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---

### Overview and purpose
- Macroprudential policies complement microprudential regulation, fiscal policy, and monetary frameworks to:
  - increase overall resilience of the financial system;
  - contain the buildup of systemic risk over time;
  - address vulnerabilities from structural relationships between financial intermediaries.
- The global financial crisis highlighted the need for these policies.

### Why macroprudential policy is especially relevant in the Arab region
- Key structural vulnerabilities:
  - High dependence on hydrocarbon revenues exposes economies to swings in global energy prices; volatility in the hydrocarbon sector spills over to the rest of the economy and is often amplified by the financial sector.
  - Heavy reliance on the extractive sector for fiscal revenues and export earnings increases vulnerability to oil price shocks.
  - Pegged exchange rate regimes in many oil exporters limit monetary policy independence, increasing the premium on macroprudential policy.
  - Oil importers face relatively small external and fiscal buffers.
- Fiscal and monetary constraints:
  - Fiscal policy has been procyclical due to reliance on hydrocarbon revenues and lack of automatic stabilizers in oil-importing countries; fiscal deficits remain high.
  - Monetary policy independence is constrained in most Arab oil-exporting countries due to fixed exchange rate arrangements and limited liquidity management tools (central banks rely primarily on reserve requirements and issuance of Certificates of Deposit and T-Bills).
  - Absence of liquidity forecasting, shallow money and financial markets, and limited open market operations capacity further constrain monetary operations.
- Financial sector features amplifying shocks:
  - Banks tend to have high US dollar and energy sector exposure.
  - Credit growth characterized by large exposures in oil-related and real estate sectors.
  - Lack of ex ante crisis management and resolution regimes complicates handling banking crises.

### Empirical indicators and recent dynamics
- Domestic liquidity grew by 24 percent in 2007 compared to 13.3 percent in 2003.
- Private sector credit growth reached 29 percent by 2007.
- In 2009, growth of domestic liquidity in the region declined by 11 percentage points.
- Private credit facilities slumped by more than 20 percentage points in 2009 to 4.3 percent.
- Twin deficits amplified during oil price surges in 2009–11 and moved in the opposite direction when oil prices decreased.
- Private Sector Credit to GDP groups (1990–1999 vs 2000–2010):
  - First Group (GCC countries): 35.58 and 48.62.
  - Second Group (Oil-importing countries): 41.37 and 51.45.
  - Third Group (Other oil-exporting countries): 12.71 and 10.00.

### Progress to date in the Arab region
- Since the global financial crisis:
  - Arab countries tightened prudential regulation and are implementing Basel III standards on capital, liquidity, and leverage.
  - Many central banks established financial stability offices/units, early warning systems, and conduct periodic stress testing of banks.
- Early adoption of macroprudential measures in some GCC countries:
  - Loan-to-deposit ratio limits.
  - Regulations on personal lending such as debt service to income ratio and limits on loan tenor.
  - Limits on concentration, including on real estate exposure.

### Gaps and needs
- Scope to better identify and mitigate spillovers, build buffers, and limit excessive leveraging and credit booms.
- Improved macroprudential frameworks should include:
  - A system of early warning indicators.
  - A set of policy tools to contain risks ex ante, address vulnerabilities early, and build buffers ex post.
  - An institutional framework for effective identification of systemic risks and implementation of macroprudential policies.
- Institutional adjustments needed:
  - Assign a macroprudential policy mandate and delineate powers.
  - Establish a financial stability coordination committee comprising all financial regulators, including capital markets authority, insurance supervisor, and Ministry of Finance.
  - Ensure appropriate accountability mechanisms.
  - Elevate the exchange of information among authorities to a legal requirement.
- Strengthening tool effectiveness requires improved data infrastructure and availability.

### Survey and scope of the study
- The study assesses regulatory and institutional macroprudential frameworks, identifies toolkits used in Arab countries, and traces progress toward implementing Basel III.
- Survey details:
  - Sent to 19 countries.
  - Responses received from all except Djibouti, Mauritania, Yemen, and Syria.
- Country groupings:
  - GCC oil exporters: Bahrain, Oman, Kuwait, Qatar, Saudi Arabia and the UAE.
  - Oil-importers: Egypt, Jordan, Lebanon, West Bank and Gaza, Morocco, Tunisia, and Sudan.
  - Non-GCC oil exporters: Iraq and Libya.

### Box 1 — Potential Vulnerabilities in Credit, Equity, and Real Estate Markets
- Credit concentration and sectoral composition:
  - Majority of bank domestic credit concentrated in the private sector (exceptions: Qatar, Algeria, Yemen, and Lebanon).
  - Country patterns:
    - Bahrain, Egypt, Morocco, Tunisia: high share to trade, industry, and finance.
    - GCC countries and Mauritania: large share in personal consumption loans.
    - Many GCC banks: credit concentrated in real estate.
  - Borrower concentration risk examples:
    - Five largest borrowers ≈ seven percent of Omani banks’ total credit portfolio (35 percent of capital).
    - Top 10 largest borrowers ≈ 109 percent of Tier 1 capital in Qatar at end-2012.
    - 10–20 largest borrowers in three Kuwait banks > 18 percent of gross loans, advances.
  - By international standards, GCC banks have sizable capital buffers given concentration risks.
- Equity markets:
  - Market cap to GDP generally below 100 percent.
  - GCC overall above 50 percent; Qatar exceeding 80 percent in 2014.
  - Jordan and Morocco exceeded 50 percent; Lebanon and Egypt well below 50 percent.
- Real estate exposures:
  - Banks’ exposures around 20 percent of total credit to real estate and construction in available data.
  - Some GCC countries constructed housing price indices showing surges (example: Qatar).
  - Real estate price trends more subdued in oil-importing countries.
- Banking sector developments and crisis responses: figures and themes reported on oil dependency, monetary regimes, equities, credit growth, and crisis mitigation measures.

