Fitch: Reform in the MENA not slowing down
Fitch Solutions, part of the Fitch Group, predicted that the Middle East and North Africa region will continue its reform processes in the coming quarters of this year, driven by the declining impact of THE CORONA virus on its economy.
Fitch released the latest version of its series of periodic reports, titled “Steady Momentum for Reform in 2022,” in which it said the reform campaign in the Middle East and North Africa region was “not slowing down.”
UAE and Saudi
In its report, seen by Economy Middle East, Fitch predicted that the UAE and Saudi would continue their efforts in applying reforms that would free up business and attract foreign investment. “We expect the two countries to do more on their reform agenda, since moving away from treating Corona as a pandemic and as competition between them grows,” it said.
With regard to the UAE, Fitch said it raised UAE’s rank from 7.5 in the fourth quarter of 2021 to 8 in the first quarter of 2022, “considering that the UAE is leading reform efforts in the Middle East, North Africa and globally.”
“This amendment came against the backdrop of new legislation on working conditions and trade laws. “The introduction of a 9 percent income tax on profits, which was decided in January 2022, would diversify financial revenues,” it said.
The high rate of vaccination in the UAE and strong economic growth would allow the authorities in the country to maintain their objectives of enhancing the competitiveness of the business climate, it added.
For Saudi Arabia, the report signaled that the kingdom will continue to advance its vision 2030 and carry out reforms to create important incentives for foreign investment.
In January, the authorities passed a new privatization law that would regulate competition, including public and private sector tenders and partnerships, the report said.
“As the Saudi government renewed its commitment to digital transformation, it pledged to invest $6.4 billion in advanced technology in 2022, and signed agreements with Huawei to build data anchors and introduce a digital passport,” Fitch Solutions added.
It noted that the kingdom’s 2022 budget expects a surplus for the first time in years, supporting its fiscal stance as part of its medium-term financial plan.
All this prompted Fitch to reconsider Saudi Arabia’s rank from 6.5 in the fourth quarter of 2021 to 7 in the first quarter of 2022 while supporting the roadmap drawn up by the Kingdom’s vision for 2030. Fitch is optimistic about Saudi Arabia’s reform process and direction.
In Egypt, Fitch increased the country’s ranking from 5 in the fourth quarter of 2021 to 5.5 in the first quarter of 2022, as the country was not making significant progress in the second phase of its reform economic program, which was launched in April 2021. The foundation expressed an optimistic view of reform in Egypt, as the government tries to reduce its intervention in the economy for the benefit of the private sector.
For Iran, Fitch said that plans to adjust public finances would address financial imbalances.