A World in Limbo
Report: May 2022
Various projects are still being implemented by major players within the region, despite the slow-down in growth throughout the world. Photo credit: www.constructionweekonline.com
In spite of the receding global economy as detailed by the IMF, the Middle East is standing firm behind pre-approved projects being implemented. For every challenge that might arise as a result of events surrounding the region, most local governments are standing firm behind well-tailored policies. Unfortunately, others are still lagging behind in terms of tangible progress, due to shadowing state-corruption that is burdening societies at large.
THE SOCIO-ECONOMIC SITUATION
Egypt
According to Fitch Ratings, Egypt is on the right path, despite a large current account deficit. Photo credit: Arab News.
Corona cases, deaths and recovered are distributed as follows:
515,645 corona confirmed cases
442,182 recovered
24,613 deaths
During this month, Egypt was affected by the ramifications surrounding the war in Ukraine and US’s inflation. As the US raises its Federal Reserves rate by 0.5%, Egypt’s economy was impacted; the country will witness foreign capital flight and weak investor interest in local debt instruments such as financial bonds. Concequently, Egypt’s currency most probably will be influenced by the turn of events in the world as energy and food prices increase. Already, the Central Bank of Egypt had already depreciated the Egyptian pound by 14 percent in March, as a result of the Russian-Ukrainian war. As such, Foreign debt is expected to rise even more in the coming months, as Egypt will be struggeling to tend to the needs of its growing population, and meet its financial obligations to other countries and international financial institutions. Combined with high unemployment, Egypt might wonder off into stagflation.
Despite all this, the Egyptian government is fully aware of the challenges of the situation and is coordinating efforts to alleviate the economic burdens on the country. President Abdel Fattah El Sisi directed the government to form a working group that would regularly monitor the import system and follow up on measures taken to meet the needs of the production sector. Moreoer, spending will be increased by 15% as detailed by its draft budget for the fiscal year thus covering important sectors impacted by the war. Gulf states are also on the helm of assisting Egypt: They are transfering 22 billion dollars to overcome the currency crisis. Commenting on this kind of support, Fitch director Krisjanis Krustins is optimistic about what is happening despite the depreciation of the currency and the large account deficit.
Jordan
A general view of the Central Bank of Jordan in downtown Amman, Jordan, July 2, 2019. REUTERS/Muhammad Hamed/File Photo
Corona cases, deaths and recovered are distributed as follows:
1,694,216 corona confirmed cases
1,678,941 recovered
14,048 deaths
Despite the war going on in Europe, the Jordanian economy remains strong. Described as one of the most immune in the region, the economy reflected immunity and solidity due to effective management. According to Prime Minister Bisher Al Khasawneh, the central bank has $17 billion of foreign currency reserves that can be used by local commercial banks. Moreover, the country had registered progress on fiscal consolidation and post-pandemic economic recovery, thus making the country insusceptible to external changes. Additionally, Jordan's stockpile of wheat reserves for over a year and its fuel contracts, provided the necessary conditions to absorb the global fallout.
What daunts the kingdom however is the high unemployment rate that is still a challenge. According to the Finance Minister Mohamad Al Ississ, one in two are unemployed among the youth. As such, it is important to incentivize large companies and wealthy people to hire more people by reducing taxation. In this way, the most vulnerable are protected at the worst times of crisis. As Jordan prepares for summer and the tourists who will flood the country’s sun-drenched cities and beaches, companies will hire additional employees to welcome incoming nationals.
Iraq
The government had signed deals with international companies for the deployment of 7.5 GW of solar capacity. Photo credit: Kurdistan 24.
Corona cases, deaths and recovered are distributed as follows:
2,327,557 corona confirmed cases
2,301,309 recovered
25,218 deaths
Although Iraq benefitted from a major rise in oil prices, other initiatives are still underway to diversify the economy and make it a more sustainable one. For this purpose, Iraq’s Central Bank has dispatched IQD 1 trillion (USD 682.2m/EUR 629.1m) to support the expansion of renewable energy. In cooperation with the with the Ministry of Environment, the Central Bank is backing investments which pour in the Green Energy domain by establishing a committee specifically for this subject. The loans that the Bank will give, will only have administrative fees attached to them. Such a new move by the bank, comes after the government’s signing of deals with international companies for the deployment of 7.5 GW of solar capacity. Chairwoman of the Investment Authority, Suha al Najjar pointed out that the Central Bank has provided the necessary financing and called on local and international investors to take part in the bank's initiative for the construction of solar plants.
