Goldman Sachs expected several countries in Sub-Saharan Africa (SSA) to face challenges in meeting their external financing needs in 2020, as they entered the coronavirus crisis with pre-existing vulnerabilities. It anticipated the current account balance of SSA economies to widen by two percentage points of GDP on average in 2020. It indicated that Angola and Nigeria face high risks of short-term balance-of-payments stress due to their reliance on hydrocarbon exports. Further, it projected a substantial decline in tourism receipts in Africa this year, which will have a significantly negative impact on Kenya, Mauritius and Tanzania. However, it considered that the deferments of bilateral interest payments by external creditors will provide negligible relief for balance-of-payments of SSA countries, while the anticipated decline in global remittance inflows will affect a limited number of SSA economies, such as Nigeria, Kenya and Ghana.

It expected the financing needs of SSA oil-exporters to significantly increase this year. It noted that Angola is already in debt relief talks with its creditors, while capital outflows have constrained Nigeria's external position, which resulted in an 8% devaluation of the naira against the US dollar in recent months. 

In parallel, Goldman Sachs said that the external positions of Ethiopia and Uganda are fragile, mainly due to the countries' low level of foreign currency reserves and to their reliance on foreign direct investments (FDI) for external financing. As such, it noted that a decline in FDI inflows due to the coronavirus pandemic will exacerbate the financing challenges of the two economies. Further, it considered that the scale of deterioration in the current account balance for the rest of SSA countries is manageable, even though their external positions have weakened and their ability to access international markets has diminished. It expected policymakers in SSA countries to choose between adjusting their exchange rates and monetary policy to rebalance external and internal pressures, or seeking additional sources of financing to cover capital outflows.
Source: Goldman Sachs

Figures issued by Bureau Van Dijk and Zephyr show that there were 194 merger & acquisition (M&A) deals targeting companies in the Middle East & North Africa (MENA) region for a total of $26.6bn in the first five months of 2020. In comparison, there were 230 M&A deals worth $95.2bn in the first five months of 2019. The figures show a decrease of 15.7% year-on-year in the number of deals, and a decline of 72.1% in their amount in the covered period. The elevated value of deals in the first five months of 2019 was mainly driven by Saudi Aramco's acquisition in March 2019 of a 70% stake in Saudi Basic Industries Corporation for $69.1bn. The amount of M&A transactions in Bahrain reached $11.5bn in the first five months of 2020 and accounted for 43.1% of the region's aggregate deal value. The UAE followed with M&A deals valued at $9bn (34%), then Saudi Arabia with $1.6bn (6.1%), Qatar with $1.2bn (4.6%), Egypt with $1.1bn (4.1%), Oman with $926m (3.5%), Iran with $877m (3.3%), Kuwait with $298m (1.1%), Morocco with $42m (0.2%), Jordan with $18m (0.1%), and Lebanon with $1m. Egypt had 72 M&A deals in the covered period; followed by the UAE with 37 transactions; Saudi Arabia with 20 deals; Jordan and Kuwait with 15 transactions each; Oman with 12 deals; Bahrain with 10 transactions; Iran, Morocco and Qatar with three deals each; as well as Algeria and Lebanon with two transactions each.
Source: Zephyr, Bureau Van Dijk, Byblos Research

The Syrian Center for Policy Research (SCPR) indicated that Syria's fiscal deficit narrowed from 40% of GDP in 2013 to 23.7% of GDP in 2016, while it widened to 33.5% of GDP in 2018 and reached 26% of GDP in 2019. It noted that government receipts fell from 25.4% of GDP in 2011 to 7.4% of GDP in 2019. It added that the government aimed to increase revenues since the onset of the conflict through the liberalization of the prices of basic goods and services and the increase in indirect fees and taxes. In parallel, it pointed out that total expenditures declined from 29% of GDP in 2011 to 13.3% of GDP in 2019. It said that the regime increasingly allocated its resources to military operations and conflict related-activities, as military spending stood at 17.2% of GDP last year, relative to 1.7% of GDP in 2011 and 13% of GDP in 2015. It noted that spending on public-sector wages and salaries decreased from 16.4% of GDP in 2014, its highest level in the 2011-19 period, to 6% of GDP in 2019; while spending on subsidies fell from 20.2% of GDP in 2011 to 4.9% of GDP last year and capital expenditures dropped from 7.3% of GDP in 2011 to 2.9% of GDP in 2019. It indicated that the cut in subsidies increased production costs and inflationary pressure, which constrained local demand. In parallel, it pointed out that the public debt level increased from 30% of GDP in 2010 to 208% of GDP in 2019, driven by the rise in the external debt level from 7% of GDP in 2010 to 116% of GDP in 2019. 
Source: Syrian Center for Policy Research