### Institutional framework for macroprudential policy — Mandate and design
- Observed institutional models:
  - (i) No explicit financial stability mandate legally assigned: Kuwait, Libya.
  - (ii) Different agencies ensure aspects with no coordination: UAE.
  - (iii) Mandate shared by multiple agencies including central bank, which chairs coordination body: Morocco.
  - (iv) Central bank or committee of central bank is sole owner: Saudi Arabia, Bahrain, Oman, Jordan, Iraq, Qatar, Lebanon, Tunisia, Egypt.
- Recommended enhancements:
  - Greater clarity on mandates, instruments and functions.
  - Transparent accountability framework.
- Implementation examples:
  - Separate financial stability offices within central banks in Group 1 (GCC) and publication of financial stability reports.
  - Lebanon: financial stability unit within central bank and department within banking control commission; financial stability committee chaired by vice governor with banking control commission representation.

### Box 2 — Institutional considerations and coordination
- Institutional mandate and design principles:
  - Explicit legal mandate with powers to decide and accountability.
  - Rules-based approach with guided discretion and clear communication.
  - Accountability: internal checks and balances plus external scrutiny (parliament, public opinion).
  - Publish overall strategy, motivation for decisions, and periodic assessments of effectiveness and costs.
- Distinguishing dimensions (Nier et al. 2011): integration of central bank functions; ownership of mandate; role of government; organizational separation of decision making and control over instruments; presence of coordination committee.
- Coordination: needed to respect autonomy of policy bodies and exploit complementarities with microprudential, fiscal, monetary, and structural policies.
- Macroprudential monitoring and discretion:
  - Monitor time-varying and cross-sectional systemic risks.
  - Use all relevant indicators and supervisory judgment to tighten or ease stance.

### Macroprudential policy toolkit (classification and examples)
- Five major groups by source of systemic risk (examples preserved from source):
  - Broad-based (time-varying) tools addressing credit booms:
    - Countercyclical capital buffers (CCBs)
    - Dynamic loan loss provisioning
    - Leverage ratio
  - Sectoral tools targeting household vulnerabilities:
    - Sectoral capital requirements (risk weights)
    - Loan-to-value (LTV) ratios
    - Debt-service-to-income (DSTI) ratios
  - Tools addressing corporate leverage:
    - Sectoral capital requirements, exposure caps, LTV limits
  - Systemic liquidity and currency risk tools:
    - Liquidity buffer requirements, stable funding requirements, liquidity charges, reserve requirements, constraints on open FX position and FX funding
  - Structural risk tools:
    - Capital and liquidity surcharges for systemically important institutions, measures to control interlinkages, exposure limits
- Empirical usage patterns:
  - LTV is the most frequently used macroprudential tool globally.
  - Advanced economies favor LTV and DSTI; emerging economies prefer LTV, limits on foreign currency lending, and limits on credit growth.

### Indicators to define when to tighten or ease MaPP (selected)
- Broad-based (Capital) — Indicators to tighten:
  - Credit/GDP gap; Growth in credit/GDP; Credit growth; Asset price deviations; Under-pricing of risk; DSTI ratios; Leverage metrics; Increasing wholesale funding ratio; Weakening exports/current account deficits; High frequency balance sheet stress indicators (e.g., CDS spreads).
- Broad-based (Capital) — Indicators to ease:
  - Slowing credit growth; Increasing default rates and NPLs/arrears; Indication of worsening credit supply from lending surveys.
- Household tools — Indicators to tighten:
  - Household loan growth; Increasing house prices; House price-to-rent and price-to-disposable income; Increasing share of household loans; Deteriorating lending standards; High LTV/LTI/DSTI ratios.
- Liquidity tools — Indicators to tighten:
  - Increasing loan-to-deposit (LTD) ratio; Increasing share of noncore funding; Decreasing liquid assets; Worsening maturity mismatches; Increasing securities issuance; Increasing unsecured funding; Increasing FX positions; Increasing gross capital inflows; Increasing spread between interbank rate and policy/swap rate.

### How Arab countries have implemented macroprudential policy — High-level findings
- GCC central banks used several macroprudential instruments pre- and post-crisis to mitigate exposures to real estate, personal loans, and group concentration risks.
- Capital, provisioning, and liquidity requirements:
  - Most GCC countries have fixed general provision ratios; dynamic/countercyclical measures uncommon except Saudi Arabia (provisioning ratio of 100 percent of NPLs, raised to 200 percent at peak).
  - Kuwait, Oman, Qatar, UAE adjusted general provisioning upward after the crisis; Kuwait applied precautionary provisions since 2008.
  - Bank deposit reserves and liquidity levels have been commonly used across the region.
- Basel III regulations:
  - Implemented in all GCC countries except UAE.
  - DSIB framework implemented in Bahrain, Kuwait, Oman, Saudi, and Qatar; expected to be finalized in UAE near-term.
  - LCR introduced in all GCC countries except UAE; same for leverage ratio.
- Ceilings on personal loans:
  - DSTI commonly used except in Oman and Kuwait; Kuwait DSTI = 40 percent.
  - Caps on monthly repayments range from 33 percent (Saudi Arabia) to 50 percent (Bahrain, Qatar, UAE).
  - UAE ceiling on total amount of personal loans; Oman has no such ceiling.
  - Qatar differential ceilings for nationals and expatriates.
  - LTV use uncommon; UAE implemented LTV ceilings; explicit measures in Qatar and Saudi Arabia; business practice elsewhere yields ~80 percent LTV.
- Loan-to-deposit (LTD) ratios:
  - GCC ahead in LTD ratios: 60 percent in Bahrain to >100 percent in Qatar.
  - UAE exception: regulation prohibits loans that exceed stable resources as percent of bank’s capital.
  - Constant LTD ratios failed to sufficiently slow credit growth during 2003–08 when average annual real growth in credit to private sector in GCC ranged from 17 percent (Oman) to 35 percent (Qatar).
- Limits on real estate exposures:
  - Regulatory definitions often did not capture real estate–related lending, so actual exposures were higher than caps suggested.
  - Post-crisis, LTVs increasingly recognized as useful; all countries have some form of LTVs except Bahrain.

