MENA COVID-19 Situation Report

Middle East & North Outlook Issue 12 – Updated 15 June 2020

Florence Eid-Oakden, Ph.D [email protected] Tel: +44 203 239 4518

With CharleneArabia Rahall & MonitorBouchra Abaakil MENA Outlook Q2 2020 COVID-19 Situation Report: GCC (1)

Country Economic & Fiscal Health & Travel Related has been hit by the spread of COVID-19 and by lower oil prices. The kingdom's fiscal situation still presents risks. Bahraini growth was revised to a 3.6 contraction in 2020 from positive growth of 2.1% forecast last October and compared with a 1.8% pickup in 2019. After a reduction in the public-sector workforce of about 18%, the government plans to decrease expenditure through a centralised procurement structure, reducing transfers by balancing the Electricity and Water Authority’s budget, and reforming subsidies. We do not believe Bahrain will make large cuts to expenditure, given its low, albeit increasing, flexibility. • USD 11.4B stimulus package (29% of GDP) • Estimated # of Infections to Date: 18,544 (Cases per Million: 10.921) • Doubling the Liquidity Fund to BHD 200M • Announced # of Deaths to Date: 45 (Deaths per Million: 27) • Waiver on utilities bills for three months • Delay in loans instalments for six months • Limits on social gathering of more than 150 people Bahrain • Banned lenders from freezing customers’ accounts in case of lost jobs • Closed all cinemas, sports centres, gyms, salons • Cut overnight lending rate to 2.45% from 4% • Bahrain will allow passengers to transit through its airport although • Finance Ministry to withdraw funds with a 5% ceiling from the public account entry into the country will be limited only to citizens • Waiver on rents and allowance from all tenants of municipal properties • Launched a virtual mall to enable shops to continue serving their customers • USD 570M for salaries of 100,000 employees in the private sector Apr-Jun • Bahrain’s shops and industrial enterprises opened on 7 May, while • Slashed spending by ministries and government agencies by 30% restaurants remain closed for dine-in customers • Central bank issued bonds worth USD 793M • All non-essential medical services resumed operations • Lower rate for internet usage • Commercial and industrial businesses can resume usual operations * USD 46.1M package aimed at supporting business owners who are not covered by • Bahrain plans to reopen schools in September insurance, students from needy families, and for the sanitisation of towns * Increase monthly allowances to 11,000 orphans and widows by 20% GDP in is forecast to contract by 1.1% in 2020 from 1.5% growth previously forecast by the IMF in October. Oil price volatility and the impact of COVID-19 have seriously hit the outlook. The much-awaited MSCI listing of Kuwait’s companies into its emerging markets index in May has been postponed indefinitely. With Kuwait yet to pass a revised debt law authorising the government to borrow, there are questions about how future central government deficits will be financed. As anticipated, further fiscal consolidation measures have been announced, particularly after Kuwaiti Emir Sabah al-Ahmad al-Jaber al-Sabah's public statement regarding the impact of the oil price drop on state finances. • Reduced the discount rate to 1.5% (from 2.5%) a record-low • Estimated # of Infections to Date: 35,920 (Cases per Million: 8,417) • Set up a USD 33M fund, to be financed by Kuwaiti banks • Announced # of Deaths to Date: 296 (Deaths per Million: 69) • Suspended fees on point of sales devices and ATM withdrawals + raised the Kuwait limit for contactless payments to KWD 25 (USD 79) from KWD 10 • Banned on all commercial passenger flights • Stimulus package to support SMEs including a cut in the capital adequacy • Closed schools, shopping centres, cinemas, wedding halls & requirements by 2.5% and easing the risk weighting for SMEs to 25% from 75% children’s entertainment • Postponed loan repayment and credit card facilitations for SMEs for six months • All educational institutions in Kuwait will reopen on 4 August • Kuwait will cut government entities’ budget for fiscal year 2020-2021 by at • Grocery stores’ working hours amended to 8:00 am to 4:00 pm least 20%. • Replace the complete lockdown with a partial curfew as of 31 May • Kuwait plans to reduce the expat population to just 30% of the total. MPs have • Eased its full-time curfew to a 12-hour one (from 6pm to 6am) and will proposed a quota system in addition to replacing expat government employees last three weeks before the next phase of easing is introduced (~100k) with Kuwaitis * On 10 June, Kuwaiti mosques opened their doors after a three-month closure * Kuwait Petroleum Corporation will stop hiring expats for the rest of 2020 and 2021 1 Arabia Monitor; IMF. * Updated as of 15 June, 2020. Arabia Monitor

