MGI Weekly round-up | 22 December 2017
Stories MGI has been tracking this week:
- IMF visits Bosnia and Herzegovina to discuss unlocking loan payments
- Egypt to connect its power grid to Saudi Arabia
- BOI’s governor: the crisis and EU rules are responsible for the collapse of banks
And as always, we feature content from the MGI data and analysis platform, a summary of the week’s key statistical releases, and a look to the week ahead in data. This week, we use the MGI platform (WB section) to look at the evolution of bank non-performing loans (% of total gross loans) in Italy over the last twelve years.
IMF visits Bosnia and Herzegovina to discuss unlocking loan payments
An IMF mission is visiting Bosnia and Herzegovina for talks aimed at unblocking the payments of a €550 million loan scheme approved by the Fund in September 2016. Part of this amount – €79.2 million – has already been disbursed to two autonomous regions – the Bosniak-Croat Federation and the Serb Republic. However, due to the lack of progress in adopting economic reforms, loan payments have been frozen. The visit of the IMF comes after the country's parliament adopted last week a long-delayed set of excise laws, which is expected to unlock money for infrastructure projects from international lenders and – according to the IMF – will lead to a new cycle economic growth and job creation, Reuters reports.
Egypt to connect its power grid to Saudi Arabia
Egypt plans to connect its power grid to Saudi Arabia in a project that will cost about $1.6 billion. According to the Egyptian Electricity Minister, around 40% of the projects costs will be paid by Egypt while contracts for the construction of the network will be signed in March or April next year. The link – with a capacity of 3,000 megawatt – will allow the nation to export electricity in periods of surplus and import energy during shortages.
Interestingly, the minister also revealed the country intentions to increase the production of energy generated from renewable sources to 42% by 2025. The country will start to receive bids for 600 megawatts of wind power, while the Benhan solar park – the largest solar power installation in the world – is set to start at the end of 2018 or early 2019, Bloomberg reports.
BOI’s governor: the crisis and EU rules are responsible for the collapse of banks
Speaking before a parliamentary committee, the governor of the Bank of Italy (BOI) defended the actions of the institution in recent years, saying that problems in the banking sector were not due to poor supervision but to the deep economic crisis and the EU regulatory regime.
“It was not inattentive supervision that determined the evolution of the Italian financial system, but the worst economic crisis in the history of our country… There was bad management at some banks – and we highlighted it – but the very serious economic conditions made pathological situations explode…Numerous technical decisions in Europe were conditioned by countries that intervened massively with public funds to support banking systems hit by the global financial crisis. In an especially unfavourable macroeconomic context, these choices did not help to make the management of banking crisis in our country more speedy or effective”, the governor said.
The commission was set up in September to examine the collapse of ten Italian banks over the past two years and has created tensions in the country's political scene as the national elections in Italy are expected to take place in March next year.
Featured content from the MGI data and analysis portal
In this newsletter, we use the WB section on the MGI platform to look at the evolution of bank non-performing loans (% of total gross loans) in Italy. International guidelines recommend that loans be classified as nonperforming when payments of principal and interest are 90 days or more past due or when future payments are not expected to be received in full. This ratio is a measure of the health and efficiency of banks, and a high indicator value may indicate a deterioration of the credit portfolio. The period under review is 2005-2016. As can be seen from the graph, the share of non-performing loans increased significantly during the period 2007-2015 - reaching 18% in 2015 compared to 5.8% in 2007. In 2016, the share of non-performing loans (% of total gross loans) fell slightly compared to 2015, reaching a level of around 17%.
The week in data
Highlights from national statistics releases tracked by MGI this week include:
- Registered employment in Slovenia increased 0.6% MoM and 3.5% YoY in October 2017
- In November 2017, Malta's annual inflation rate (as measured by the Retail Price Index) stood at 1.3%, down from 1.32% in October
- Israel's employment in November 2017 decreased 0.2% vs October 2017. Unemployment rate increased to 4.3% from 4.2%
- Lebanon's CPI in November 2017 increased 0.55% vs October 2017
Next week, we expect data on the real GDP of Albania and the Palestinian Territories, the IPI for Cyprus and Croatia and the interest rate decision of the Central Bank of Egypt. MGI’s complete data release schedule can be viewed at our release calendar section.
Monday 25 December, 2017:
- Montenegro IPI and balance of trade for November
Tuesday 26 December, 2017:
- Israel composite economic index for November
- Turkey business confidence and capacity utilization for December
Wednesday 27 December, 2017:
- Spain retail sales for November
- Cyprus retail sales for October
- France 3-month, 6-month and 12-month BTF auction
- France registered unemployed for November
Thursday 28 December, 2017:
- Palestinian Territories real GDP for 2017Q3
- Cyprus IPI for October
- Turkey economic confidence index for December
- Spain tourist arrivals for November
- Italy 6-month BOT auction and 5-year, 10-year BTP auction
- Morocco money supply (M2) for November
- Egypt central bank interest rate decision
Friday 29 December, 2017:
- Turkey balance of trade and tourist arrivals for November
- Spain domestic and harmonized inflation for December, preliminary estimates
- Spain current account for October
- Croatia current account for 2017Q3 and retail sales for November
- Croatia IPI for November
- Albania real GDP for 2017Q3
- Italy PPI for November
- Slovenia domestic and harmonized inflation for December
- Slovenia retail sales for November
- Cyprus average monthly earnings and current account for 2017Q3
- Greece PPI for November and retail sales for October
- Egypt money supply (M2) for November
- Montenegro unemployment rate and employment (register data) for November