### Oil-importers group — Vulnerabilities and tools
- Characteristics:
  - High levels of banking concentration; vulnerability to business cycle shocks due to credit concentration in tourism and personal loans (e.g., personal loans ≈ 71 percent of total credit facilities in Tunisia).
  - Main risks: liquidity problems, credit concentration, large sectoral exposures.
- Broad-based tools and examples:
  - General provisioning requirements present in all countries of this group.
  - Lebanon: minimum general provision of 1.5 percent of retail loan portfolio phased over 4 years beginning 2014; additional general reserve of 1.5 percent of corporate and SME loans over four years.
  - West Bank: general provision requirements of 1.5 percent of direct performing loans and 0.5 percent of off-balance sheet facilities.
  - Sudan: general provision of 1 percent of credit facilities.
  - Example requirement: 3.5 percent of retail loans (excluding housing) over 7 years starting 2014.
  - None of these countries use time-varying loan loss provisioning requirements.
- Liquidity tools and FX position limits (selected country limits preserved):
  - Egypt: long and short positions in any single currency cannot exceed 1 percent and 10 percent, respectively, of the capital base; and 2 percent and 20 percent, respectively, for all currencies.
  - Jordan: cannot exceed 15 percent for position in total currencies and 5 percent in individual currency.
  - Lebanon: limits of 1 percent of Tier 1 capital for net trading position and 40 percent of Tier 1 capital for global forex position.
  - Morocco: forex position under 20 percent of capital for all currencies and 10 percent per currency.
  - Tunisia: two limits on FX position: one in relation to net capital equity and another related to total loss on a position.
  - West Bank and Gaza: open position of each currency should not exceed 5 percent of the bank's capital base and the aggregate total of short and long positions should not exceed 20 percent of the bank's capital base for all currencies.
  - Sudan: foreign exchange position should not exceed 20 percent of capital.
- Basel III, LCR, leverage:
  - Lebanon and Morocco: Basel III capital requirements enforced since 2014 for progressive implementation by end-2015 and end-2018, respectively.
  - Jordan and Tunisia: frameworks expected to be finalized in the near-term.
  - Jordan, Lebanon, and Morocco: working on frameworks for introducing countercyclical capital buffers (CCBs).
  - DSIB frameworks: not finalized in any of these countries.
  - LCR: being phased in in Morocco and Tunisia; others have not implemented.
  - Leverage ratio framework: not finalized in any of these countries.
    - Lebanon: central bank monitoring leverage ratio semi-annually and expects to set a minimum leverage ratio for banks in 2015.
    - Central Bank of Egypt: completing Pillar 2 of Basel II and on track to implement Basel III according to internationally agreed timeline.
- Ceilings on personal loans, DSTI and LTV ratios:
  - Personal loans share example: credit to households ≈ 40 percent of total credit in Jordan at end-2013.
  - DSTI limits:
    - Lebanon: 35 percent, and 45 percent if debt includes housing loans.
    - Tunisia: 40 percent.
    - West Bank and Gaza: 50 percent.
  - LTV ranges:
    - Jordan, Lebanon, Tunisia, and Sudan: LTV between 70 and 80 percent.
    - West Bank and Gaza: LTV depends on credit rating: 30 percent for lowest graded borrowers to 85 percent for highest graded borrowers.
- Limits on exposures and concentration measures (selected):
  - Lebanon: single borrower exposure ≤ 20 percent of Tier 1 capital; country limits ≤ 50 percent of Tier 1 capital and minimum BBB rating; limits on non-resident bond issuances ≤ 10 percent of Tier 1 capital.
  - Egypt: single exposure limit 20 percent of capital base and 25 percent for group exposure.
  - Tunisia: total incurred risks ≤ three times net core funds of lending institution.
  - West Bank and Gaza: enforces between 10 percent and 25 percent of bank's capital base subject to prior PMA approval.
  - Jordan: maximum real estate exposure limit 20 percent of total deposits in local currency and 30 percent limit for foreign currency loans (exporting purposes).
  - Sudan: 25 percent ceiling on direct finance and 25 percent on indirect finance; related parties: total finance must not exceed 10 percent of portfolio or 100 percent of capital, whichever is lower.
- Loan-to-deposit ratios:
  - Central Bank of Egypt: guiding limit of 75 percent.
  - Tunisia: imposes a limit on domestic currency loans.
  - Sudan: domestic lending must not exceed available domestic resources; foreign lending must not exceed available foreign resources.

### Iraq and Libya — Third group features
- Banking-sector characteristics:
  - Dominance of public banks, high levels of liquid assets, low financial deepening, high NPLs.
- Broad-based macroprudential tools:
  - Caps on credit growth to contain total exposure.
  - Iraq: since 2007 plan to increase minimum capital base for commercial banks to US$215 million; private banks now account for ~80 percent of total capital base; public banks need strengthening.
- Liquidity tools:
  - Legal reserve requirements between 15 and 20 percent of total deposits.
  - Liquidity buffers between 25 and 30 percent of total short-term obligations.
- Basel III: no schedule for implementation in either Iraq or Libya.
- Ceilings on personal loans:
  - Libya: no ceilings on personal loans.
  - Iraq: DSTI ratio for bank leadership must not exceed 50 percent of annual incomes; LTV ratio of 40 percent to limit real estate exposure.
- Limits on exposure:
  - Libya: individual large exposures ≤ 20 percent of bank capital base; government entities not allowed to borrow from commercial banks by law.
  - Iraq: loans to natural and moral persons (including public institutions) ≤ 10 percent of bank capital and reserves; sectoral exposure capped at 4 times capital and reserves; interbank lending limited to 10 percent of capital and sound reserves.
- Loan-to-deposit ratios:
  - Total credit must not exceed 70 percent of deposits in both countries.
- Additional notes:
  - Libya: public banks' assets ≈ 90 percent of total assets; liquid assets ≈ 60 percent of total assets in Libya.
  - Iraq: related rule—15 percent maximum for person and his companies and relatives.

