Have Sovereign Funds and the Banking sector been adversely impacted by the global economic downturn in recent months?
Sovereign funds have taken some losses on their investments in global financial institutions. Some early estimates by the Council on Foreign Relations suggest that sovereign funds with a high allocation into equities, emerging market and private equity may lost as much as 40% in portfolio value between December 2007 and December 2008. However sovereign funds continue to have significant reserves. With the exception of a Kuwaiti bank that suffered significant losses due to trading in currency derivatives in late 2008, the banking sector across MENA has so far been little affected, mainly because of limited integration with global financial institutions. However, many banks are being cautious in their lending decisions, and this is causing a credit dry out in some countries. To what extent has the access of MENA economies to external financing been affected? The global financial crisis had immediate impact on access to external financing worldwide. Borrowing spreads increased for emergin
