MARKET TALK: Resource-poor Arab States Could Face Fiscal Crisis-CE

Sunday, May 06, 2012

0538 GMT [Zawya Dow Jones]--Resource-poor Arab countries may face a fiscal crisis as their debt levels remain high while funding fiscal deficits prove to be difficult amid tight financial markets, says London-based Capital Economics. Estimates that "Egypt, Morocco, Tunisia, Lebanon and Jordan, will need a total of $75 billion," to fund their fiscal deficits over the next two years. Adds that the resource-poor governments won't be able to use fiscal stimulus as a buffer against a slowdown in global growth, unlike their oil-rich neighbours. Predicts Morocco and Tunisia to be the most vulnerable as their economies heavily rely on Europe, which in turn is facing a crisis. "We expect GDP growth in resource-poor Arab economies to be well below recent trends over the next three years or so," it adds.

(leila.hatoum@dowjones.com)

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06-05-12 0539GMT