EU Delegation: Lebanon Has Made ‘Only Limited Progress’ on Reformshttps://english.aawsat.com/business/4950916-eu-delegation-lebanon-has-made-%E2%80%98only-limited-progress%E2%80%99-reforms
EU Delegation: Lebanon Has Made ‘Only Limited Progress’ on Reforms
Lebanon's caretaker Prime Minister Najib Mikati heads a cabinet meeting, at the government palace in Beirut, Lebanon April 4, 2024. REUTERS/Mohamed Azakir
EU Delegation: Lebanon Has Made ‘Only Limited Progress’ on Reforms
Lebanon's caretaker Prime Minister Najib Mikati heads a cabinet meeting, at the government palace in Beirut, Lebanon April 4, 2024. REUTERS/Mohamed Azakir
The Delegation of the European Union to Lebanon said Friday that the country has made “only limited progress” since April 2022 when it agreed on a program of actions and reforms with the International Monetary Fund (IMF).
“Its implementation would have unlocked over $3 billion in assistance, additional support from donors, put Lebanon back on the path of economic recovery and restored its international credibility,” the EU delegation said in a statement.
“Unfortunately, since then, only limited progress has been made,” it said.
According to the statement, the situation in Lebanon “could and should serve as a driver for change.”
It said it was “critical” to elect a president and form a fully functioning government. “But a delay should not hinder the implementation of agreed key reforms, in order to restore the trust of international actors and Lebanese citizens in the financial system.”
“The adoption of the 2024 budget within constitutional deadlines, the reforming of the bank secrecy law and the stabilization of the exchange rate, have shown that where there is a will, there is a way,” said the statement.
The delegation stressed that structural reforms are necessary to avoid the country being trapped in a perpetual cycle of crises.
“Decisive leadership is needed. The answers to Lebanon’s economic crisis can only come from within Lebanon,” it said.
“The time to act is - always – now,” the statement added.
Fitch Affirms Saudi Arabia at 'A+', Outlook Stable
A view of the Saudi capital, Riyadh. (SPA)
Fitch Ratings has affirmed Saudi Arabia's Long-Term Foreign-Currency Issuer Default Rating (IDR) at "A+" with a Stable Outlook, the agency said on Friday.
The rating reflects strong fiscal and external balance sheets, with government debt/GDP and sovereign net foreign assets (SNFA) considerably stronger than the "A" and "AA'" medians, and significant fiscal buffers in the form of deposits and other public sector assets, it added.
"Oil dependence and World Bank Governance Indicators (WBGI) have improved but remain weaknesses. Geopolitical risk is high, but the economy and public finances have been resilient to the US-Iran war," it stressed.
"Fitch forecasts real GDP growth will slow to 0.6% in 2026 due to disruption to trade caused by the closure of the Strait of Hormuz," it continued.
"Flows through the East-West pipeline supported oil production during the war and we expect output to be ramped up to meet external demand following the reopening of the Strait and to rebuild domestic stocks, but at an annual average of 9m b/d it will be below the 2025 level," it said.
"Non-oil growth will be hit by an inability to export petrochemicals during the closure of the Strait, but consumer spending held up and business confidence is recovering."
"Growth will rebound in 2027 as the normalization of flows through the Strait allows higher oil and petrochemicals production, before easing to 2.9% in 2028 The phased opening of gigaprojects (many of which have launched initial operations), the proximity of key events and guidance that the Public Investment Fund will keep domestic spending largely unchanged in its new five-year plan, will also support growth," Fitch noted.
The King Fahd Industrial Port in Yanbu, Saudi Arabia (SPA)
"The fiscal deficit is projected to narrow in 2026 owing to higher oil revenues, as prices will offset lower volumes. Spending will also rise, reflecting the impact of the war, but much of the jump in 1Q was the precautionary frontloading of spending from later in the year," it said.
Fitch forecasts that lower oil revenues will widen the deficit to 4.7% in 2027, consistent with a fiscal breakeven oil price of USD94/b.
Spending is expected to decline in 2027, due to an easing of war-related pressures, lower capex and ongoing efforts to reduce rigidities in current spending. Expenditure adjustment will allow the deficit to narrow in 2028 despite a projected further fall in oil prices.
"Our fiscal projections are consistent with a further increase in debt/GDP, which we project at 41.3% at end-2028 (projected peer median of 58.1%), from 31.8% at end-2025. based on deposits remaining around 10% of GDP," said Fitch.
"Fitch forecasts a small current account surplus for 2026 due to higher oil export revenues. Lower oil prices and ongoing domestic demand growth that has a heavy component of imported goods, services and labor, will lead to a deficit of 5% of GDP by 2028. Current account deficits will be financed by external borrowing and the ongoing reorientation of public assets to domestic from foreign investments," it continued.
