What Will 2023 Bring?
Report: December 2022
It is rumored that 2023 will be an even more difficult year for the world. How will a probable global recession affect the Middle East. Photo credit: https://thesparrow.news
According to the World Bank, most of the Middle East countries are accumulating debt. Such a phenomenon is due to several reasons unique to every country. However, the global economic crisis and the events in Eastern Europe may have had a direct impact on external debt as countries had to spend money to guarantee basic commodities such as fuel and wheat. Now more than ever, ME countries must band together to compliment one another’s needs so that to alleviate the incoming burdens of 2023.
2. The Socio-Economic Situation
Egypt
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 515,493
-Deaths: 24,801
-As of 3 December 2022, a total of 100,825,424 vaccine doses have been administered.
Minister of Planning and Economic Development Hala al-Said
The recently reached agreement which entitles Egypt to obtain a 3 billion USD loan has yet to give the country some space to breath. Already, inflation has reached 20% as the Egyptian Pound continued to fall against the dollar; so far, the Egyptian Pound has weakened to 36 EGP/USD in the parallel market. Moreover, rising commodity prices, including wheat and sunflower has contributed to the inflation. Also, the Central Bank of Egypt’s attempt to establish a flexible exchange rate caused the Egyptian pound to sharply depreciate, which increased import costs, reduced its foreign exchange reserves and widened the budget deficit. The problems don’t end here; Egypt’s net foreign assets fell by 109.9 billion Egyptian pounds ($4.47 billion) carrying on a decline that has been happening since September 2021. What’s more, Egypt seems intent on adopting a new law that would force business owners to seek approval from security services by paying certain fees. As Egypt is running dry on funds, it intends to extract money from the population to feed its coffers. All of this hints to an economic slowdown or recession in the near future.
As the situation is becoming even more alarming, some members of parliament are asking for a report showcasing the accurate financial and economic situation of Egypt. According to them, the absence of information about the condition of the economy is leading to more turmoil in the markets and more rumors related to the economic conditions. Moreover, they asked for clarifying steps the government will take to control market prices and unprecedented inflation rates, and whether the Egyptian pound will be floated again as rumored.
Despite the troubelsome situation in Egypt, the government does appear to be active in alleviating the situation. The government is seeking to reinforce the country’s foreign exchange reserves in the short or medium terms amid the persisting global inflation. Egyptian Prime Minister Mostafa Madbouly stressed the ongoing cooperation between the government and the Central Bank of Egypt (CBE) to secure sources of supply of US dollar to provide the required essential commodities and inputs. Also, Minister of Planning and Economic Development Hala al-Said, confirmed in an interview that there are medium- and long-term plans to improve the Egyptian economy. That is why the government has already begun the rationalization of its expenses in parallel with pumping necessary staples at reduced prices into the markets.
Jordan
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 1,746,997
-Deaths: 14,122
-As of 20 August 2022, a total of 10,057,975 vaccine doses have been administered.
A picture of a burning tire during a strike in Jordan's south. AFP
Although the economy is set to improve in the foreseeable future, rising prices within the Kingdom have triggered violent protests. Fuel prices have nearly doubled in Jordan compared with a year earlier, prompting the price of diesel, which is used for lorries and buses, and kerosene used for heating, to increase. This was due to Jordan's fuel pricing committee decision to raise the prices of a number of fuel derivatives during December. The government reportedly declared that it has paid more than 500 million Jordanian dinars ($700 million) to cap fuel price hikes this year and cannot do much more if it wants to avoid breaching an International Monetary Fund deal. The move proved to be pointless, as violent protests still erupted leading to the death of a high-ranking police officer. Now, the government, under the instruction of His Excellency King Abdullah II, is trying to revive the economy. However, plans have been delayed due to financial issues. Nevertheless, the 123-page plan stipulates doubling Jordan's GDP to $82 billion over the next 10 years, partly by attracting $41 billion of unspecified funding and investment over the period. One of its aims is to provide jobs for more than 1 M people that will be joining the workforce over the next decade. For the plan to come to fruition, His Excellency King Abdullah II, presided over a cabinet session in which he instructed Prime Minister Bisher Al Kasawneh to report every three months on how the plan is being executed.