2 COVID-19 Situation Report: GCC (2)

Country Economic & Fiscal Health & Travel Related The new Investment Authority formed on 4 June will take over almost all the assets of the country’s two existing funds, the State General Reserve Fund and the Oman Investment Fund, as well as assets held by the Directorate General of Investments at the Ministry of Finance. The idea of merging Oman’s two main investment funds has been around for several years, in part because they were seen to be duplicating each other’s functions. The new fund will face the challenge of contributing to support the government’s weak fiscal position, while also attracting inward investment. *The sultanate is also reeling from low oil prices, and will slash its crude production by 23% under the latest round of OPEC+ cuts. Oman’s 2020 budget was based on an oil price of USD 58 per barrel; on 14 June the price was USD 39.90 per barrel. • A USD 20B incentive package • Estimated # of Infections to Date: 24,524 (Cases per Million: 4,809) • Repo rate cut by 75bps to 0.5% • Announced # of Deaths to Date: 108 (Deaths per Million: 69) • Reduced Capital Conservation Buffers for banks to 1.25% from 2.5% Oman • Lending ratio increased to 92.5% from 87.5% • Closure of schools, public parks, and public gatherings • Deferment of loan instalments / interest / profit for affected borrowers • Will not allow cruise ships to dock at its ports during this period • Slashed budgets of civil, military and security agencies by 10 • Friday prayers at mosques suspended • Tourism and tax breaks and free government storage facilities • Opened some commercial activities including car servicing, repair and rental, • Reduced approved liquidity for development budgets by 10% money exchanges, outlets selling electrical and electronic appliances, printing • Froze repayments of personal and housing loans for three months, from May • Ended the lockdown of Muscat governorate on 29 May * New USD 779M development project to support economic growth • At least 50% of employees in government entities can work from offices * Hotel revenues fell by 24% YoY to USD 140M starting 30 June * Ministry of Housing issued regulations banning expats from ownership of land * Dhofar Governorate, a tourist hotspot, to be put under lockdown from 13 June and real estate in specified places, with the exception of tourists complexes to 3 July as cases spike Three years into the rift, Doha has built up local production, especially of food, and prepared Qatar well to deal with the supply chain disruptions allowing it to overcome the challenges of the blockade and will help the economy weather the pandemic and lower oil prices. According to IMF forecasts, Qatar will be the only MENA country to post a fiscal budget surplus this year. Risks to the outlook include a delayed global recovery and lower LNG prices. • USD 23.3B stimulus package. • Estimated # of Infections to Date: 79,602 (Cases per Million: 28,350) • Postponed loan instalments with a grace period of six months • Announced # of Deaths to Date: 73 (Deaths per Million: 26) • Exempting food and medical goods from customs duties for six months • Fees on points of sale transactions and ATM withdrawals cancelled • School closure Qatar • Private sector companies to have 80% of their staff work from home, • Public transport stopped for 14 days effective 2 April for an initial two weeks. The working day will be reduced • Parks and public beaches closed till further notice to six hours, from 7:00 a.m. to 1:00 p.m., excluding grocery stores, • Qatar Airways expects to reopen routes this month: it hopes to fly to 52 pharmacies and restaurants destinations by end-May and up to 80 in June (compared with 165 total • Postponed USD 8.2B of unawarded contracts on capital spending projects destinations previously) • Fully opened its industrial area on 6 May • Restaurants and cafés are allowed to resume delivery and collection * Reduction of costs of non-Qatari employees in government entities by 30% via * Mosques reopening on 15 June salary cuts or layoffs * Partial reopening of restaurants on 1 July * New Public-Private Partnership to support investment in the non-oil sector * Reopening of malls and resumption of flights from low-risk nations 1 August

