The slump in the profits of Saudi Arabia’s state oil company, Aramco, in Q2 has focussed attention on the deterioration in the Kingdom’s budget position. But the authorities appear to be taking as many steps as possible to ensure that they can maintain a loose fiscal stance. Elsewhere, Egypt’s central bank delivered an unexpected interest rate hike last Thursday in a move that has been welcomed by investors as a sign that officials are jumping back on the path towards orthodoxy. But policymakers have more work to do to reinforce their commitment to orthodoxy and the key test will be what happens to the pound.
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