"Banks have been resilient to the war and did not require any support measures from the central bank," it stressed. "At end-1Q, non-performing loans were 1.1% and the Tier 1 capital ratio 19.2%, both improved from end-2024. Credit growth has slowed, particularly mortgages, in response to policy measures, and is being outpaced by deposit growth."
Fitch maintained its mid-year 2026 sector outlook for Saudi banks at "neutral".
A traditional market in Egypt’s Giza Governorate. (Asharq Al-Awsat)
The renewed US-Iran conflict in the Middle East is expected to further curb Egypt’s economic growth prospects as global oil prices are forecast to rise again, while several sectors of the economy continue to grapple with the effects of months of conflict, analysts say.
In its latest World Economic Outlook report released days ago, the International Monetary Fund (IMF) lowered its forecast for Egypt’s economic growth in fiscal year 2026-27 to 4.4 percent, down from the 4.8 percent projected in April. The IMF cited “the continuing impact of the Iran conflict — particularly the closure of the Strait of Hormuz — on the Middle East, weaker investment, higher financing costs, and persistent uncertainty.”
Economist Wael El-Nahas said the downgrade is “not limited to Egypt but reflects the global economy as a whole in light of the conflict’s repercussions,” describing the revision as both natural and expected.
Speaking to Asharq Al-Awsat, El-Nahas noted that the current period of skirmishes between the two sides could be viewed as a period of tacit understandings, allowing oil supplies to keep flowing while limiting sharp increases in food prices and other commodities. However, he warned that a renewed conflict would bring “a much worse period.”
Financial markets researcher Mohamed Mahdy Abdulnabi told Asharq Al-Awsat that geopolitical tensions are the main driver behind the weaker growth outlook.
He said Egypt faces several challenges under the current circumstances, including higher borrowing costs, greater reluctance among lenders to extend new financing, declining foreign investment, stagnation in the private sector, and continued losses at the Suez Canal.
President Abdel Fattah al-Sisi has previously estimated the canal’s losses at $10 billion, citing regional tensions and their impact on Red Sea shipping.
Abdulnabi warned that if the conflict persists, pressure on Egypt’s economy will intensify. “When global oil prices fell below $70 a barrel, the Egyptian government did not cut domestic fuel prices. But as soon as prices began rising again, discussion resumed over the automatic fuel pricing mechanism and the need to increase fuel prices,” he remarked.
The government raised fuel prices by between 14 and 30 percent last March, just 10 days after the US-Iran conflict erupted, amid rising energy import costs.
El-Nahas warned that global oil prices could climb above $100 a barrel, noting that Egypt’s current state budget is based on an assumed oil price of about $75 a barrel. Any increase, he said, would raise the country’s energy import bill and widen the budget deficit. He also cautioned that it could trigger another round of fuel price hikes, further worsening the cost-of-living crisis.
Egypt’s annual inflation rate stood at 14.3 percent in June, down slightly from 14.6 percent in May.
Despite the risks, El-Nahas stressed that some sectors, particularly tourism, still have strong growth prospects despite the renewed US-Iran conflict.
China Temporarily Bans Helium Exports as US-Iran Tensions Flare Againhttps://english.aawsat.com/business/5294483-china-temporarily-bans-helium-exports-us-iran-tensions-flare-again
China Temporarily Bans Helium Exports as US-Iran Tensions Flare Again
Ships and containers at a Chinese port (Reuters)
China announced on Friday a temporary export ban on helium, effective immediately, as resumption of military conflict in the Middle East threatens to trigger new shortages of the gas critical for chip manufacturing.
Earlier this year, the US-Israeli war on Iran led to helium shortages, disrupting companies globally, including in China, where the AI industry increasingly relies on domestic chips for training and running AI models. Helium is essential for heat management in semiconductor production.
The helium ban is the latest example of Beijing seeking to prevent domestic shortages of critical materials by curbing exports. It has previously imposed similar measures on fuel, fertilizers and sulfuric acid.
China is also looking to boost domestic chip manufacturing capacity and reduce the industry's dependence on cutting-edge Nvidia semiconductors that fall under US export controls.
China is heavily dependent on overseas helium despite efforts to expand domestic production.
Still, the export ban could squeeze global supply further because Chinese companies have increasingly acted as intermediaries, importing Russian helium and re-exporting some volumes to overseas markets, including Europe.
According to Reuters, analysts estimate China imports around 85% or more of its helium requirements. Qatar accounts for a major share of global helium output and has supplied more than half of China's imports in recent years.
Helium is extracted from natural gas fields with unusually high helium concentrations and cannot be quickly manufactured from other industrial processes.
In chipmaking, it is used for wafer cooling, plasma etching, chemical vapor deposition, atomic layer deposition, lithography support and leak detection.
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