Frontier Markets Weekly, February 11th 2023

Egypt privatization plan | Pakistan teeters on the brink | China’s role in the Gulf | Moldova’s government travails

By Dan Keeler, Ken Stibler, Noah Berman and Nojan Rostami 

Welcome to the latest edition of Frontier Markets News. As always, I would love to hear from you at with news ideas, feedback and anything else you find interesting.

Talking of welcome, we’re delighted to welcome London-based Nojan Rostami to our team this week. Nojan will be covering the Middle East and beyond.

If you’d like to receive this newsletter in your inbox every weekend, sign up at Please also share this link with any friends or colleagues you think would enjoy it.


US and UN encourage Somalia aid. The UN is seeking $2.6 billion in aid to assist 7.6 million people in Somalia, its Office for the Coordination of Humanitarian Affairs announced on Wednesday. The Horn of Africa country is in the midst of its longest drought ever recorded.

Over 1.4 million people have already been displaced, and more than 3.5 million livestock animals have died, but UN and Somali officials have yet to officially declare a famine. Analysts say that hesitance could cost millions in potential aid, The Guardian reports.

Farhia Nur, 25, and her son have spent the past six months at the Xaaxaar IDP camp in the Galmudug region of Galkayo, Somalia. Photo: Gary Calton/The Observer

Last week, the US issued its own calls for aid to the drought-stricken nation. On a visit to Mogadishu last week, US Ambassador to the United Nations Linda Thomas-Greenfield pledged $40 million and appealed to the EU and “nontraditional donors” to increase their aid contributions, PBS reports. 

Egypt ramps up privatization program. Egypt will sell stakes in all businesses controlled by the military-affiliated National Service Projects Organization, Bloomberg reports. 

The country has already begun the sale of two companies, an oil distributor and a bottler of water. They are included among 32 state-owned companies that will be offered to investors. Egyptian officials said the sales could occur in either public offerings or in block sales to private companies. Most sales are expected to be completed in 2023.

Egypt’s President Abdel Fattah El-Sisi. Photo: Karen Minasyan/AFP/Getty Images

The move is part of an effort to meet IMF conditions for a $3 billion loan that was approved by the multilateral lender’s executive board in December last year. This follows three devaluations of the Egyptian pound, which hit a record low last month. Among the notable companies included in the asset sale are Banque du Caire, Arab African International Bank, United Bank and Wataniya, the oil distributor that has already been placed on the market.


Russia sanctions threaten Bangladesh’s nuclear ambitions. In 2013, when officials in Bangladesh signed a contract with Russian state-owned nuclear power company Rosatam to build a long-desired nuclear power plant, war was not on their minds. Now, with 90% of the $12.65 billion project’s financing backed by Russian loans, Bangladeshi officials worry US sanctions will delay its completion, Nikkei reports.

The Russia-backed Rooppur Nuclear Power Plant is currently under construction. Photo: Rizwan Hasan via Nikkei

The power plant is the most expensive infrastructure project the South Asian country has pursued. If completed, it would generate enough electricity to power 15 million households, a serious boost to the country of 170 million where blackouts have become increasingly common. It would also be the country’s largest non-oil-or-gas source of energy.

Analysts say Bangladesh could pay for the project by asking China or India to function as an intermediary, but warn of potential consequences from Western governments.

The project was previously expected to be completed by 2024. Bangladesh has not made its three most recent payments for the project, totaling $110 million. 

Pakistan on the brink as IMF deal proves elusive. Pakistan’s government has failed to reach a deal with the IMF to release blocked funds, the BBC reports. Despite the impasse, IMF negotiators said a series of meetings had led to “considerable progress.”

If Pakistan succeeds in accessing the IMF funds it could unlock a swath of other funding, especially from Gulf nations, Matt Vogel, head strategist for frontier and emerging markets at fund manager FIM Partners told FMN in our latest podcast.The South Asian nation has already made some significant concessions to try to unlock the IMF funds. If it can’t persuade the multilateral lender to provide a bailout, though, a debt default is looking increasingly likely, according to frontier-focused analysis firm Tellimer. 

Vietnam and Singapore agree to green cooperation. Vietnam and Singapore agreed to a series of deals on digital and climate cooperation on Thursday. The so-called Green-Digital Economic Partnership is expected to build a framework on energy connectivity and sustainable infrastructure, the Straits Times reports. It follows a series of deals the two countries signed last year.