Combining green energy with Iraq’s traditional oil production, Iraq has a golden opportunity to cohesively build the country and address challenges. Now more than ever, it is critical for the Iraqi government to set goals that would target dire socioeconomic conditions in the country such as lack of electricity, drinking water and other basic services.
Lebanon
As powerful blocs lose their majority in parliament, Lebanon is being cast into the unknown.
Corona cases, deaths and recovered are distributed as follows:
1,098,791 corona confirmed cases
1,086,039 recovered
10,422 deaths
The month of May was a historic period of time, during which parliamentary elections took place. New and old faces clashed over seats in parliament while voters rushed to their respective ballots to cast their own votes. Surpisingly the number of voters, when compared to the last election period, was at a lower rate. Nevertheless, election day was met with the needed attention from the media and citizens fulfilling their national duties. It was without a doubt a critical period that would define Lebanon’s trajectory over the next few years: whether to continue in its downward trajectory to further stagnation or seek constructive solutions which include a crackdown on corruption and help from the IMF. Needless to say, new faces have secured their seats in parliament while some candidates belonging to the ‘old guard’ were cast aside . The end result was a shift in the balance of power in which the will of the people finally prevailed.
However, economists are skeptical with the new parliamentary line-up as the situation remains to be extremely challenging. Fuel and energy prices are constantly rising thus impacting the price of everything else. As the government is unable to subsidize essential items such as bread and medicine, there is no foreseeable lid on prices; inflation will continue to take its toll thus impacting every Lebanese residing in the country. What’s more, the Lebanese Pound is continuing to devaluate in the parallel market at a dangerous rate. With the high number of unemployment and the lack of well-paying jobs, Lebanon is being forced into stagflation.
Palestine
World Bank: The Palestinian economy will continue to operate below potential without concrete policy actions. Photo credit: MEMO.
Corona cases, deaths and recovered are distributed as follows:
582,363 corona confirmed cases
576,879 recovered
5,356 deaths
In its latest review of the Palestinian economy, the World Bank pointed at the stagnating Humanitarian Aid which had been a point of controversy in state-building. The Trump administration had taken a bid to significantly decrease aid and many other countries followed suit. President Joe Biden did restore part of the Humanitarian Aid yet to little effect. As such, humanitarian aid did very little addressing the root causes of Palestine’s economic deterioration: corruption and colonialism. Nevertheless, international partners continue to dedicate financial support to the beleaguered Palestinian Authority by including a financing scheme containing loans, grants and guarantees. In other words, a new “Palestine Financial Sustainability Programme” was introduced to improve Palestinian Authority’s access to finance, strengthen economic resilience and share financial best practice. It also included financing to help Gazan companies recover from several recent crises, COVID, expand and create jobs as part of a first ever credit facility of this size offered by the European Investment Banks to a Palestinian public institution. Thus, the new support program will entail 60 million Euros designed to sustain employment and reinforce economic resilience. Any new investment by companies will be supported by this fund and the Palestine Monetary Authority, under a broader lending initiative covering the West Bank and Gaza. In other words, the Palestine Monetary Authority, the European Investment Bank and the European Union will cooperate to harness new opportunities for entrepreneurs and the private sector.
Syria
Displaced Syrian children are pictured at a camp near the Turkish border in December 2019 (AFP)
Corona cases, deaths and recovered are distributed as follows:
55,880 corona confirmed cases
52,610 recovered
3,150 deaths
With the war ending throughout much of Syria, many Arab states are diplomatically engaging the current regime in hopes of launching new economic projects. However, the United States is still not so keen on following suit. It prefers strengthening territories outside the control of Damascus. For this reason, the US Treasury Department announced that it will be issuing a general license that authorizes private-sector investment and other activities in non-regime-held areas of northeast and northwest Syria. Private investments are expected to take place in the fields of agriculture, telecommunications, power grid infrastructure, construction, manufacturing, trade, finance, and clean energy. As for oil purchase, it can now be done on condition that it is not used for the benefit of Assad’s government. Similarly, Turkey is planning to build 200,000 and 250,000 housing units in Northern Syria to resettle one million Syrian refugees displaced across its territory.