1 Arabia Monitor; IMF. * Updated as of 15 June, 2020. Arabia Monitor . 3 COVID-19 Situation Report: GCC (3)

Country Economic & Fiscal Health & Travel Related The economic impact of the pandemic, including lost revenue from suspended pilgrimages, is compounding that of the drop in oil revenues. 's export revenue stood at USD 53B in Q1 2020, down 20.7% from Q1 2019, mainly due to a 22% decline in oil export revenue. Saudi Arabia fiscally consolidating and managing heightened public expectations for the future will be crucial in maintaining public support for Crown Prince Mohammad Bin Salman when the pandemic subsides, and austerity hits the kingdom's generous social welfare programmes. They have certainly taken some bold moves recently, both in terms of austerity and in terms of investments abroad and their drawdown of reserves for this purpose. • USD 32B to support the private sector including USD 13.3B for SMEs • Estimated # of Infections to Date: 127,541 (Cases per Million: 3,666) • Saudi Arabia will cut USD 13.3B from 2020 budget (less than 5%) • Announced # of Deaths to Date: 972 (Deaths per Million: 28) • 60% of salaries of Saudi employees in the private sector for three months Saudi • USD 4.5B to deal with job losses • Temporary ban on Umrah pilgrimages to Mecca and Medina; Arabia • A USD 530M healthcare portfolio to support SMEs in healthcare • An evening curfew from 7pm to 6am for 21 days from 23 March; partially • SAR 50B (USD 266M) to accelerate payment of private sector dues lifted on 26 April in all regions to 9am to 5pm; five-day nationwide • Disbursement of SAR 2.2B for over 40K citizens working in the private sector lockdown and curfew during the Eid holidays from May 23 to 27 • Land borders closed except for commercial trucks • VAT will increase from 5% to 15% as of 1 July • Lifted bans on domestic travel, holding prayers in mosques and workplace • Cost of living allowance suspended from 1 June attendance in both the government and private sector from this week • Raise import duties by between 0.5-15ppts on products ranging from meat, dairy * Reinstated restrictions in Jeddah for 15 days from 6 Jun and vegetables to vehicles and building materials * Reopened mosques on 12 June except in Mecca and Jeddah * 8% decrease in value of contracts awarded in Saudi Arabia in Q1 * Professional sports activities to resume on 21 June In the UAE, as in previous times, the financial implications of the slow-down in Dubai will require federal support. Government-related entities that are unable to service their debt will once again become attractive assets for Abu Dhabi investment arms. We expect restructurings, downsizing, and mergers in the form of consolidations. We expect a similar debt-related pattern as seen in the wake of the financial crisis, including a rise in non- performing loans and a liquidity crunch. Many GREs were banking on Expo 2020 for growth, so we expect a series of restructurings of at least some of their debt. This means that the debt market is expected to be active, with both governments and GREs likely to issue. *The economy is expected to contract by 3.6% and the non-oil economy to contract by 4.1% in 2020, according to the UAE Central Bank. • 50% reduction in reserve requirements for demand deposits to 7% • Estimated # of Infections to Date: 42,294 (Cases per Million: 4,279) • AUSD 70B stimulus package to the private sector • Announced # of Deaths to Date: 289 (Deaths per Million: 29) UAE • USD 7.2B in various fiscal measures • Banks to reschedule loans contracts, grant deferrals on monthly payments • The curfew has been eased to 10pm to 6am (Dubai from 11pm to 6am) • Dubai government agencies to cut admin and general expenses by 20% • Beaches, parks, cinemas, museums and tourist attractions have reopened • UAE Ministry of Economy announces reduction in fees for 94 of its services • 50% of UAE government staff will return to work from 7 June •15% of government procurement spending and contracts to go to SMEs • Private sector and malls in Dubai are now permitted to operate at 100% • Dubai Customs extended a 20% refund on fees imposed on imported products capacity from 3 June sold locally in Dubai markets • The UAE will allow transit flights to resume: Emirates will operate transit * Licensed businesses can apply to a 20% refund on rent of commercial properties flights to 29 destinations by 15 June and Etihad will fly to 20 destinations * Emirates and Etihad airlines extended pay cuts until September from 10 June

1 Arabia Monitor; IMF. * Updated as of 15 June, 2020. Arabia Monitor

4 COVID-19 Situation Report: North Africa (1)

Country Economic & Fiscal Health & Travel Related The coronavirus and ongoing political uncertainty create a perfect financial and social storm, especially as the country braces for further austerity. Lower oil prices will further worsen ’s state finances as it struggles to maintain peace in a society based on generous subsidies. Any further measures to raise revenue in the form of tax increases or reductions in subsidies would further fuel unrest threatening the fragile social peace. The plan to increase fuel prices (awaiting approval) would test the waters. *Energy earnings fell by 26% in Q1 and the budget deficit is expected to reach 10.4% of GDP in 2020. • Cut public spending by 30% and delayed state projects (8% of GDP) • Estimated # of Infections to Date: 10,919 (Cases per Million: 249) • Allocation of USD 100M to import pharmaceutical products and equipment • Announced# of Deaths to Date: 767 (Deaths per Million: 18) • Lowered the reserve requirement ratio from 10% to 8%, and its main Algeria policy rate by 25 basis points to 3.25% • Postponed high school final exams until September • The authorities announced several measures to cut the import bill by at • Extended lockdown in 44 out of the 48 of Algeria until 13 June least USD 10B (6% of GDP) • A progressive deconfinement started on 7 June with the opening of clothing • Slashed the national budget by 50% stores, food outlets (delivery only) and hairdressing shops (only for men). • Raised minimum wage from 18,000 dinars (USD 140) per month to 20,000 • Construction businesses, travel and real estate agencies allowed to resume dinars; income tax abolished for those earning 30,000 dinars or less from 7 June. * Ending of the 50% paid leave that was given to state employees in March * A second confinement phase started on 14 June by easing the curfew, allowing * Removal of the 51/49 rule which capped overseas investment in Algerian public transport to resume and allowing female hairdressing and non-essential companies at 49% retail

