% in 2020, even if authorities commit to a tighter monetary policy.

In parallel, the IIF projected the fiscal deficit to widen from 1% of GDP in 2018 to 1.3% of GDP in 2019, and to narrow to 0.8% of GDP in 2020, in case authorities step up fiscal consolidation efforts, including by reorienting spending and lifting inefficient subsidies. It said that the government debt level surged to 148.6% of GDP in 2018 following the sharp depreciation of the pound, as 90% of the public debt sock is denominated in US dollars. It forecast the debt level to decline from 158.7% of GDP in 2019 to 120% of GDP in 2020 in case of fiscal consolidation, but considered the lifting of subsidies to be politically challenging.

Further, the IIF projected the current account deficit to narrow from 12.6% of GDP in 2018 to 10.9% of GDP in 2019 and to 7.3% of GDP in 2020, in case exports pick up after the recent sharp depreciation of the pound. It estimated foreign currency reserves at $260m, or 0.3 months of import coverage at end-2018, and expected them to decline to $221m, or 0.2 months of imports at end-2019, but to recover to $943m, or one month of import coverage at end-2020. It said that fiscal adjustment and monetary discipline are critical to stabilize the inflation rate, mitigate external vulnerabilities and stimulate long-term growth prospects. 
Source: Institute of International Finance

The International Monetary Fund considered that the Egyptian banking system is liquid, profitable and well capitalized, with limited and well-provisioned non-performing loans (NPLs). It indicated that the sector's capital adequacy ratio stood at 15.6% at end-June 2018, which is above the Basel-recommended floor of 9.875% and the Central Bank of Egypt's (CBE) mandated ratio of 11.875%. It also noted that the banks' non-performing loans ratio declined from 4.9% at the end of 2017 to 4.3% at end-June 2018. However, the IMF pointed out that some large state-owned banks have breached the regulatory limits on net open foreign exchange positions, which could weaken banking supervision, hinder financial stability, and may expose banks to exchange rate risks. As such, it welcomed the CBE's decision to strengthen the enforcement of regulatory rules on open foreign exchange positions and to penalize any bank that violates the limits. Further, the Fund noted that Egypt's two largest public banks are financially stable, but could require additional capital in the coming two years in case strong lending growth persists. It said that authorities are reviewing the National Investment Bank's operations and finances, given the bank's systematic importance, and will develop a plan with a revised mandate, business model and financial structure. It added that several smaller banks with below-average financial metrics require the CBE's continued monitoring.
Source: International Monetary Fund

Total fixed income issuance in Gulf Cooperation Council (GCC) countries reached $36.6bn in the first quarter of 2019, up by 21.2% from $30.2bn in the same quarter of 2018. Aggregate fixed income in the first three months of 2019 consisted of $21.7bn in sovereign bonds, or 59.3% of the total, followed by sovereign sukuk at $6.6bn (18%), corporate bond issuance at $4.8bn (13.1%), and corporate sukuk at $3.5bn (9.6%). Aggregate bonds and sukuk issued by GCC sovereigns reached $28.3bn, or 77.3% of total fixed income issuance in the region in the first quarter of the year, while bonds and sukuk issued by corporates in the region amounted to $8.3bn or 22.7% of the total. On a monthly basis, GCC sovereigns issued $12.6bn in bonds and sukuk in January, $1.9bn in February and $13.8bn in March 2019. In parallel, corporates in the GCC issued $1.7bn in bonds and sukuk in January, $2.3bn in February and $4.3bn in March 2019. Sovereign issuance in March 2019 consisted of $12bn in sovereign bonds issued by Qatar, $981.3m in sovereign sukuk issued by Saudi Arabia and $750m in sovereign bonds issued by the UAE. In parallel, corporate issuance in the covered month included $1.65bn in corporate bonds and $1.25bn in corporate sukuk issued by Qatar, $500m in corporate sukuk issued by Saudi Arabia, and $238.8m in corporate bonds issued by the UAE.  
Source: KAMCO