Iraq
The World Bank is satisfied with Iraq’s performance throughout this year. Photo: Iraqi News Agency
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 2,464,997
-Deaths: 25,369
-As of 10 December 2022, a total of 19,534,812 vaccine doses have been administered.
The World Bank declared that the Iraqi economy is witnessing significant growth, reaching 10.5 percent, and cited an increase in the productivity of the non-oil sector in Iraq. The increased export quantities, the rising global prices, the high rate of oil production, and the increased productivity of the non-oil sector have led to this growth. As public revenues continue to increase there lies an important opportunity that supports the Iraqi economy towards diversifying it and increasing the contribution of non-oil sectors to the gross domestic product. The World Bank did however, highlight the fact the Iraqi economy is still suffering from many problems such as the water crisis and the climate, that need urgent solutions to sustain resilience and economic growth. The Central Bank of Iraq also took the spotlight during this month. It confirmed that its monetary policy’s aim is to achieve stability and economic growth using various monetary policy tools. The CBI highlighted that its initiatives worth 12.33 billion USD assisted in providing financing for many small, medium and large projects to support the private sector and economic diversification. One of the CBI’s many endevours to diversify the economy include a 685 million USD to finance the purchase of renewable energy systems for both individuals and enterprises. As such, the CBI is in-line with World Bank’s priorities.
Lebanon
People wait in line at a bakery in Beirut, Lebanon, July 2022, Hussam Shbaro/Anadolu Agency via Getty Images
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 1,221,696
-Deaths: 10,742
-As of 11 December 2022, a total of 5,813,287 vaccine doses have been administered.
During the series of meetings the IMF held during December, about how to handle initial understandings and agreements at the level of employees regarding loan programs for various nations around the world, Lebanon was not listed on the Executive Board of IMF's agenda. This is because Lebanon has only so far only implemented 2 reform steps of the 8 reform steps asked by the IMF. Moreover, figures associated with the plan need updating to estimate the losses and the deposits that can be guaranteed. For instance, the item of other assets on the Banque du Liban (BDL) balance sheet increased by 49.91% from the same period last year to the end of last month, showing a significant change in numbers; there is a sizable mass of accumulated losses in the budget. Since the beginning of 2022 BDL reserves have lost around $2.64 billion in value, while its gold reserves have witnessed several fluctuations due to changes in gold prices on the global market. All of this means that a plan is needed to align the figures with the new adjustments in the financial sector's budgets. Currently there doesn’t seem any Lebanese intentions to fix the problem. Given the presidential vacuum and the inability to pass decrees and draft laws related to fateful matters the situation will not be remedied any time soon.
As for the situation on the ground, things remain the same. According to Human Rights Watch, the majority of people in Lebanon are unable to secure their social and economic rights amid a deepening economic crisis, as low-income households bear the brunt. New research is casting light on the alarming levels of poverty and food insecurity in Lebanon that are a result of the downfall of the economy and the inflation that came along. Meanwhile, authorities are failing to ensure an adequate standard of living for everyone. To make matters worse, Lebanon’s social protection system is highly disfunctional, leaving, older people, and children without any protection. Now that the economy is in a free-fall situation, it is set to contract by 5.4% in 2022, thus enlarging socioeconomic woes. 2023 will not be any different as Lebanese will continue to watch their country tumble.