### Principal recommendations — Toward a more effective macroprudential policy framework
- Strengthening the institutional framework:
  - Clear mandate for financial stability and strengthened interagency coordination.
  - Appropriate accountability mechanisms.
  - Central banks well placed to lead given experience in monitoring and managing financial risks.
- Strengthening macroprudential instruments:
  - Expand range of instruments and refine existing ones to reduce leakages.
  - Focus on implementing Basel III regulations, CCBs, instruments targeting real estate risk, liquidity tools, and instruments for DSIBs.
- Strengthening regulatory capacity:
  - Develop a financial stability risk map covering macroeconomic performance, credit growth, financial activities, interconnectedness, liquidity risk, contagion risk, real estate exposure risk, structural indicators and financial infrastructure.
  - Adopt an Early Warning System (EWS) built on analytical work, forecasting outputs and macro stress testing.
  - Establish ex ante crisis management and resolution regimes with clear division of responsibilities and burden sharing mechanisms.
  - Choose macroprudential tools effective at preventing the buildup of systemic risks and communicate decisions to the market appropriately.
  - Continuous monitoring and updating of the risk map.
- Ensure policy coordination between macroprudential and macroeconomic policies, and between macro- and microprudential policies.
- Address challenges related to Basel III implementation, with special attention to liquidity standards.
- Share cross-sectional country experiences across the region.
- Pursue other financial reforms: develop domestic debt markets, strengthen bank resolution frameworks, corporate governance, financial disclosure, credit reporting systems, and insolvency regimes.

### Appendix I — Financial sector structure and key statistics
- Banking sector constitutes about 54.2 percent of the total size of the Arab financial sector; equity and bond markets contribute about 33 percent and 12.8 percent, respectively.
- Arab banking sector assets exceeded US$ 3 trillion by the end of 2013.
- Public banks dominate banking activities in some countries, exceeding 70 percent share in certain countries.
- High credit concentration in some jurisdictions; personal and real estate loans exceeded 40 per cent of total banking assets in a number of Arab countries.
- Post-global financial crisis policy responses included limits on loan-to-deposit ratios, ceilings on some private loans, increasing NPL provisions, asset purchases, supporting capital bases through injecting liquidity; costs in some GCC countries constituted 8 percent of GDP.

### Appendix II — Macroprudential toolkit (selected exact entries)
- General provisions and provisioning examples:
  - Saudi Arabia: Fixed level: 1.0 percent of total loans and 100 percent of NPLs.
  - UAE: Must represent 1.5 percent of credit risk weighted assets.
  - Kuwait: 2.0 percent for retail loans, 1.0 percent on all other standard loan, and 0.5 percent on loans and advances to SMEs.
  - Palestine: 1.5 percent of direct performing loans and 0.5 percent of the off-balance sheet facilities.
  - Lebanon: gradual collective provisions culminating in 1.5 percent of retail loans (excluding housing) over 4 years starting 2014 and 3.5 percent of retail loans (excluding housing) over 7 years (0.5 percent per year starting 2014).
- Reserve requirements on bank deposits (selected):
  - Saudi Arabia: 7.0 percent on demand deposits and 4.0 percent on time and saving deposits.
  - UAE: 14.0 percent on demand and savings deposits; 1.0 percent on time deposits.
  - Qatar: 4.75 percent of total deposits.
  - Palestine: 9.0 percent of deposits in each currency.
- Leverage ratios (selected):
  - Saudi Arabia: Deposit/(Capital + Reserve) not to exceed 15 times; Basel III Leverage ratio introduced since 2011.
  - Qatar: 3.0 percent.
  - Bahrain: 3.0 percent as per Basel III requirement will be implemented in 2017; in the meantime a 5.0 percent gearing ratio applies.
  - Jordan: Minimum limit 6.0 percent calculated as Equity/Assets.
- Loan-to-deposit (LTD) ratios and lending limits (selected):
  - Saudi Arabia: 85.0 percent Lending to Stable Resources ratio.
  - UAE: 90.0 percent (loan-to-deposit ratio).
  - Kuwait: 87.5 percent.
  - Egypt: Guide limit of 75 percent.
- Liquidity requirements / buffers (selected):
  - Saudi Arabia: Liquid Assets to Deposits at least 20.0 percent.
  - Qatar: LCR to be 60 percent in 2014, increasing by 10.0 percent each year to 100 percent by 2018.
  - Bahrain: Stock liquidity requirement of 25.0 percent liquid assets ratio.
  - Egypt: Liquidity ratio of 20 percent for local currency and 25 percent for foreign currency.
- Limits on real estate exposure and sectoral exposure (selected):
  - UAE: Real Estate Exposure cannot exceed 20.00 percent of the funding.
  - Qatar: Real estate finance should not exceed 150.00 percent of the bank's capital and reserves.
  - Tunisia: 20.0 percent of total loans portfolio.
  - Saudi Arabia: LTV for real estate finance 70.0 percent.
  - UAE LTVs for nationals and expatriates: 80.0 percent / 75.0 percent on first property under AED 5 M, with specified lower ratios for higher-value and subsequent properties.
- Debt / Loan-to-income (DTI / LTI) and debt servicing limits (selected):
  - Saudi Arabia: Total monthly repayments for personal loans and credit cards should not exceed 33.0 percent of income (25.0 percent for retirees).
  - UAE: Loan servicing cannot exceed 50.0 percent of gross salary plus any regular income.
  - Kuwait: Monthly installment limits at 40.0 percent for employed individual and 30.0 percent for retired individual.
  - Palestine: 50.0 percent.
- General countercyclical capital buffer / requirement (selected):
  - Qatar: In times of excess credit growth, buffer varies between 0 percent - 2.5 percent of bank’s total risk-weighted assets, to be met with CET1.
  - Bahrain: In process, up to 2.5 percent of Risk Weighted Assets.
  - Palestine: YES, geopolitical reserve 15 percent of net profit.
- DSIB capital buffer and treatment (selected):
  - Kuwait: YES, currently at 1 percent, can be increased up to 2.5 percent.
  - Bahrain: DSIB buffers ranging from 0.5 percent to 2 percent CET1; to be applied in 2016.
  - Palestine: PMA in process of developing methodology for DSIBs.
- Limits on exposure concentration and large exposures (selected):
  - Saudi Arabia: Per party limit 15.0 percent of bank’s net worth.
  - UAE: Legal limit 25.0 percent to be reduced to 15 percent by 2019.
  - Kuwait: 15.0 percent per obligor, 400.0 percent for total large exposures.
  - Qatar: Individual large borrower 25.0 percent of capital base; ceilings for single customer and group exposures detailed.
- Libya / Iraq comparisons (selected exact ratios):
  - Reserve Requirements: Libya 20.0 percent; Iraq 15.0 percent on total deposits.
  - Loan-to-Deposit (LTD): Libya 70.0 percent; Iraq total credit must not exceed 70.0 percent of total deposits.
  - Liquidity requirements / buffers: Libya 25.0 percent; Iraq liquidity ratio must not exceed 30.0 percent of gross total assets/liabilities.
  - Limits on real estate exposure: Libya 30.0 percent; Iraq NO.
  - General countercyclical capital buffer: Libya NO; Iraq YES (Basel 2 capital adequacy 12.0 percent).
- Institutional mandates and coordination (selected excerpts):
  - First Group (KSA, UAE, QATAR, BAHRAIN, KUWAIT, OMAN): central bank commonly has formal macroprudential mandate with Monetary Policy and Financial Stability Departments.
  - Second Group (EGYPT, Jordan, Lebanon, Morocco, Tunisia, Palestine, Sudan): mixed formal mandates; financial stability units established; coordination mechanisms described.
  - Third Group (LIBYA, IRAQ): Libya NO formal mandate but committee to draft proposal; Iraq YES formal mandate at Central Bank of Iraq.

