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00:00Monica. Just your analysis then of the three months cyberwar the benchmark local interbank rate dropped two point ninety two percent. Are we going to need to see more from the central bank to really bring that down. I think we will. I think it's a positive move. It's an indication that the central bank is responding to the tightening liquidity especially at a time when fiscal policy has changed and not providing the same support. But you know we we all agree that credit growth is going to remain very buoyant in the double digits and and funding for banks deposit growth is not matching that that credit growth. So I do think that we will need some more measures by summer to end the liquidity crunch further. But I think it's also up to the banks to diversify their funding sources and perhaps borrow externally which will also help to reduce liquidity pressures. Well Monica good to see you this morning. You think that some are going to have to do more. How much more. 13 billion dollars so far. How much more do you think they need to do. Because B Bloomberg Intelligence have run the numbers they say. Actually the Saudi banks are going to need to raise more capital. So what is the balance. Monaco how much more do you think they need to do and do they need to raise capital. In your view. Well I think it's going to be a multitude of measures that are going to be required so deposits is is just one side they can use other monetary instruments as well. I think also on the fiscal side even though we're not seeing government spending going up we're not seeing government deposits going up to the same degree because the government is keeping its fiscal surplus with SAMA in the current account. We could see some relief if the government starts paying back domestic debt. And and we we do expect that to happen as as the fiscal position improves. So I think it's going to be various factors as well as some. I can use repo activity. In the past they've used the loan to deposit ratio. So I think deposits is just one side of it. But I think it's going to be both between the regulators the government on the fringes and and the banks as well. What about oil prices. They're kind of going to stay range bound. Thursday's debate under way whether the UAE and Saudi Arabia can pump a meaningful amount of additional oil and how much political appetite there really is to rock the boat within OPEC plus. What is your read on it. Well I think it's it's a difficult situation because it's a fundamentally tight oil market. And if Saudi Arabia and UAE pump significant amounts now they they reduce their their spare capacity. They risk reduce the global spare capacity. So if we see a supply event happened then there'll be absolutely no space. So our view is that both Saudi Arabia and UAE will try and support production as much as they can. And the focus really is on boosting investment. So this week while we have the OPEC meeting and and we expect you know to see the production increase increases that were already agreed to be stamped. But the key issue is going to be what happens after. And our view is that both Saudi and UAE will gradually increase production in the second half of the year after September. While some people would suggest that it suits the G7 to have this narrative there are maximum capacity because they want the GCC to keep some of their powder dry. Monica what do you think of the other top line from G7 which is there might be speculation about perhaps loosening the constraints on expenditure on fossil fuels. I mean this would be quite dramatic if you take your mind back to cop just just over just under a year ago. How important is that line from G7 Monika for our region first of all. Well I think I think for the region the impact will be relatively contained in the short term because as I mentioned there is fundamental tightness in the oil market. And one thing the GCC oil ministers have highlighted repeatedly is the fact that globally we do need more investment not only in hydrocarbon output but also on the refining side as well. And we are already seeing signs of of G7 countries going against the move away from from hydrocarbons for for near term energy security. The war in Ukraine has really changed everything. We're seeing Germany going back to to increasing coal production. So I think at the moment it's just trying to secure as much energy supply as you can get. And it's not only oil that's tight it's gas that's tight globally as well. And I think you know but in the longer term we still think that there's going to be a focus on on renewables especially as Europe looks to diversify its energy sources. Middle East will be important. Gas will be important whether it's from Qatar whether it's from the UAE whether it's from Egypt. But renewables will will be a longer term area focus for Europe.

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ACDB's Malik on Saudi Banks, OPEC+ Outlook

Monica Malik, chief economist at Abu Dhabi Commercial Bank, discusses the liquidity relief for Saudi banks after facing the worst funding crunch in over and decade. She also talks about the difficult situation with OPEC+ in a tight oil market. She speaks on "Bloomberg Daybreak: Middle East." (Source: Bloomberg)

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