The IMF has revised growth for 2020 to 2% from 5.5% previously forecast. Egypt secured a USD 5.2B standby loan from the IMF to help the country alleviate the economic impact of COVID-19. The one-year stand-by arrangement, which is subject to approval by the IMF's board, follows the USD 2.8B in emergency financing from the IMF. Egypt is also seeking USD 4B from other sources. • Slashed its main interest rate by 300 basis points • Estimated # of Infections to Date: 44,598 (Cases per Million: 436) • EGP 100B (USD 6.4B; 2% of GDP) stimulus package • Announced # of Deaths to Date: 1575 (Deaths per Million: 15) • Three month grace period for real estate tax payment for factories and tourism facilities • Suspended parliament until 12 April • Reduced price of electricity for the industrial sector • Closed schools and universities Egypt • Reduced taxes on dividends from listed companies • Partial curfew from 7pm to 6am from 25 March: extended to 9pm till 6am • Six-month rescheduling and deferral plan on utility payments for tourist until end of Ramadan firms and private airlines • EGP 3.8B has been allocated to the healthcare sector • Egypt’s ministers are taking a 20% pay cut for three months. • Egyptian courts resume work with precautions • About 13 industrial complexes in Egypt will receive EGP 5B in funding • Hotels to open to new guests, operating at a 25% capacity with some • Pensions have been increased by 14% conditions until 1 June and at 50 percent capacity thereafter • Made factories and production facilities fully operational • Shopping malls and retail outlets have been allowed to open on weekends until 5 pm, while restaurants are permitted to do deliveries and collections * Seaside resorts to reopen for foreigners on 1 July * All airports set to open on 1 July

1 Arabia Monitor; IMF. * Updated as of 15 June, 2020. Arabia Monitor

5 COVID-19 Situation Report: North Africa (2)

Country Economic & Fiscal Health & Travel Related will suffer its first recession this year since 1993. Drought-stricken agricultural output is translating into sizeable declines in exports, while the COVID-19 pandemic is all but halting tourism and remittance revenues. Lower oil prices and efforts from international organisations will not be able to offset the negative impacts of the pandemic and drought. The IMF expects the economy to contract by 3.7% this year from 2% growth initially forecast in October 2019. On the other hand, low oil prices are good for Morocco, a net importer. We expect financing the balance of payment deficit to prove difficult given an expected slowdown in FDI. Morocco had a 19.7% drop in exports between January and April of this year, with a loss of USD 2B. • MAD 2K (USD 203) monthly stipend to assist all workers who lose jobs • Estimated # of Infections to Date: 8,838 (Cases per Million: 240) • Workers get four-month extension of the deadline for loan payments • Announced # of Deaths to Date: 212 (Deaths per Million: 6) • SMEs and certain professions get moratorium on social security payments, Morocco mortgages and rents • Suspended flights from 29 countries, including most EU countries • All businesses can defer social contribution payments until 30 June, and • Lockdown extended from 20 May for three weeks companies with turnover lower than 20M dirhams can defer tax payments • Ramadan curfew from 7pm to 5am • Special fund set up dedicated to the management of the pandemic, of about • Restaurants reopened but only for takeaways and delivery 2% of GDP. • Partial resumption of railway lines • Post-crisis facility to support businesses by providing financing to cover • Partial relaxation of the night curfew (a valid authorisation is required) working capital needs at subsidised interest rate * The first phase of opening up started on 11 June with the resumption of • Sovereign guarantee of 95% for SMEs, for up to 10% of annual turnover economic activities in all Moroccan regions • Morocco received a loan worth USD 127M from the Arab Monetary Fund * The country was divided into two zones. Zone 1 citizens will not need an exceptional movement permit to go out