Palestine
Palestinian and European officials seen during the signing an agreement on Wednesday, December 8, 2022. (Wafa)
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 703,228
-Deaths: 5,708
-As of 17 October 2022, a total of 3,748,571 vaccine doses have been administered
According to the UN development agency the Palestinian economy has lost 50 billion USD over the course of 20 years between 2000 and 2020, due to restrictions imposed by Israel. In a report titled “Economic costs of the Israeli occupation for the Palestinian people: The toll of the additional restrictions in Area C, 2000–2020”, submitted to the General Assembly, the United Nations Conference on Trade and Development claimed that extra restrictions imposed within the West Bank's so-called Area C, which remains under full Israeli control, had cost $2.5 billion per year. The report further indicated that that the cumulative cost during the two decades is equivalent to three times the West Bank GDP in 2020 and over 2.5 times the Palestinian GDP in the same year. Moreover, Area C, which accounts for 60% of the West Bank and contains the most fertile land and valuable natural resources, is being usurped by Israeli settlers. So far, settlers have taken 70% of Area C making them off limits to Palestinians. As for the remaining 30%, Palestinian access remains to be heavily restricted.
This is nothing new in terms of what the occupation has been doing to the Palestinians. It has robbed Palestine of most of its natural resources. Nevertheless, Palestinians are carrying on by establishing close ties with international partners. For instance, European and Palestinian companies inked in December five investment and financing agreements worth over 80 million euros. This came on the sidelines of the first EU-Palestinian Business Forum, which was held in Ramallah and which was attended by Palestinian Prime Minister Mohammad Shtayyeh, representatives of banks, Palestinian and European officials, financial institutions, and businessmen from both sides. The goal is to support Palestinian government’s efforts to develop the economy, expand the role of banks, and strengthen partnership between the public and private sectors.
Syria
With its economy battered by more than a decade of war, Syria has announced four fuel price hikes this year. Photo credit: The Organization for World Peace.
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 57,423
-Deaths: 3,163
-As of 15 October 2022, a total of 4,777,586 vaccine doses have been administered
Since the Syrian government no longer controls oil fields in the east and the US-backed sanctions continue to prevent Syria from importing petroleum, Syria is in an oil crisis. As a result, some protests were reported in regions such as Sweida to protest the widening fuel shortages and the country's worsening economic situation. Moreover, cities were reported to be almost devoid of traffic and having nearly empty streets. Fuel shortages and a record low exchange rate for the Syrian pound against the U.S. dollar in trading, have combined to make life exceedingly miserable in territories occupied by the Syrian government. The Syrian Observatory for Human Rights (S.O.H.R.) reported that the streets of Aleppo, a government-controlled city and once the economic powerhouse of Syria, are empty of essential goods, diesel, gas, and petrol. Also, widespread brownouts are being reported due to the lack of fuel to operate power plants and private generators. Many factories and small businesses have also shut down as they can no longer maintain normal working hours. Moreover, government offices were closed due to the same reasons. With no solution in sight, the government has ordered the rationing of petrol and fuel oil supplies. This depletion of fuel reserves is casting a shadow on Syria’s already-fragile economy.
Through this month, there were no new developments concerning achievements the government has achieved. On the other hand, it is still dealing with a depreciating currency in which the dollar has crossed the 6,000-pound level in the Syrian foreign exchange market for the first time on record. The Syrian pound’s weakness represents a main indicator that illustrates the extent to which Syria’s economic crisis has worsened this year, forcing import prices and living costs upward. To make matters worse Syrians have to contend with a cholera outbreak, with more than 15,000 suspected cases. Government determination to put a lid on the outbreak has been met with poor health care facilities. But there should be no confusion that the continuation of large-scale military warfare is one main factor which continues to destabilize Syria and its economy.
Cyprus
Mr. Constantinos Petridis, Finance Minister. Photo credit: kathimerini.com.cy
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 625,562
-Deaths: 1,250
-As of 26 November 2022, a total of 1,837,359 vaccine doses have been administered.
