MOROCCO
The Moroccan equity market rallied strongly in
September, drawing strength from reports of oil and gas
discoveries in the kingdom. The findings, which are
expected to dramatically change the face of the
Moroccan economy, would help to lessen the country’s
heavy dependence on the agricultural sector and make of
Morocco a net exporter of oil in a few years. Blue chip
stocks across the board reacted positively to the news and
investors’ enthusiasm was apparent in the substantial
increase in trading volumes.
Egypt
Sentiment was mostly positive in Egypt; however, the stock
exchange failed to uphold some gains realized in the month
of August with most blue chips witnessing consolidation.
Among the most demanded stocks were CIB, MobiNil and
OT, which together captured the bulk of trading activity.
Despite signs of improving domestic conditions, particularly
on the macro level, the market remains clouded by
uncertainty and tight liquidity condition. Nevertheless, investors
are bracing for the partial privatization of Telecom Egypt,
which is anticipated by the end of the year. The offering,
which will also include a GDR, is expected to rejuvenate
activity on the local bourse
JORDAN
Mixed semi-annual results for most listed concerns on the
Amman Stock Exchange kept sentiment subdued, with
the index hovering below the 140-psychological level.
Losses remain concentrated in the industrial and the
banking sectors, and to some extent, in the services sector.
Foreign investors continued to shun the market with
their sell orders outnumbering buy orders by JD5.9 million
in the first eight months of 2000. Accordingly, the
share of non-Jordanians in the listed companies stood at
41. 9% of market capitalization at the end of August, out
of which 36% is held by Arab investors and 5.9% by
non-Arab investors.
External debt under control in the Arab region
Successful debt management policies
have enabled several Arab countries
to reduce their external debt over the
past few years, most notably Egypt,
Morocco and Algeria. On the other hand,
other Arab countries, such as Lebanon,
Tunisia, Qatar and Oman, have been
accumulating higher levels of external
indebtedness. Among the indebted Arab
countries, Qatar and Jordan exhibited the
highest levels of external debt as a percentage
of GDP. at around 98% in 1999 for
both countries, while Oman and Egypt
enjoy the lowest levels, at 29% and 32%
respectively. Total external debt for the
eight Arab countries surveyed declined
from$118 billion in 1996to$113.8 billion
in 1997, but rose again in the following
two years toreach$117.9billion in 1999.
Those Arab countries that have a history
of debt rescheduling and those with a
high external debt burden will find it difficult
to attract foreign investment.
Capital always goes to those countries
who live up to their commitments and
where the risk of non-payment is low.
Besides, servicing large external debt eats
up a good portion of a country’s export
revenues, adds to its external imbalances
and puts pressure on the country’s foreign
reserves and its monetary stability.
Following the Gulf War in 1990, all of
Egypt’s debt to Arab creditors was cancelled,
as well as military debt owed to the
US, in recognition of the country’s support
to the UN coalition formed to liberate
Kuwait. This was followed by the cancellation
of half of the net present value of
the debt owed to the Paris Club ($22 billion)
and the rescheduling of the remaining
balance. As a result, foreign debt
declined from more than $46 billion in
1986 to about $28.2 billion in 1998/99,
representing 32% of GDP. Debt structure
is favorable and debt service/ exports
at less that 10% in 1999.
Lebanon’s external debt is expected to
rise in the foreseeable future as the government
gradually replaces part of the
expensive domestic debt, which stood at
a high of 126% of GDP at the end of
1999, with relatively cheaper dollar dominated
borrowing. Lebanon
tapped international markets in
September 1994 with the launch of its first
Eurobond, providing the government
with access to non-resident Lebanese,
Arab and foreign capital. Following a
series of Eurobonds, external debt rose
from a low of $772 million in 1994 to
$5,538 million in December 1999, representing
only 35% of the GDP and 25% of
the total debt outstanding. At the end of
June this year, the Lebanese Government
successfully issued a five-year Eurobond
for $500 million and is planning to issue
$500 million worth of 20-year
Eurobonds in the coming few months.
Total outstanding external debt of
Jordan at the end of 1999 stood at
JD5,186 million (US$7,312 million), or
98% of GDP, down from JD 6,052.5 million
(US$9,121 million) in 1990. By July
2000, total external debt dropped to
JD4,874 million (US$6,872 million).
Jordan• s largest creditors are the industrial
countries with whom the government is
negotiating debt rescheduling and debt forgiveness
agreements, and swapping some debt into local investment.
This should help reduce the country’s
debt burden, and with higher
growth in GDP this year, debt to
GDP ratio should drop below 90%.
Qatar’s LNG investment program,
financed by a huge stock of
external debt, led to the reversal of …_
the country’s position from a net
creditor up until 1994, to a net
debtor starting from 1995. The
country’s external debt (including
government guaranteed debt and
QGPC debt) reached $11.2 billion in
1999, accounting for 98% of GDP.
A new $500 million sovereign loan will be
launched this month, coming at the heels
of Qatar’s second Eurobond issue, which
in mid-June raised $1.4 billion. Debt
ratios are expected to improve beyond
the year 2000 on the back of sustainable
economic growth driven by growing natural
gas exports and higher oil revenues.
Total external debt in Tunisia stood at an
estimated $13 billion last year, equivalent
to 62% of GDP. The country’s external
indebtedness is manageable in light of
Tunisia’s easy access to external borrowing
and international bond markets. In
Morocco, prudent external borrowing
and active debt management policy has
substantially reduced the country’s external
debt from a peak of 130% of GDP in
1985 to $19.2 billion or 54% of GDP in
1999. The stock of external debt in
Algeria has declined from a peak of
$34.4 billion in 1996 to an estimated
$29.7 billion in 1999, equivalent to
62.1 % of GDP, and is further expected to
fall to $28. 7 billion by the end of the year.
It is imperative for the indebted Arab
countries to take all possible measures to
reduce their debt burden. Buying one’s
debt from the world’s secondary market at
a fraction of the nominal value and using
privatization proceeds to retire existing
debt are well-known measures for the countries of the region to follow