Tourism will be hit hard by the pandemic, especially by the loss of European travellers who make up the bulk of inbound arrivals to the country. The crisis will test the resolve of the newly formed government, led by Prime Minister Elyes Fakhfakh, and strain its fiscal resources. IMF financing will help the authorities cover large fiscal and balance of payments needs, estimated at 2.6% and 4.7% of GDP, respectively. Fitch Ratings downgraded ’s rating to 'B' from 'B+’, with a stable outlook. *Tourism revenues have declined by 38% in June, compared with the same period in 2019. • A TND 2.5B emergency plan (1.8% of GDP) was announced including the • Estimated # of Infections to Date: 1,096 (Cases per Million: 93) postponement of some taxes and social contributions, VAT exemptions, • Announced # of Deaths to Date: 49 (Deaths per Million: 4) and liquidity to the private sector • Allocation of TND 450M (USD 156M) in financial aid to poor families and • General lockdown ordered till 4 May Tunisia Tunisians who have lost their jobs due to the crisis • Return of final year high school students to school on 28 May • Postponed taxes on SMEs, delayed repayment of low-income employee loans • Return of medical and pharmacy students to university on 11 May • Interest rate cut by 100 basis points • Retail shops and supermarkets reopened on 15 May • Banks to defer payments on existing loans and suspend any fees for • Mosques, restaurants and cafes open as of 4 June electronic payments and withdrawals • Education in universities suspended until 8 June • Operations resume in the food and construction sectors • The opening of sea, air and land borders on 27 June. • Return of government employees to work • Public transports to operate on full capacity starting from 8 June * USD 175M loan from the World Bank to help mitigate the impact of COVID

1 Arabia Monitor; IMF. * Updated as of 15 June, 2020. Arabia Monitor

6 COVID-19 Situation Report: Levant (1)

Country Economic & Fiscal Health & Travel Related The country has a limited fiscal margin to cope with the impact of less oil revenue from either the lower price or a virus-related drop in demand. This year’s budget and those of the past five years have been based on an estimated oil price assumption averaging USD 51.3 pb. The last of ’s key cabinet positions under new Prime Minister Mustafa al-Kahdimi have been filled with Ihsan Ismail appointed as oil minister and Fuad Hussein as minister of foreign affairs. However even with domestic support for his cabinet of independents, dwindling protests could ramp up again against the new Prime Minister’s fragile government. • The Central Bank of Iraq (CBI) has established a fund to collect donations • Estimated # of Infections to Date: 20,209 (Cases per Million: 503) from financial institutions with initial donations of USD 20M from the CBI • Announced # of Deaths to Date: 607 (Deaths per Million: 15) itself and USD 5M from the Trade Bank of Iraq Iraq • Moratorium on interest and principal payments by SMEs • Government offices can keep staffing levels at a maximum of 25% and some shops will be allowed to reopen, though malls, parks and mosques will remain closed • A road-rationing system has been introduced, allowing vehicles to be on roads and public highways on alternate days and plans are been discussed to reopen cement manufacturing plants • Extended the nationwide curfew until 13 June; imposed a partial curfew between 6 PM and 5 AM from 14 June • Maintained the ban on all gatherings and on travel within provinces

In , the IMF had forecast GDP growth at 2.4% this year driven by tourism and higher exports with the opening up in neighbouring countries. However, muted tourism and trade (hit by the global turndown) have led the IMF to revise the forecast for 2020 to a contraction of 3.7%. On 20 May, the IMF approved Jordan’s request for emergency financial aid equivalent to USD 400M. This is expected to cover part of Jordan’s financing needs stemming from the COVID-19 shock. • Cash reserve requirement that banks maintain lowered to 5% of monthly • Estimated # of Infections to Date: 961 (Cases per Million: 94) average of daily customer deposit balances from 7% • Announced # of Deaths to Date: 9 (Deaths per Million: 1) • Cut interest rate to 3.5% on 4 March and to 2.5% on 16 March from 4% • Additional liquidity of USD 775M • Closed its borders, halted all flights and banned domestic travel Jordan • Rescheduled loans and offered grace periods with no additional fees • Nationwide curfew & lockdown; on 20 April, the government announced the • A USD 704.5M soft financing programme for SMEs lifting of lockdowns in the governorates of Karak, Tafileh, Maan and Aqaba • Banks cut interest rates to SMEs and individuals by 1.5% from end-April • Jordan will ease movement restrictions in the country from 8 am to 7 pm, • Employers will pay 50% of private sector wages and the public sector will return to work on 26 May • Plans are underway to restart investment sectors in free zones after getting the required approvals • World Bank USD 20M project approved to support response to COVID-19 * EU Regional Trust Fund mobilised USD 22.9M for refugees and the vulnerable * Launch of the “Our Jordan is Paradise, our Jordan is Fine” programme to revive the tourism sector 1 Arabia Monitor; IMF. * Updated as of 15 June, 2020. Arabia Monitor