In an interview with Kathimerini's business magazine, Finance Minister Constantinos Petridis claimed that inflation has reached its peak and it will start to decrease moving forward. His statement came as a response to allegations that next year there will be a slowdown in the Cypriot economy due to the increasing energy prices. However, he lauded the rising tourism, the flexibility and resilience of the Cypriot economy, and the recovery policy being adopted. He noted that at this point, increasing interest rates is the best course of action to tackle inflation. He also considered the results of the Strategy for Attracting foreign companies and talent as "excellent”, and the issuance of the green bond as "very important" to ascertain the Cypriot economy's reliability and credibility. As for tax reform, the minister emphasized that it is not the time to forgo any changes with respect to taxes. For the time being, the most important thing is to maintain Cyprus as an attractive investment destination and business center. He also pointed out that although 2023 will witness a slowdown of economic activity, the outlook for tourism is quite positive due to additional increases in connectivity and flight supply. Moreover, the banking sector is continuously being appraised for its positive performance. For instance, Capital Intelligence Ratings (CI Ratings or CI) has upgraded the Long-Term Foreign Currency Rating (LT FCR) of Bank of Cyprus (BoC) to ‘BB’, from ‘BB-’.
3. The Refugee Situation
Egypt
The WFP reported that 273,000 people were assisted in November 2022, of which about 105,000 registered vulnerable refugees were supported with monthly cash assistance to help secure their basic food needs.[1]
Jordan
The UNHCR states that there are currently 669,483 registered refugees in Jordan up until the beginning of December.
The proportion of Syrian displaced people registered within the UNHCR for December, are distributed as follows:
-199,303 in Amman Governorate (29.8 %)
-169,710 in Mafraq Governorate (25.4%)
-133,128 in Irbid Governorate (19.9%)
-98,702 in Zarqa Governorate (14.8%)
-17,683 in Balqa Governorate (2.6%)
-13,195 in Madaba Governorate (2%)
-8,889 in Jarash Governorate (1.3%)
-8,437 in Karak Governorate (1.3%)
-8,268 in Maan Governorate (1.2%)
-6,241 in Ajlun Governorate (0.9%)
-3,811 in Aqaba Governorate (0.6%)
-1,619 in Tafilah Governorate (0.2%)
In November, WFP continued to provide monthly food assistance to around 460,000 vulnerable refugees residing in camps and host communities through cash based transfers.[2]
The Netherlands has announced a €14 million ($14.8 million) contribution to the UN High Commissioner for Refugees in Jordan which will support the basic needs of 31,400 refugee families.[3]
Iraq
The UNHCR states that there are currently 263,087 registered Syrian refugees in Iraq.
The proportion of displaced Syrian people registered within the UNHCR up until the beginning of December, are distributed as follows:
-130,210 in Erbil (49.5%)
-83,255 in Dahuk (31.6%)
-34,058 in Sulaymaniyah (12.9%)
-2,310 in Anbar (0.9%)
-13,254 in other areas (5%)[4]
In November, WFP provided cash and food assistance to 127,292 internally displaced persons (IDPs) and 33,133 refugees.
On 25 November, WFP initiated a number of activities to mark the annual 16 days of Activism against Gender-based Violence (GBV) campaign and the International Day for the Elimination of Violence against Women. Several activities took place including efforts at camps to sensitize people on human and women’s rights as well as calling for the prevention of GBV. [5]
Lebanon
[For the month of November, figures were not updated by the UNHCR]
Since October, the number of registered Syrian refugees in Lebanon is 825,081.