In December last year, Vietnam agreed to speed up its transition to renewable energy in exchange for $15.5 billion in investment from wealthy countries including the US.

Vietnam and Singapore also signed an agreement focused on traditional economic and trade cooperation on Thursday. That deal will focus on building ties in the “digital economy,” such as electronic payments and e-commerce.  

Indonesia restricts more palm oil exports. Indonesia will suspend some palm oil export permits amid rising domestic demand, a cabinet minister announced on Instagram on Monday. 

Trucks with palm oil fresh fruit bunches in West Aceh, Indonesia. Photo: Antara Foto/Syifa Yulinnas/Reuters

Indonesian palm oil producers are subject to export controls that require them to sell a certain amount of oil in the domestic market. This week’s restrictions will prevent two-thirds of planned export quotas from being reached until domestic demand cools, Reuters reports

Palm oil exports have become progressively more unpredictable as Indonesia institutes and eliminates restrictions. Last year, the country temporarily banned exports of the oil entirely amid a global uptick in the price of cooking oil. And Indonesia and neighboring Malaysia are suing the EU over a deforestation law the Southeast Asian countries say is discriminatory.

Middle East

Iraq revalues currency. Iraq has adopted a new official exchange rate, pegging the dinar at 1,300 to the US dollar. Previously, the dinar had been fixed at 1,470 but traded weaker on the street, moving the government to strengthen it, Al-Monitor reports.

The dinar has sharply depreciated since November, in part due to US currency controls creating a shortage of dollars. This prompted the central bank’s move this week to restore price stability.

A street money exchanger in Baghdad. Photo: Ahmad Al-Rubaye/AFP

This move comes as Iraq is under US pressure to limit the flow of dollars from Iraq into sanctioned Iran and Russia. Iraq’s foreign minister and central bank governor are due in Washington to discuss stronger standards for the transfer of US dollars in Iraq.

Saudi Arabia surprises oil markets with price rise. Saudi Arabia has pushed up March prices for light grade oil to Asia and Europe by between 30c and $2 per barrel. The price increase comes as a surprise as the market was pricing in cuts of 20c per barrel and crude prices have fallen around 7% so far this year, Bloomberg writes.

The price hike is seen by some as a bet on increased demand from China as it emerges from its zero-Covid policy. With other oil producers such as Kuwait and Iraqtaking their lead from Saudi Arabia on crude prices, and OPEC being generally optimistic about rising demand in 2023, this week’s price increases may signal a reversal of the decline from the June 2022 peak.

The anticipation of further demand for Saudi oil by China in 2023 is part of a broader, ongoing deepening of economic ties between China and the Gulf. Earlier in January, Saudi Arabia hinted it was open to discussing non-dollar oil-trade settlement with China.

China explores direct investments and trade deals as it tightens ties with the Gulf. Chinese companies showed up in force at Saudi Arabia’s flagship LEAP technology investment conference, Al-Monitor writes. Major Chinese companies such as Huawei and Lenovo attended and used the conference as an opportunity to announce large direct investment commitments in the country.

The LEAP technology conference in Saudi Arabia. Source: Twitter

Telecom company Huawei announced a $400 million investment in cloud technology infrastructure and services in the Gulf as part of a broader partnership between the company and Saudi Arabia’s communications ministry. Another Chinese giant, Lenovo, signed a memorandum of understanding with the King Abdulaziz City for Science and Technology—a state-owned scientific innovation, research, and policy-making center—on long-term cooperation on digital technology.

A separate event, the UAE-Hong Kong Business Forum, also ended with memoranda of understanding signed between Emirati and Hong Kong companies on the development of carbon-footprint-reducing building materials and cloud-based sustainability technology. Speaking at the conference, Hong Kong Chief Executive John Lee Ka-chiu commented that a free trade agreement is the “next logical step” in the relationship.

Earthquake death toll in Syria and Turkey grows as politics slows rescue and recovery efforts. Monday’s twin 7.8 and 7.5 magnitude earthquakes devastated Syria’s war-torn north, particularly the already-suffering Idlib province. Years of war have destroyed both physical and governmental infrastructure, and as many as four million Syrians already relied entirely on humanitarian aid even before Monday’s earthquake struck, CNN reports.