### Basel III implementation timelines and capital buffers (selected entries preserved)
- Countercyclical Capital Buffers up to 2.5 percent, full effect by 2019.
- DSIB framework phasing and buffers (selected):
  - 2016: Framework for DSIBs implemented beginning 2016; implemented from 2016; Number of banks = 5.
  - 2015: 1 bank designated as D-SIB.
  - 2016: 0 percent - 2 percent (countercyclical buffer range reported).
  - Phased additional CET1: 40 bps (2017), 30 bps (2018) and 30 bps (2019) for designated banks in one reporting sequence.
- Liquidity coverage ratio (LCR) and NSFR phase-in (selected exact schedule):
  - LCR minima:
    - 2015: LCR min. 60 percent
    - 2016: LCR 70 percent
    - 2017: LCR min 80 percent
    - 2018: LCR min 90 percent
    - 2019: 100 percent LCR
  - NSFR minimum standard: reported starting at 60 percent in 2015 up to 100 percent by 2019 (mixed language preserved).
  - Qatar: LCR to be 60 percent in 2014, increasing by 10.0 percent each year to 100 percent by 2018.
- Leverage ratio:
  - Monitored quarterly at minimum of 5 percent since January 2011 on BCBS document of December 2010; monitored and disclosure timelines noted with 3 percent reported in some jurisdictions.
- Capital adequacy and conservation buffers (selected):
  - Progressive capital requirements by end-2015 in one reporting sequence:
    - Min CET1 Ratio ≥ 5.5 percent
    - Min T1C Ratio ≥ 7.5 percent
    - Min TC Ratio ≥ 9.5 percent
  - Capital Conservation Buffer 2.5 percent of RWA by end-2015: examples of combined minima reported.

### Financial stability frameworks and stress testing (selected practices)
- Financial stability units and EWS:
  - KSA/UAE: Macroprudential dashboard launched; financial stability units established; FSRs issued since 2012 in some jurisdictions.
  - Qatar/Bahrain: QCB and CBB monitor indicators; FSRs published (QCB since 2009; CBB semi-annually).
  - Kuwait/Oman: Early Warning Mechanisms in development; Oman publishes annual Financial Stability Reports.
  - Egypt/Jordan/Lebanon/Morocco/Palestine/Sudan: Macroprudential units or departments established; FSRs published in various years (e.g., Lebanon first FSR published 2014, July 24th).
- Stress testing:
  - SAMA and UAE: periodic capital and liquidity stress testing.
  - CBB (Bahrain): semi-annual sensitivity stress testing for D-SIBs.
  - QCB (Qatar): stress tests for credit, liquidity, market and cross-border risks.
  - Egypt: top-down and bottom-up stress testing since 2010.
  - Lebanon: top-down stress tests including interbank contagion and macro stress tests.

*Source: _wp1698 (IMF/AMF survey-based study; PDF chapter content provided).*

### Introduction ...........................................................................................................

### _wp1698 - Introduction

### Overview and purpose
- The global financial crisis highlighted the need for macroprudential policies alongside microprudential regulation, fiscal policy, and monetary frameworks to increase resilience of the financial system and contain systemic risk.
- Macroprudential policies aim to: increase overall resilience of the financial system; contain the buildup of systemic risk over time; address vulnerabilities from structural relationships between financial intermediaries.

### Why macroprudential policy is especially relevant in the Arab region
- Key structural vulnerabilities:
  - High dependence on hydrocarbon revenues makes many Arab economies especially vulnerable to swings in global energy prices; volatility in the hydrocarbon sector spills over to the rest of the economy and is often amplified by the financial sector.
  - For most oil exporters, heavy reliance on the extractive sector for fiscal revenues and export earnings translates into increased vulnerability to oil price shocks.
  - Pegged exchange rate regimes in many oil exporters limit monetary policy independence, increasing the premium on macroprudential policy.
  - Oil importers face relatively small external and fiscal buffers, making them highly vulnerable to shocks.
- Fiscal and monetary constraints:
  - Fiscal policy has been procyclical in many countries due to heavy reliance on hydrocarbon revenues and lack of automatic stabilizers in oil-importing countries; fiscal deficits remain high in most countries despite recognition of the need for consolidation.
  - Monetary policy independence is constrained in most Arab oil-exporting countries due to fixed exchange rate arrangements and limited liquidity management tools (central banks rely primarily on reserve requirements and issuance of Certificates of Deposit and T-Bills).
  - Absence of liquidity forecasting, shallow money and financial markets, and limited open market operations capacity further constrain monetary operations.
- Financial sector features amplifying shocks:
  - Banks tend to have high US dollar and energy sector exposure; credit growth is characterized by large exposures in oil-related and real estate sectors.
  - Lack of ex ante crisis management and resolution regimes complicates handling a banking crisis ex post.

