The Saudi government is speeding up its privatisation drive, which will help to finance the budget deficit. But the continued reliance on the Public Investment Fund to drive investment risks undermining the country’s long-run prospects. Elsewhere, although the extension of the UAE’s Targeted Economic Support Scheme this week looks helpful, the scheme has had little effect so far. And with overcapacity in key sectors exacerbated by the crisis, banks’ bad loans are likely to rise further. Finally, Tunisia’s political crisis escalated further this week and the ensuing policy paralysis makes a sovereign debt restructuring even more likely.
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