7 COVID-19 Situation Report: Levant (2)

Country Economic & Fiscal Health & Travel Related

Over 130 days since Prime Minister took office, the government is attempting to implement economic reforms to unlock IMF financing; however key reforms remain pending: an amnesty law for thousands of wanted/imprisoned people, and; a capital controls law limiting transfers abroad. The government is only trying to show the IMF it has the political will to take the actions it needs to receive approval from the Fund on a financial rescue plan. Disagreements between the government, the central bank, the banking association, and political parties are stalling reforms and pushing IMF help further away. Moreover, the lack of consensus and a clear plan continues to anger protestors and pushing them to take the streets again. We do not except the protests to fade away. We also except negotiations with the IMF to drag until the government provides a clear economic and social rescue plan. • Zero interest loans to companies unable to pay salaries and debts • Estimated # of Infections to Date: 1,446 (Cases per Million: 212) • Banks to donate USD 6M to government hospitals to fight COVID-19 • Announced # of Deaths to Date: 32 (Deaths per Million: 5) • Extend exceptional five-year zero percent interest rate loans in Lebanese pounds and in dollars to customers that already have credit facilities but • Museums & sports sessions remain closed are unable to meet their obligations • SMEs reopened on 27 April; restaurants opening until 9pm • Distribute cash assistance to families hit financially as a result of COVID-19 • Salons reopening for pre-booked appointments • USD 797M stimulus package to cover the costs of COVID-19 • Increases its curfew time to 7pm-5am from 9pm-5am * Central bank will inject dollars to prop up the national currency from 15 June • Opening up of schools and universities and the resumption of air travel on * Opening of a new electronic platform to unify the price of dollars on the 8 June parallel market * Beirut International Airport to open for commercial flights on 1 July, with flight traffic to be at 10% of capacity from a year ago The Palestinian economy will suffer from escalating Israeli constraints and slower trade opportunities. Growth was expected to rebound in 2020 but could be revised downwards due to an ongoing standoff over the transfer of Palestinian taxes collected by Israel, low aid, the COVID-19 outbreak and long-standing constraints. The US has announced that it will provide USD 5M to the Palestinian Authority (PA) to curb the spread of the virus. This makes up about 4% of the PA’s USD 137M emergency response plan.

• The PA asked Israel to transfer its withheld clearance funds • Estimated # of Infections to Date: 492 (Cases per Million: 97) • The Israeli government will release USD 33.5M from tax revenues collected • Announced # of Deaths to Date: 3 (Deaths per Million: 1) on the PA’s behalf Palestine • The PA is planning to spend NIS 410M (0.7% of GDP) to cover (1-3 months) • Closed restaurants and cafes critical gaps related to COVID-19 • Suspended Friday prayers • Postponed monthly/periodic loan repayments to all borrowers for the next • Ban on movement from West Bank and Israel & between governorates four months, and for the tourism and hotel sectors for the next six months • Several economic establishments covering agriculture, food and private * France agreed to contribute USD 8.9M to the PA craftsmanship will be allowed to operate in the districts with no recorded infections or a limited number of cases, from 10 am until 5 pm • Workers will be able to move to Israel for work, provided they stay there for a month

1 Arabia Monitor; IMF. * Updated as of 015 June, 2020. Arabia Monitor

7 COVID-19 Situation Report: Levant (3) + Iran

Country Economic & Fiscal Health & Travel Related

In , COVID-19 adds a weight of additional pressure to the country’s healthcare infrastructure. The World Health Organization estimates there were 494 attacks against health facilities in Syria between 2016 and 2019. With 50% of hospitals functioning at or close to capacity, existing needs are not being met, let alone pandemic exigencies. In Damascus, the government has continued to show that it has a handle on the crisis by arresting those violating curfews.

• None taken so far • Estimated # of Infections to Date: 177 (Cases per Million: 10) Syria • Announced # of Deaths to Date: 6 (Deaths per Million: 0)

• Schools, mosques, parks and restaurants closed • Transport suspended • Reopening of businesses and industrial facilities with conditions • Daily curfew from 7:30pm to 6 am

There is little doubt that new US-led sanctions are taking a toll on Iran: the IMF forecasts the economy to shrink by 6% this year, from a contraction of 7.6% in 2019. COVID-19 has hit Iran quite hard, as well as slower growth in China and the new oil price environment. Iran's request for USD 5B in emergency funds from the IMF to fight coronavirus is still pending approval. To address the fiscal deficit, the administration has pushed forward with long-planned privatisation plans, conducting an initial public offering (IPO) for SHASTA, the investment arm of the country’s largest social security provider. Iran’s economy suffered from over 20% unemployment among its youth and over 40% inflation even before the outbreak.