Rescuers search for casualties and survivors in Syria’s rebel-held northwestern Idlib province. Photo: Omar Haj Kadour/AFP/Getty Images

The lack of government capacity, public services and humanitarian aid infrastructure in Idlib delayed humanitarian aid and rescue efforts, with the first humanitarian convoy not reaching the province until Thursday, compounding Monday’s devastation. Part of the delay is due to the complicated logistics of delivering humanitarian aid to an active conflict area.

President Bashar al-Assad has requested that all humanitarian aid be routed through Damascus, giving the government control of the response. Some, including the US, have suggested Assad is using the disaster relief efforts as leverage to evade sanctions.


Ukrainian immigrants bolster growth across a region beset by demographic struggles. Ukrainian refugees are boosting economic growth in nations across Central and Eastern Europe, BalkanInsight reports. A report by the National Bank of Ukraine says Ukrainian migration could contribute between 0.8 and 1.2 percentage points annually to the GDP growth rates of Central and Eastern European countries. 

The refugees’ consumption is offsetting a decrease in real private consumption in the EU caused by inflation, but their impact on the economy becomes even more significant once they are integrated into local labor markets, which have been struggling from declines in working populations.

Ukrainian refugees in Poland. Photo: Twitter/Lublin Police

In Poland, an estimated 60-70% of the refugees are working and registered 20,000 companies in 2022. The head of the country’s development fund estimates that the tax contributions by the refugees will surpass the state’s expenditure on aiding them by 1.1 billion zloty ($247 million) in 2023. 

Moldova’s government resigns as interwoven crises pressure pro-Western leaders. Moldova’s pro-Western government has resigned amid rising tensions with Russia and after a wave of protests over high energy prices. The resignation of the country’s prime minister on Friday came after Ukrainian intelligence shared information indicating that Moscow was moving to destabilize the country. 

Moldova’s PM calls for more EU help to curb Ukraine war smuggling. (FT)

Moldova’s intelligence service confirmed allegations by Ukrainian President Volodymyr Zelenskiy that Russia has acted to destabilize the country and has a plan similar to the one devised to take over Ukraine. The Moldovan presidency stated that its institutions are working to ensure the country’s security and are in constant contact with European partners.

Armenian banks benefit from Russian inflows. Armenian banks saw record profits in 2022, supported by an influx of Russian citizens relocating to Armenia, Eurasianet reports. The Central Bank of Armenia said transfers from Russia to the country increased to a total of $3.5 billion in 2022, accounting for 70% of all transfers.

The increase in cash has allowed banks to boost investments outside the country, with foreign investments held by the Armenian banking sector jumping from $1 billion to $2.58 billion between January and September, according to Modex, a financial research consultancy.

Latin America

Referendum losses undermine Lasso’s administration in Ecuador. Ecuador’s center-right President Guillermo Lasso has suffered a major loss in a constitutional referendum and mayoral contests, resulting in calls from the leftist opposition for an early election. Candidates loyal to the leftist former president Rafael Correa have won major cities and prefectures, including Guayaquil, which was once a conservative stronghold. 

The constitutional referendum was aimed at rebuilding Lasso’s political capital and pushing stalled reforms such as granting the attorney-general the power to appoint prosecutors and reducing the size of the legislature. All eight measures failed.

A poster in Quito calls for a rejection of the referendum on government reforms and mayoral contests. Photo: Rodrigo Buendia/AFP/Getty Images

Despite fulfilling Covid-19 vaccination targets and successfully restructuring debt with China, the former banker has faced a hostile congress while struggling to contain a rise in drug-related violence in the country’s prisons and cities. A Citibank note argued that the referendum defeat will lead to a further deterioration in Lasso’s ability to govern.

El Salvador’s gang crackdown shows significant successes. El Salvador has seen a significant decrease in gang activity and violence in the wake of a heavy handed crackdown that critics characterize as abusing human rights, El Faro reports. According to government statistics and independent assessments, the administration of President Nayib Bukele has successfully managed to undermine the gangs’ territorial presence, control and financing through a state of exception implemented in March 2022.