### Empirical indicators and recent dynamics (selected figures from the pre- and post-crisis period)
- Domestic liquidity grew by 24 percent in 2007 compared to 13.3 percent in 2003.
- Private sector credit growth reached 29 percent by 2007.
- In 2009, growth of domestic liquidity in the region declined by 11 percentage points.
- Private credit facilities slumped by more than 20 percentage points in 2009 to 4.3 percent.
- Twin deficits amplified during oil price surges in 2009–11 and moved in the opposite direction when oil prices decreased.

### Progress to date in the Arab region
- Since the global financial crisis, Arab countries have tightened prudential regulation and are implementing Basel III standards on capital, liquidity, and leverage.
- Many central banks have established financial stability offices/units, early warning systems, and conduct periodic stress testing of banks.
- Some countries, particularly in the GCC, had implemented measures now recognized as macroprudential tools earlier than many other jurisdictions; examples include:
  - Loan-to-deposit ratio limits.
  - Regulations on personal lending such as debt service to income ratio and limits on loan tenor.
  - Limits on concentration, including on real estate exposure.

### Gaps and needs
- There is scope to better identify and mitigate spillovers through the financial sector, build buffers, and limit excessive leveraging and credit booms.
- Improved macroprudential frameworks should include:
  - A system of early warning indicators to signal increased vulnerabilities.
  - A set of policy tools to contain risks ex ante, address vulnerabilities at an early stage, and build buffers to absorb shocks ex post.
  - An institutional framework ensuring effective identification of systemic risks and implementation of macroprudential policies.
- Institutional adjustments needed in many countries:
  - Assigning a macroprudential policy mandate and delineation of powers.
  - Establishing a financial stability coordination committee comprising all financial regulators, including the capital markets authority, the insurance supervisor, and the Ministry of Finance.
  - Ensuring appropriate accountability mechanisms.
  - Elevating to a legal requirement the exchange of information among authorities.
- Strengthening macroprudential tool effectiveness requires improved data infrastructure and availability to allow a more complete assessment of systemic risks.

### Survey and scope of the study
- The study assesses existing regulatory and institutional macroprudential frameworks, identifies macroprudential toolkits used in Arab countries, and traces progress toward implementing Basel III.
- Information is based on a survey conducted by the IMF and AMF with regulatory and supervisory departments of central banks.
  - The survey was sent to 19 countries.
  - Responses were received from all except Djibouti, Mauritania, Yemen, and Syria.
- Country groupings used in the study:
  - GCC oil exporters: Bahrain, Oman, Kuwait, Qatar, Saudi Arabia and the UAE.
  - Oil-importers: Egypt, Jordan, Lebanon, West Bank and Gaza, Morocco, Tunisia, and Sudan. (West Bank and Gaza and Sudan have unique banking sector characteristics; PMA operates under exceptional conditions; since 1983, Sudan has operated under a purely Islamic banking system.)
  - Non-GCC oil exporters: Iraq and Libya (with exacerbated geo-political challenges).

### Structure of the paper (sections described)
- Section II: Institutional framework for macroprudential policy.
- Section III: Role of macroprudential policy in achieving financial stability.
- Section IV: Experience of Arab countries in implementing macroprudential policies.
- Section V: Recommendations to strengthen macroprudential frameworks in Arab countries.

*Source: _wp1698 - Introduction (IMF/AMF survey-based study).*

### Box 1. Potential Vulnerabilities in Credit, Equity, and Real Estate Markets in Arab Countries

### Box 1. Potential Vulnerabilities in Credit, Equity, and Real Estate Markets in Arab Countries

### Credit concentration and sectoral composition
- The majority of the Arab world’s bank domestic credit is concentrated in the private sector (exceptions: Qatar, Algeria, Yemen, and Lebanon which have a high percentage in the public sector).
- Private sector credit distribution variation:
  - Bahrain, Egypt, Morocco, and Tunisia: high percentage of private credit to trade, industry, and finance sectors.
  - GCC countries and Mauritania: large share of credit portfolio in personal consumption loans.
  - Many GCC banks: credit concentrated in the real estate sector.
- Borrower concentration risk examples:
  - The five largest borrowers account for about seven percent of the Omani banks’ total credit portfolio (35 percent of capital).
  - The top 10 largest borrowers represented about 109 percent of Tier 1 capital in Qatar at end-2012.
  - The 10–20 largest borrowers in three Kuwait banks represented more than 18 percent of their gross loans, advances.
- Gross exposures of large borrowers are concentrated on claims on corporates, sovereigns, and public entities, with specific credit exposures in sectors ultimately dependent on oil.
- Many GCC banks are found not to lend much outside of the Middle East.
- By international standards, GCC banks have sizable capital buffers considering the concentration risks in their credit portfolios.
- Availability and sources:
  - Prepared by: Hania Qassis, IMF.
  - Data sources include Arab Countries Central Banks’ Annual and Financial stability reports and IMF’s Article IV reports for each respective country.
  - Note: Information on concentration of Banks in non GCC countries was not available.

### Equity markets
- Equity market values to GDP ratios are generally below 100 percent in the Arab region.
- GCC countries:
  - Market cap to GDP ratio above 50 percent for GCC countries overall.
  - Qatar exceeding 80 percent in 2014.
- Oil-importing Arab countries: heterogeneity across countries:
  - Jordan and Morocco: exceeded 50 percent market cap to GDP.
  - Lebanon and Egypt: well below 50 percent market cap to GDP.