• Commercial banks to extend low interest loans to restaurants, • Estimated # of Infections to Date: 187,427 (Cases per Million: 2,233) confectionary, travel and hospitality, textile, sports & entertainment • Announced # of Deaths to Date: 8.837 (Deaths per Million: 105) • One-time cash handout to low income families within next 4 months • Retail sector workers and street vendors will receive an interest-free loan • All government & private sector employees can now return to work Iran of USD 474 to be repaid over 30 months • Khuzestan has been placed under lockdown to prevent the spread • Moratorium on tax payments for a period of three months (7% of GDP) of coronavirus after a sharp rise in new cases across the province • Credit for affected businesses (4.4% of GDP) • Reopened international borders, except with Turkmenistan (1 June) • Extra funding for the health sector (2% of GDP) • Schools in low-risk areas reopened on 16 May and university exams will be • President Hassan Rouhani withdrew USD 1.1B from the National Development held on 6 June Fund to address the negative economic impact of the outbreak • All major Shi’a shrines have reopened with courtyard access • Trade resumes with neighbouring countries via land and water • Shopping malls would be able to stay open beyond the 6pm closing time • The Central Bank of Iran injected USD 1.5B in the foreign exchange market imposed as part of the lockdown to stabilise the rial • Nurseries to reopen on 14 June, Koran and languages classes to also resume • Turkey will reopen two border crossings with Iraq and Iran this week

1 Arabia Monitor; IMF. * Updated as of 15 June, 2020. Arabia Monitor

8 COVID-19 Situation Report: Rest of MENA (1)

Country Economic & Fiscal Health & Travel Related

With the disruption of the supply of inputs needed for manufacturing, and severe contraction in the travel and transport sectors, the pandemic threatens a dramatic drop in export revenues. This could precipitate currency and debt crisis in . However, Beijing is likely to endorse a temporary freeze on debt payments by African countries which would offer a breather for Djibouti. The country is facing a large negative external demand shock due to the global recession. Output is contracting, while lower exports of services and foreign direct investment have opened an urgent balance of payments need of USD 164M (4.8% of GDP). • Increase in health spending (no figures announced) • Estimated # of Infections to Date: 4,465 (Cases per Million: 4,522) Djibouti * USD 10M financing under the Development Response to Displacement Impacts • Announced # of Deaths to Date: 43 (Deaths per Million: 44) Project in the Horn of Africa to address COVID impact * USD 15M Economic Management and Statistics Development for Policy Making • Suspension of all commercial passenger flights; restrictions of air, land and Project sea borders; except for humanitarian personnel; borders and international travel expected to be reopened starting in September • Transport, retail, services, construction and public administration are allowed to reopen; places of worship resumed In addition to the continuing civil war, oil revenue losses from supply stoppage and the price war have hampered the government’s ability to import medical supplies which could make it harder to battle COVID-19. The government has no other sources of revenue, and reserves have become massively eroded since they peaked at USD 118B in 2012. exported some crude and condensate from the Zawiya terminal, a first from this port in almost four months. But with the civil conflict still brewing, a full or sustained return of Libyan oil is unlikely. The battle in Libya has reached a turning point with the loss of Tripoli and Tarhouna from Rebel General Khalifa Haftar — it could be the beginning of the end for Haftar, however it is certainly not the end of the fighting as LNA militamen have already threatened to seek revenge for their losses. Libya • The internationally recognised GNA announced a package of LD 500M • Estimated # of Infections to Date: 454 (Cases per Million: 66) (about 1% of GDP) in emergency COVID-19 related spending • Announced # of Deaths to Date: 10 (Deaths per Million: 1) • Resumption of production of El-Sharara oilfield, the country’s largest, on 7 June with an initial daily production of 30 Kb/d; force majeure declared on • Both governments have imposed lockdowns, curfew & halted travel 14 June • Opened schools for grade 9 and grade 12 from 6 June * 6pm to 6am curfew set to expire on 17 June Growth was expected to remain strong in 2020 at 6.3% following a peak of 6.9% last year, but this has been revised downwards to a decline of 2%. • The Ministry of Health has prepared a USD 10M (0.13% of GDP) short-term • Estimated # of Infections to Date: 1783 (Cases per Million: 364) response plan to contain the spread of COVID-19 • Announced # of Deaths to Date: 87 (Deaths per Million: 19) • A reduction of the policy rate from 6.5% to 5%; a reduction of the marginal lending rate from 9% to 6.5%; a decrease of the reserve requirement ratio • Nationwide curfew issued from 7% to 5% • Halted all international flights & tightened land border crossings • Emergency fund of about USD 80M (1.1% of GDP) for urgent procurements of • School closure medical supplies and equipment • Friday prayer now allowed in groups • Markets reopened; restaurants reopened but only for takeaways * Schools to reopen on 1 July for examination classes