As for Syria’s humanitarian portfolio, which is impacting the country socioeconomically, international donors have yet to give up on the country. During May, partners at the sixth annual Brussels conference pledged $6.7bn despite the growing humanitarian needs in Ukraine. According to European Commissioner Oliver Varhelyi, the international community is now ready “to do even more than before” to rebuild the country and to ensure a peaceful future. However, donor fatigue, instigated by a global economic depression, is still a palpable issue impacting Syria; donors are no longer able to match immense humanitarian needs with the right sum of money. To make matters worse, Syria’s Assad government slashed its budget from $9bn in 2020 to $5.3bn for 2022, thus reducing subsidies for bread, diesel, cooking gas, petrol, and other essential items. Unsurprisingly, this has impacted Syrians from all walks of life.
Cyprus
Cyprus Finance Minister Constantinos Petrides was optimistic that Cyprus would mitigate the impact of the crisis. Photo credit: www.financialmirror.com
Corona cases, deaths and recovered are distributed as follows:
477,711 corona confirmed cases
124,370 recovered
1,032 deaths
Despite the war concerning Russia and Fitch Ratings lowering the projected economic growth from 3.7% to 3.1%, the agency claimed that the country’s two largest banks are on good track. As such, the Bank of Cyprus only has EUR13 million of deposits in Russian subsidiaries while the Hellenic Bank has EUR20 million of deposits in Russian subsidiaries of European banks. These numbers do not pose a threat to the banks’ capital as they account for only 8% of BoC’s common equity and 5% of HB’s.
Therefore, the banks’ deposits from Russian clients are not large enough to represent a liquidity risk. As for Cyprus’s trade deficits, the Cypriot Statistical Service (CyStat) reported an increase from 429 million euros in February to €729 million in March. Of course, this is due to Cyprus importing higher number of goods when compared to exports. However, Cyprus has succeeded in increasing the volume of its exports when compared to last year’s numbers; it was able to incur an increase by 20.3%. Cypriot Minister of Finance Constantinos, commenting on the general situation in Cyprus and the EU, revealed that the situation is not going to be easy for Cyprus and the entirety of Europe in the coming years ahead. Already, inflation rose by 8.6% in April thus impacting energy and commodity prices.
2. The Refugee Situation
Egypt
· In a side event titled ‘Social and Economic Integration in National Services and Development Programs: Best Practices from Egypt and Iraq’, Nevin Al-Husseini, Deputy Assistant Minister of Foreign Affairs for Immigration, stressed the importance of increasing support to assist Egypt in dealing with refugees. [1]
· The World Food Program released a report detailing that 270,000 people were assisted as part of its drive to improve food security in the poorest villages in Egypt. Additionally, 100,000 refugees were assisted through monthly cash distribution.[2]
· UNICEF implemented a project in which 3,000 families from a poor village in Minya, gained access to drinkable water.[3]
Jordan
The UNHCR states that there are currently 674,458 registered refugees in Jordan up until the beginning of May.
The proportion of Syrian displaced people registered within the UNHCR for May, are distributed as follows:
200,121 in Amman Governorate (29.7 %)
169,556 in Mafraq Governorate (25.2%)
136,128 in Irbid Governorate (20.2%)
98,572 in Zarqa Governorate (14.6%)
18,203 in Balqa Governorate (2.7%)
13,385 in Madaba Governorate (2%)
9,217 in Jarash Governorate (1.4%)
8,626 in Karak Governorate (1.3%)
8,299 in Maan Governorate (1.2%)
6,422 in Ajlun Governorate (1.0%)
3,824 in Aqaba Governorate (0.6%)
1,655 in Tafilah Governorate (0.2%)
· The WFP has released a report in which it claimed that it has distributed food assistance in April, to around 463,000 vulnerable refugees residing in camps and host communities through cash-based transfers.[4]
Iraq
The UNHCR states that there are currently 257,974 registered Syrian refugees in Iraq.
The proportion of displaced Syrian people registered within the UNHCR up until the beginning of May, are distributed as follows:
130,914 in Erbil (50.6%)
85,371 in Dahuk (33.0%)
33,499 in Sulaymaniyah (12.9%)
1,533 in Anbar (0.6%)
7,648 in other areas (2.9%)[5]
· UN agencies based in Iraq are warning that 86 percent of refugees based in the camps, remain food insecure or vulnerable to food insecurity following a string of socio-economic shocks.[6]
· The Government of Japan contributed a generous USD five million to the United Nations High Commissioner for Refugees (UNHCR), renewing its longstanding commitment to improving the lives of vulnerable displaced families in Iraq in 2022.[7]
Lebanon
[For the month of May, the number of distributed refugees has not been updated]
Since April, the number of registered Syrian refugees in Lebanon is 839,086.