### Real estate sector exposures and indicators
- Information on the real estate sector is scarce, but available indicators point to a relatively significant size of the real estate sector in oil-importing countries.
- Banks’ exposures:
  - All available information for Arab countries’ banks point to exposures in the threshold of 20 percent of their total credit to real estate and construction sectors.
- Country examples and indicators:
  - Some GCC countries have constructed housing price indices showing a surge in real estate prices (example: Qatar).
  - Real estate price trends seem more subdued in Arab oil-importing countries.
  - Jordan: trading volume of real estate stocks and its real estate price index indicate steady growth.
- Data notes:
  - Real Estate and Construction Credit to Total Credit, 2014 (and earlier vintages for some countries): 2013 for Jordan, Tunisia and Kuwait; June 2013 for Mauritania.

### Banking sector developments and crisis responses (figures and themes reported)
- Figures referenced discuss:
  - Oil Dependency and Variability of Main Macro Variables.
  - Oil Prices, Monetary Developments and Exchange Regimes.
  - Regional Equities Markets and Oil Price, 2006-2014 (Jan. 2006=100).
  - Credit Growth for Oil Exporters and Importers (Oil Exporters Credit Growth; Oil Importers Credit Growth).
  - Arab Banking Sector Developments, Effects of the Global Financial Crisis, Measures taken to Mitigate the Effects of the Crisis and Main Characteristics.
- Selected numerical groupings and comparative notes drawn from Arab Monetary Fund sources:
  - Private Sector Credit to GDP groups (1990–1999 vs 2000–2010):
    - First Group (GCC countries): 35.58 and 48.62.
    - Second Group (Oil-importing countries): 41.37 and 51.45.
    - Third Group (Other oil-exporting countries): 12.71 and 10.00.
- Sources cited in figures and accompanying notes include IMF staff calculations, Bloomberg, and Arab Monetary Fund (“The Consequences of the Global Financial Crisis on Arab Countries”, The Joint Arab Economic Report: Thematic Chapter).

### Institutional framework for macroprudential policy — Mandate
- Importance:
  - A strong institutional framework is crucial for ensuring authorities can use macroprudential tools effectively.
  - The framework must ensure an ability and willingness to act while fostering adequate coordination across sectors and policies.
  - The macroprudential authority should be guarded from political and industry pressures to delay action and should have checks and balances to avoid misuse.
  - Coordination mechanisms should facilitate information sharing and policy cooperation while preserving autonomy of separate policy functions.
- Observed models in Arab countries (based on who has the mandate for macroprudential policies):
  - (i) No explicit financial stability mandate legally assigned to any institution: Kuwait, and Libya.
  - (ii) Different agencies ensure different aspects of financial stability but there is no coordination between them: the UAE.
  - (iii) Financial stability mandate is shared by multiple agencies including the central bank, which chairs the coordination body: Morocco.
  - (iv) The central bank, or a committee of the central bank, is the sole owner of the mandate: Saudi Arabia, Bahrain, Oman, Jordan, Iraq, Qatar, Lebanon, Tunisia, and Egypt.
  - The central bank plays an important role in a majority of countries.
- Recommended institutional enhancements:
  - Greater clarity on the mandate, instruments and functions of institutions involved.
  - A transparent accountability framework to reinforce the capacity and willingness to act.
- Implementation examples:
  - Some countries have established a separate financial stability office within the central bank.
  - Central banks in all Group 1 countries (GCC) have set up separate financial stability offices and publish financial stability reports.
  - In Group 2, Lebanon has established a financial stability unit within the central bank and a department within the banking control commission to monitor systemic risk; a financial stability committee chaired by the vice governor of the central bank includes members of the banking control commission, the financial stability unit, and representatives from other departments in the central bank.

*Prepared by: Hania Qassis, IMF.*

### Box 2. Considerations for Institutional Framework

### Box 2. Considerations for Institutional Framework

### Institutional mandate and design principles
- An explicit mandate assigning clear roles and responsibilities to the relevant agencies with powers to decide—while remaining accountable—should be clearly defined in the law.
- A rules-based approach helps to overcome the inaction bias or avoid extra limitations in the use of the tools, but some discretion may be needed to enable the authorities to respond to changing conditions in financial sectors as sources of systemic risks evolve.
- Guided discretion should be accompanied by clear communication based on the systemic monitoring of various key indicators combined with expert judgment.
- Clear communication and transparency creates public awareness of risks and an understanding of the need for action.
- An adequate accountability arrangement involves two elements:
  - an internal system of checks and balances, and
  - the scrutiny of external third parties (e.g. parliament, public opinion).
- Transparency should also involve the publication of an overall strategy, motivation for policy decisions, and the periodic assessment of effectiveness and costs.
- There is no one-size fits all.1 No institutional model is without weaknesses and each has different strengths; arrangements are shaped by country-specific circumstances (historical events, legal traditions, resource availability, size and complexity of financial markets).

### Distinguishing dimensions of institutional arrangements
- Nier et al. (2011) identify five key distinguishing dimensions:
  1. the degree of institutional integration between central bank and financial regulatory and supervisory functions;
  2. the ownership of the macroprudential mandate;
  3. the role of the government in macroprudential policy;
  4. the degree to which there is organizational separation of decision making and control over instruments; and
  5. whether or not there is a coordination committee that, while not itself charged with the macroprudential mandate, helps coordinate several bodies.

### General guidance for institutional arrangements
- The macroprudential mandate should be assigned by law to an authority with clear objectives and accountability.
- The central bank should play an important role in macroprudential policy. However, its independence and credibility should not be undermined.
- Complex and fragmented regulatory and supervisory structures are unlikely to lead to the effective mitigation of risks to the system as a whole.
- Formal coordination mechanisms across institutions and policies are needed.
- Participation by the Ministry of Finance is useful, but if the ministry plays a dominant role, that may pose important risks.
- Systemic risk prevention and crisis management are different policy functions that should be supported by separate arrangements.

