Political troubles casting a shadow

Political developments across Algeria, Tunisia and Lebanon threaten to exacerbate already-poor balance of payments positions. Presidential elections that took place in Algeria last week don’t appear to have appeased protestors, who are no doubt disillusioned with the election of another insider from the current ruling regime. And Tunisia’s Prime Minister-designate, Habib Jemli, is no closer to forming a coalition government. In both countries, there are likely to be few efforts in the near-term to address large macroeconomic imbalances, setting the stage for a sharper adjustment further down the line. The situation is worst in Lebanon. Pressure is mounting on the dollar peg and there is a growing risk that the country starts the next decade amid messy currency, debt and banking crises.