Refugees in Lebanon are distributed as follows:
328,354 in Bekaa (39.1%)
228,758 in North Lebanon (27.3%)
190,636 in Beirut (23.1%)
91,338 in South Lebanon (10.9%)[8]
· The WFP increased the transfer value of monthly cash assistance for refugees from LBP 300,000 to LBP 500,000 per capita for food assistance and from LBP 800,000 to LBP 1 million per household for non-food assistance to help beneficiaries better cope with the worsening economic conditions.[9]
· The WFP delivered payments to 28,608 households on behalf of the Government for the Emergency Social Safety Net.
· 83,600 food rations arrived at the port of Beirut for WFP’s crisis response for Lebanese, including 79,000 parcels that were dispatched during April’s cycle of assistance.[10]
Syria
· A Complementary Project for Enhancing Food Security in the North of Aleppo Governorate was given the green light, for a total budget of EUR 8.4 million.[11]
· The UNHCR released a report detailing its successful winterization support project as it tended to 31 million people during the winter months.[12]
· The World Health Organization released a report claiming 700,000 children are at risk of facing hunger in Syria.[13]
· As part of the Syria Trust Fund plans to support and develop the agriculture sector in the northern countryside of Aleppo Governorate, a number of tractors were distributed to local farmers.[14]
· To improve the quality of health care services in Syria, Qatar Charity (QC), with funding from the World Health Organization (WHO), organized two medical training courses for anesthesia staff in northern Syria. [15]
Cyprus
· According to latest estimates, 15,000 Ukrainian refugees have relocated to Cyprus.[16]
· Some hotels in Cyprus have taken the initiative to house Ukrainian refugees fleeing the conflict. [17]
Communication and Public Relations Departement.
[1] Egypt Today, April 28, 2022, https://www.egypttoday.com/Article/1/115382/Deputy-Assistant-Min-of-Foreign-Affairs-for-Immigration-Refugees-reviews
[2] OCHA, May 22, 2022, https://reliefweb.int/report/egypt/wfp-egypt-country-brief-april-2022
[3] OCHA, May 19, 2022, https://reliefweb.int/report/egypt/saving-water-increasing-access
[4] OCHA, May 22, 2022, https://reliefweb.int/report/jordan/wfp-jordan-country-brief-april-2022
[5] https://data2.unhcr.org/en/situations/syria/location/5
[6] UN, May 17, 2022, https://news.un.org/en/story/2022/05/1118472
[7] OCHA, May 18, 2022, https://reliefweb.int/report/iraq/unhcr-grateful-government-japans-renewed-commitment-support-thousands-displaced-persons-returnees-and-syrian-refugees-iraq-enarku
[8] https://data2.unhcr.org/en/situations/syria/location/71
[9] OCHA, May 20, 2022, https://reliefweb.int/report/lebanon/wfp-lebanon-situation-report-april-2022
[10] OCHA, May 20, 2022, https://reliefweb.int/report/lebanon/wfp-lebanon-situation-report-april-2022
[11] OCHA, May 25, 2022, https://reliefweb.int/report/syrian-arab-republic/srtf-management-committee-mc-holds-its-30th-meeting-and-approves-new-projects-total-budget-eur-168-million
[12] OCHA, May 24, 2022, https://reliefweb.int/report/syrian-arab-republic/2021-2022-regional-winterization-programme-final-report-syria-and-iraq-situations-september-2021-march-2022
[13] OCHA, May 19, 2022, https://reliefweb.int/report/syrian-arab-republic/malnutrition-northeast-syria-case-urgent-action-may-2022
[14] OCHA, May 17, 2022, https://reliefweb.int/report/syrian-arab-republic/four-agricultural-tractors-delivered-potato-farmers-northern-aleppo
[15] OCHA, May 19, 2022, https://reliefweb.int/report/syrian-arab-republic/charity-organizes-two-medical-courses-northern-syria
[16] Financial Mirror, May 24, 2022, https://www.financialmirror.com/2022/05/24/cyprus-hosts-15000-ukrainian-refugees/
[17] Cyprus Mail, May 24, 2022, https://cyprus-mail.com/2022/05/24/british-cypriot-hotelier-offers-rooms-to-ukrainian-refugees/