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The “Corona” epidemic increased foreign holdings of Arab debt securities after governments resorted to early borrowing to deal with the impact of the epidemic, and economic growth slowed, foreign holdings of bonds Egyptians having risen to over $ 10 billion.
This trend has affected all parts of the region, as 6 Arab countries issued a record number of government and corporate debts worth $ 100 billion in the first ten months of the year.
A report by The Economist saw the Corona epidemic as a driver of rising demand for borrowing from Arab countries, which began before being affected by falling oil prices and slowing the economy .
The report, which was reviewed by “Al Arabiya.net”, predicted that by next year, the public debt ratio in GCC countries will reach its highest level in two decades.
The average size of the debt reached 25% of the GDP of eleven oil-exporting Arab countries during the period between 2000 and 2016, this percentage could increase sharply to 47% of the GDP of these countries according to the expectations of the International Monetary Fund, and the increase will be less pronounced in Arab countries, which do not have many energy resources, as some of them already have the highest levels of debt in the world.
The Economist believes that there is no need to worry, especially since some Gulf Cooperation Council countries have strong central banks, sovereign wealth funds, as well as low cost of capital, such as the return on the fall in Eurobonds issued by Saudi Arabia for 35 years in January / January is less than 4%.
Bahrain’s debt-to-GDP ratio is expected to rise to 131% next year, up from 34% on average between 2000 and 2016.
Oman’s debt will reach 89% of GDP, nearly seven times the historical benchmark, and both were largely excluded from bond markets earlier this year.
Elsewhere in the region, the epidemic reversed years of tax reform, as Egypt struck a $ 12 billion deal with the International Monetary Fund in 2016 that resulted in subsidy cuts and the imposition of value added tax.
Reform plans led to reducing the deficit from 11% of GDP in 2016 to 7% last year, and Egypt was on track to reduce the debt-to-GDP ratio to 79% by 2021. However, the epidemic sent it back to the International. Monetary Fund to secure a reserve deal of $ 5.2 billion. Next year, its debt is expected to drop to 91% of GDP. Jordan will lag behind by 89% and Tunisia by 86%.
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