Refugees in Lebanon are distributed as follows:
-324,141 in Bekaa (39.3%)
-227,875 in North Lebanon (27.6%)
-182,979 in Beirut (22.2%)
-90,086 in South Lebanon (10.9%)[6]
According to a joint statement issued by the United Nations High Commissioner for Refugees (UNCR), the World Food Programme (WFP) and the United Nations Children's Fund (UNICEF), ninety per cent of Syrian refugees in Lebanon need humanitarian assistance to survive during the worst economic crisis the country has witnessed in decades.[7]
The European Union allocated $243 million to provide services in social protection, education, health, and water provision to Syrian refugees.[8]
In November, WFP assisted a total of 1.8 million beneficiaries through cash-based transfer modalities amounting to USD 23 million and through the distribution of food parcels. The people assisted were 690,000 Lebanese, 1,086,000 Syrian refugees, and 5,000 refugees of other nationalities.[9]
Syria
The Government of Japan has contributed US$5.1 million to UNICEF to provide vulnerable children and their families in Homs and Hama, Syria, access to education, basic healthcare, and skill-building services.[10]
Almost 7,000 children still trapped in unsafe camps despite 60% increase in repatriations in 2022, says Save the Children.[11]
The SRTF announced the successful completion and closure of its Food Security project: "Complementary Project for Enhancing Food Security in the North of Aleppo Governorate (Phase IV)", which aimed to stabilize and improve the food security situation by ensuring access and improving the quality of bread.[12]
The SRTF announced the successful completion of its Health project: “Support to Health Services in Northern Aleppo Countryside” with a positive impact on the living conditions of the targeted community. The project set out to increase the quality of essential health services provided in the northern Aleppo countryside, decrease mortality and morbidity rates, and increase the quality and quantity of the implementing entities’ (IE) capacity and performance.[13]
The Syria Recovery Trust Fund (SRTF) announced the reception of EUR 10 million in fresh contributions from Germany to support the Fund’s efforts in the Northeast and Northwest of Syria.[14]
Cyprus
According to a recent report, this was a record year of arrivals of irregular migrants in Cyprus with the total being around 21,000 marking an increase of 82% compared to last year.[15]
According to Interior Minister Nicos Nouris, Cyprus has repatriated close to 7,000 migrants during 2022 and is a model within the EU for such returns.[16]
MECC Communication and Public Relations Department
[1] OCHA, Dec 19, 2022, https://reliefweb.int/report/egypt/wfp-egypt-country-brief-november-2022
[2] OCHA, Dec 20, 2022, https://reliefweb.int/report/jordan/wfp-jordan-country-brief-november-2022
[3] Arab News, Dec 21, 2022, https://www.arabnews.com/node/2215006/middle-east
[4] https://data2.unhcr.org/en/situations/syria/location/5
[5] OCHA, Dec. 19, 2022, https://reliefweb.int/report/iraq/wfp-iraq-country-brief-november-2022
[6] https://data2.unhcr.org/en/situations/syria/location/71
[7] Middle East Monitor, Dec. 17, 2022, https://www.middleeastmonitor.com/20221217-lebanon-90-of-syria-refugees-need-humanitarian-aid-to-survive/
[8]Arabian Business, Dec 15, 2022, https://www.arabianbusiness.com/politics-economics/lebanon-refugees-sent-243mn-from-eu-for-water-education-health
[9] OCHA, Dec 20, 2022, https://reliefweb.int/report/lebanon/wfp-lebanon-country-brief-november-2022
[10] OCHA, Dec 19, 2022, https://reliefweb.int/report/syrian-arab-republic/japan-contributes-us51-million-enhance-access-essential-social-services-syria
[11]OCHA, Dec. 21, 2022, https://reliefweb.int/report/syrian-arab-republic/north-east-syria-almost-7000-children-still-trapped-unsafe-camps-despite-60-increase-repatriations-2022-says-save-children
[12] OCHA, Dec 19, 2022, https://reliefweb.int/report/syrian-arab-republic/srtfs-food-security-project-phase-four-successfully-completes-its-life-cycle
[13] OCHA, Dec 18, 2022, https://reliefweb.int/report/syrian-arab-republic/srtf-successfully-concludes-health-project-northern-aleppo-countryside
[14] OCHA, Dec. 15, 2022, https://reliefweb.int/report/syrian-arab-republic/germany-contributes-additional-eur-10-million-srtf-efforts-northeast-and-northwest-syria
[15] In Cyprus, Dec. 17, 2022, https://in-cyprus.philenews.com/news/local/record-21000-irregular-migrants-came-to-cyprus-this-year-7500-were-returned/
[16]Cyprus Mail, December 1, 2022, https://cyprus-mail.com/2022/12/01/cyprus-has-repatriated-nearly-7000-migrants-in-2022/