MENA Sovereign Borrowing To Surge 25% In 2019

Sovereign long-term commercial borrowing in the Middle East and North Africa (MENA) region could increase by 25 percent this year after falling 38 percent in 2018, according to a new report from S&P Global Ratings.

According to the report, the increase in 2019 is largely driven by higher oil prices and fiscal consolidation measures in the countries of the GCC “significantly” reduced sovereigns’ funding needs in 2018.

The report added that lower oil prices in 2019 will not support a further reduction in GCC fiscal deficits.

Additionally, the report said Kuwait, Egypt and Iraq are expected to significantly increase their gross commercial long-term borrowing in 2019 compared to the previous year.

S&P added that it expects approximately 44 percent of MENA sovereigns’ $136 billion of gross borrowing to go towards the refinancing of long-term debt, which in turn will lead to an estimated net borrowing of $76 billion.

Total debt is expected to reach about $892 billion, a year-on-year increase of $85 billion, or 11 percent. S&P added that it expects outstanding commercial debt with an original tenor of less than one year to rise as high as $169 billion by the end of 2019.