Middle East & Central Asia News
LAST UPDATE: May 30, 2025
Saudi Arabia to ‘take stock’ of spending after oil price drop
Saudi Arabia plans to reassess its government spending priorities following a significant drop in oil revenues, aiming to maintain fiscal stability while supporting economic diversification efforts.
Insight
The decline in oil revenues has prompted Saudi Arabia to reevaluate its fiscal strategies to avoid the pitfalls of boom-and-bust cycles. Despite an 18% drop in oil revenues leading to a $15.6 billion fiscal deficit in Q1 2025, the government remains committed to its Vision 2030 agenda. Emphasizing countercyclical spending, the finance minister highlighted the importance of prudent fiscal management to support non-oil sector growth. Maintaining a manageable debt-to-GDP ratio and sufficient reserves provides the kingdom with buffers to navigate the current economic challenges. However, sustained low oil prices may necessitate further fiscal adjustments to ensure long-term economic resilience.
Pakistan inflation in May seen at 1.5%-2%, in 3%-4% range in June
Pakistan’s inflation is projected to remain between 1.5% and 2% in May, with expectations of a slight increase to 3%-4% in June, according to the finance ministry.
Insight
The anticipated low inflation rates suggest a period of price stability in Pakistan, providing a conducive environment for economic planning and investment. This stability may allow the central bank to maintain or further reduce interest rates to stimulate growth. However, the projected uptick in June indicates potential emerging pressures, possibly from seasonal factors or global commodity price fluctuations. Policymakers need to monitor these trends closely to ensure that inflation remains within manageable levels, balancing growth objectives with price stability.
Egypt Considers Securing Another LNG Vessel as Import Needs Jump
Egypt is considering acquiring an additional LNG import vessel to meet rising domestic demand, as the country transitions from being a gas exporter to an importer.
Insight
The shift from exporter to importer reflects underlying challenges in Egypt’s energy sector, including declining domestic production and increasing consumption. Securing another LNG vessel indicates proactive measures to address potential energy shortages and maintain supply stability. This move may have fiscal implications, increasing the import bill and affecting the trade balance. Additionally, it underscores the importance of investing in domestic energy infrastructure and exploring alternative energy sources to reduce dependency on imports. The situation highlights the dynamic nature of energy markets and the need for adaptable energy policies.
Trump Sees Iran Deal That Allows US to Destroy Nuclear Sites
President Trump envisions a nuclear agreement with Iran that permits the U.S. to destroy Iranian nuclear sites if deemed necessary, emphasizing a more aggressive stance in negotiations.
Insight
This proposed approach marks a significant departure from previous diplomatic strategies, introducing a more confrontational element to nuclear negotiations. Allowing unilateral action to destroy nuclear sites could escalate tensions and reduce the likelihood of reaching a mutually agreeable deal. It may also strain relations with allies who favor diplomatic solutions. Such a stance could provoke retaliatory measures from Iran, potentially destabilizing the region further. The international community may need to mediate to prevent escalation and encourage a return to traditional diplomatic negotiations.