An abandoned house in Las Margaritas that was used for many years by MS-13. Photo: Víctor Peña/El Faro

The policies have led to reductions in extortion and a decrease in violent crime, with residents, teachers and communal leaders reporting a decrease in gang activity and the revival of restaurants, taxis and ride-hailing services in communities once deemed no-go zones. 

The shift in perceptions has resulted in an upswing in tourism in 2022. Visitor numbers recovered to close to pre-pandemic levels and spending grew by 50% over the previous year.

Brazil agrees to explore yuan-clearing with China. The People’s Bank of China signed a memorandum of understanding with its Brazilian counterpart to establish yuan clearing, Reuters reports. 

The currency arrangement is intended to boost cross-border transactions and promote bilateral trade, which reached $172 billion in 2022 according to Chinese customs data. Beijing’s biggest currency success in the Americas so far comes on the heels of similar yuan-clearing deals with PakistanKazakhstan and Laos


Emerging markets see faster inflows than US ETFs. Emerging market equity exchange traded funds have attracted the highest monthly net inflows in a year, according to an FT analysis of BlackRock data. In January, emerging market ETFs received a net inflow of $15.9 billion, with buying led by the US and EMEA regions. 

Almost half the total went into single-country funds, with China-focused vehicles attracting the most, at $6.4 billion. The reopening of China and the end of its zero-Covid policy has boosted growth projections in developing countries, especially large commodity exporters. 

Emerging market debt ETFs also recorded a second straight month of inflows, at $2.2 billion, following the first outflow year on record in 2022. 

For more analysis on emerging markets debt—as well as some cautionary thoughts on the current EM rally—check out our podcast with Matt Vogel, head strategist for frontier and emerging Markets at FIM Partners.

What we’re reading

Nigeria delays plans to replace its banknotes after chaotic scenes at ATMs. (CNN)

Russia pledges military support to Mali during Lavrov visit. (AP)

Uganda condemned over decision to close UN human rights office (The Guardian)

Egypt to sell state stakes in 32 firms over next year. (Reuters)

Tunisian president dismisses foreign minister. (Reuters)

Chevron explores Algerian gas plans amid Russian sanctions. (WSJ)

Russia in Africa: how Moscow bought a new sphere of influence on the cheap. (FT)

Opinion: US must try to bridge divide between Africa’s economic innovators and its political class. (The Hill)

Lack of jobs, the main driver of violent extremism in sub-Saharan Africa. (UN)

Special investigation: How Russia and political insiders cash in on Uzbekistan’slucrative gas sector. (Radio Free Europe)

Ashgabat exodus: Turkmen seek passports to leave poverty-stricken country. (Radio Free Europe)

Thai pandemic borrowing binge prompts calls for repayment delays. (Nikkei)

Thai tourism struggles to find workers as visitor numbers swell. (Nikkei)

Laos begins digital currency trial with Japan blockchain company. (Nikkei)

Philippines and Japan pledge to deepen security and economic ties. (Nikkei)

UAE grants Russian lender rare banking licence. (FT)

Syria: Assad forces bombed areas hit by earthquake hours after disaster. (Middle East Eye)

Freezing cold puts Iran’s natural-gas ambitions on ice. (Radio Free Europe)

Russia’s Wagner mercenaries ‘halt prisoner recruitment campaign.’ (Reuters)

Ukraine lays out demands for Israel ahead of key visit to Kyiv. (Axios)

Ukraine starts to import gas from EU via Moldova. (Balkaninsight)

Belarus condemns Poland’s closing of border crossing point. (Reuters)

Cuba ministers express willingness to engage with ‘legitimate’ creditors. (FT)

Drought squeezes Argentina agro exports. (Mercopress)

Paraguay president to visit Taiwan ahead of election that could end ties. (Reuters)
El Salvador’s historic metal mining ban is in danger. (Jacobin)

Iran ‘to help Venezuela revamp largest refining complex.’ (Reuters)

Peru calls on citizens to report ‘acts of terrorism’ on social media. (The Guardian)

Colombia unveils $250b four-year development plan. (Reuters)

China confirms second balloon over Latin America. (WSJ)

Welcome to Frontier Markets News

Sign up to receive our frontier and emerging markets newsletter.

We don’t spam and we won't share your info!

Leave a Reply

Your email address will not be published. Required fields are marked *