1 Arabia Monitor; IMF. * Updated as of 15 June, 2020. Arabia Monitor

9 COVID-19 Situation Report: Rest of MENA (2)

Country Economic & Fiscal Health & Travel Related

Given the country’s very weak health infrastructure and large vulnerable population, including the internally displaced, would be ill- prepared to cope with any significant outbreak. Growth which was forecast at 3.2% for 2020 from 2.9% in 2019 will now decline by 2.5% as the agriculture sector -- which makes up 75% of Somalia's GDP and 93% of its exports -- is already being hit by natural disasters. Risks will be mitigated by strong international support along with government efforts. • Allocation of a USD 5M to tackle virus • Estimated # of Infections to Date: 2,618 (Cases per Million: 165) Somalia • Seeking support from international financial organisations • Announced # of Deaths to Date: 88 (Deaths per Million: 6) • Three month tax holiday on basic commodities and reduced consumption tax on some additional goods by 50% • Suspension of all flights other than humanitarian ones • Schools closed for a period of 15 days • Large public gatherings have been banned The economic impact from COVID-19 include an increased price of basic foods, rising unemployment and falling exports. Even though containment measures are severely hampering supply chains and constraining consumption, there is no clear indication of plans to open up the country. *The worsening economic conditions and growing social discontent may threaten the country’s democratic transition.

• Ministry of Health in set up a USD 44M country-wide • Estimated # of Infections to Date: 7,220 (Cases per Million: 165) Sudan preparedness response plan • Announced # of Deaths to Date: 459 (Deaths per Million: 10) • The financing needs to cope with COVID-19 related health care is about USD 120M; pledge contributions from the government, private sector, the • Nationwide curfew issued; schools closed EU, US, and Islamic Development Bank have exceeded USD 133M * Extension of the closure of airports to international and domestic passenger * Government subsidy of cash transfers for 500,000 designated families flights until 15 June * Extension of lockdown from 3 June to 18 June in the state of Khartoum In , warring parties have agreed to a ceasefire for the first time since 2016, but this is fragile, and the humanitarian crisis remains dire as disease and food shortages continue to ravage the country. The COVID-19 lockdown is expected to hamper relief efforts. The country’s healthcare has been hit hard by the conflict as medical facilities have been repeatedly attacked by warring parties. Yemen separatists have declared self-rule in the country's south, dealing a major blow to Saudi Arabia's efforts to end the devastating civil war. The move, if it takes root, will complicate international efforts to start reconciliation talks as well as any coordinated effort to stave off an outbreak of coronavirus. • The Health Ministry has designated USD 4M to combat the virus • Estimated # of Infections to Date: 728 (Cases per Million: 24) Yemen • The Saudi government has offered to contribute with USD 500M to the UN • Announced # of Deaths to Date: 164 (Deaths per Million: 6) for the humanitarian response, and USD 25M to fight the spread of the virus * Ministry of Energy of the internationally-recognised government affirmed that • Schools in GNA and Houthi-held areas have closed Yemen would raise its crude oil production by 25% to 75,000 bpb • Closure of all land crossings between GNA-controlled provinces and Houthi- * UNICEF shipment of protective equipment to help curb the spread of COVID held provinces in the north for two weeks arrived in Sanaa on 14 June • Closure of Sanaa airport • Three-day, 24-hour lockdown, in Aden

1 Arabia Monitor; IMF. * Updated as of 15 June, 2020. Arabia Monitor

10 About Arabia Monitor

Arabia Monitor is an independent research firm specialised in economic and market analysis, and strategy advisory on the Middle East and North African region, which it views as the new emerging market. Arabia Monitor’s in-depth, locally informed analysis by Arab, Persian and Chinese speakers has placed it consistently ahead of the curve in identifying new trends within and around the region, and understanding its geopolitics.

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