- Saudi Arabia hosted the first formal Iranian Umrah pilgrimage in nine years. [see (1) below]
- PIF is investing in Saudi Telecom’s tower assets and merging them with its own.
- Abu Dhabi issued $5bn in 5 to 30-year bonds, the first in three years.
- Transportation and hospitality led the 5.8% y/y growth in the UAE’s GDP in Q3.
- Abu Dhabi achieved a 13% of GDP surplus in 2022 but budgeted a small deficit in 2024 on $69 oil. [see (2) below]
- Abu Dhabi is reported to be planning to tender for a second nuclear power plant.
- The UAE and Oman ordered personal loan payment deferrals post-floods.
- The UAE, Qatar and Turkey agreed to work together on Iraq’s Development Road project. [see (3) below]
- Qatar rejected reports that Hamas may leave Doha.
- Monthly Kuwait fiscal data until December shows less spending than a prior release for this period.
- Total and OQ awarded the main EPC contract for the Marsa LNG bunkering facility.
- Oman’s Sultan visited the UAE and several large investment agreements were signed.
- Bahrain’s private sector credit declined for a second month for the first time since 2017.
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Here are two brief snippets from the report:
(1) Pilgrimages from Iran resume
- The first group of Iranian pilgrims traveling directly from Iran in nine years visited Mecca on Umrah this week.
- The trip had been originally planned for December but was delayed, apparently problems aligning aviation standards.
- The Saudi ambassador saw them off from Tehran airport in an important symbol of improved relations, while the Iranian ambassador to Saudi Arabia welcomed them on arrival (SG).
- This comes a little over a year after Iran and Saudi Arabia restored diplomatic relations, with mediation from China, having broken them in 2016 when Saudi Arabia executed a Shia cleric and an Iranian mob attacked the Saudi embassy in Tehran.
- Regional tensions during the ongoing war in Gaza would probably have been considerably worse if this rapprochement had not already happened before 7 October.
(2) Abu Dhabi publishes fiscal data and budgets
- Abu Dhabi issued $5bn in bonds in its first issuance in three years. The Emirate only discloses its budgets and fiscal outturns in bond prospectuses and therefore, until now, no data had been available after 2020.
- Given the emirate’s low fiscal breakeven oil price, it is now surprise that there were unsurprisingly strong surpluses in 2021 (6.4% of GDP) and 2022 (12.8%). Unfortunately, no 2023 outturn or 2022 budget were disclosed, leaving a gap in the data.
- The 2023 budget allocated only 3% more expenditure than the 2022 outturn and projected a surplus of 1% of GDP. In 2024, revenue is forecast to fall due to weaker oil and spending to rise by 9% vs the 2023 budget, leading to a deficit of nearly -3% of GDP. ?
- However, as the oil price assumption underlying the revenue projection is just $69, and something around $80 currently looks most likely, there should still be a surplus.
(3) Coalition builds around Iraq’s Development Road
- On the occasion of a visit to Baghdad by Turkey’s president, the first in 13 years, a preliminary agreement was signed by Turkey and Iraq, along with ministers from Qatar and the UAE (Rt, DN, Nat).
- They plan to work together on the Development Road project, announced by Iraq last year, to link its Grand al Faw Port on the Gulf coast to Turkey (and on to Europe) with a new road and rail corridor.
- This is potentially a complementary and more politically viable route than the proposed India-Middle East-Europe Economic Corridor, across UAE, Saudi Arabia, Jordan and Israel.
- Although Iraq has significant problems, including bureaucracy, corruption and internal politics, the level of violence has declined very sharply in recent years, with fewer annual killings than many US cities (see Iraq Body Count) and so the project, a rare diversification play for Iraq, should not be immediately discounted.