### Coordination: role and regional practices
- Coordination is essential because macroprudential policy interacts with other policies and often with bodies that hold formal authority over specific tools.
- Coordination should respect the autonomy of different bodies in achieving their primary responsibilities and helps exploit complementarities with microprudential, fiscal, monetary, and structural policies.
- Current regulatory structures for most Arab countries depend on informal mechanisms for coordination and information sharing.
- Country-specific examples:
  - Kuwait, Oman, Qatar, Saudi Arabia and the UAE have established authorities to regulate capital market institutions and investments; central banks are de facto single integrated regulators of the financial market but capital markets are regulated and supervised by the capital market authority.
  - In the UAE, there are multiple regulators.
  - Qatar has a formal structure for coordination through the financial stability and risk control committee.
  - Oman has a Higher Committee on Financial Stability headed by the Executive President of the central bank and including other regulatory bodies plus the Ministry of Finance.
  - Morocco amended laws governing supervisors for insurance, pensions, and capital markets to strengthen their respective independence; new institutions will become fully operational with appointment of management bodies.

### Macroprudential policy monitoring and discretion
- Successful macroprudential frameworks should closely monitor systemic risks in time-varying and cross-sectional (structural) dimensions.
- Supervisory authorities should monitor and evaluate financial imbalances and procyclical financial activities over time and give attention to cross-sectional systemic risks from interconnectedness, common exposure, and high risk concentration.
- Regulators are encouraged to use all available and relevant indicators to identify when to tighten or ease macroprudential stance.
- Regulatory discretion is important to determine whether systemic risks arise from financial imbalances or from nonfinancial factors (e.g., private credit to GDP increases due to economic development plans; housing price increases due to supply shortages).

### Macroprudential policy toolkit (classification and examples)
- Measures can be classified into five major groups according to source of systemic risk; examples include:
  - Broad-based (time-varying) tools addressing credit booms:
    - Countercyclical capital buffers (CCBs)
    - Dynamic loan loss provisioning
    - Leverage ratio
  - Sectoral tools targeting household sector vulnerabilities:
    - Sectoral capital requirements (risk weights)
    - Loan-to-value (LTV) ratios
    - Debt-service-to-income (DSTI) ratios
  - Tools addressing corporate leverage:
    - Sectoral capital requirements (risk weights)
    - Exposure caps
    - LTV limits
  - Systemic liquidity and currency risk tools:
    - Liquidity buffer requirements
    - Stable funding requirements
    - Liquidity charges
    - Reserve requirements
    - Constraints on open FX position and FX funding
  - Structural risk tools:
    - Capital and liquidity surcharges for systemically important institutions
    - Measures to control interlinkages in funding and derivatives
    - Exposure limits
- Table 2 (summarized categories):
  - Time Varying MaPP tools: Liquidity (Reserve requirement ratio; Limits on open FX positions; Liquidity requirements; Loans to deposits ratio; Margins/haircuts on collateral financial transactions)
  - Time Varying MaPP tools: Capital (Countercyclical capital buffer; Time varying / dynamics loan loss provisioning; leverage ratio)
  - Time Varying MaPP tools: Sector Specific measures (Sector specific capital buffer; LTV ratio; DSTI ratio)
  - Time Varying MaPP tools: Others (Limits on domestic loans; Limits on foreign currency loans)
  - Structural dimension MaPP tools: Interconnectedness (Capital surcharge on SIFIs; Limits on interbank exposure; Concentration limits)

### Empirical usage patterns and indicators
- Macroprudential measures were widely used in emerging market economies long before the crisis.
- The macroprudential tool most frequently used by regulatory authorities is loan to value ratio for both advanced and emerging economies.
- Advanced economies tend to use LTV, DSTI ratios; emerging economies prefer LTV, limits on foreign currency lending, and limits on credit growth.
- Housing measures have been a key focus of MaPP interventions in many jurisdictions.
- Regulators should continuously trace relevant information to identify the proper macroprudential stance and be ready to intervene when market participants are excessively risk-averse or excessively risk-taking.

### Indicators to define when to tighten or ease MaPP (selected items preserved from Table 3)
- Broad-based (Capital) tools — Indicators used to define when to tighten macroprudential policy:
  - Core indicators: Credit/GDP gap; Growth in credit/GDP; Credit growth; Asset price deviations from long-term trends; Under-pricing of risk in financial markets (low volatility/spreads); DSTI ratios; Leverage on individual loans or at the asset level; Increasing wholesale funding ratio (noncore funding); Weakening exports and resulting current account deficits; High frequency indicators of balance sheet stress, such as increases in bank credit default swap (CDS) spreads.
  - Additional indicators: Increases in lending rates/spreads.
- Broad-based (Capital) tools — Indicators used to define when to ease macroprudential policy:
  - Slowing credit growth; Increasing default rates and nonperforming loans (NPLs)/arrears; Indication of worsening credit supply from lending surveys.
- Household tools — Indicators to tighten:
  - Household loan growth; Increasing house prices (nominal and real growth); House price-to-rent and house price-to-disposable income ratio; Increasing share of household loans to total credit; Deteriorating lending standards; High LTV ratio; High loan-to-income (LTI) ratio; High DSTI ratio; Share of FX loans and interest only loans.
- Household tools — Indicators to ease:
  - Decreasing house prices; Decreasing real estate transactions; Increasing spreads on household loans; Decreasing prices of mortgage backed securities; Slowing net household loan growth (change in stock); Slowing growth of new household loans (flow); Increasing household NPLs/arrears.
- Corporate tools — Indicators to tighten:
  - Corporate loan growth; Increasing share of corporate loans to total credit; Increasing commercial property prices; Increasing commercial real estate credit; Increasing share of FX loans; Increasing corporate leverage (debt to equity ratio); Corporate credit gap; Increasing debt-service ratio; Deteriorating lending standards; Average DSTIs on commercial real estate loans; Average LTVs on commercial real estate loans; Share of FX loans and extent of natural hedges; High frequency indicators, e.g., corporate CDS spreads, bond yields.
- Liquidity tools — Indicators to tighten:
  - Increasing loan-to-deposit (LTD) ratio; Increasing share of noncore funding to total liabilities; Decreasing share of liquid assets; Worsening maturity mismatches; Increasing securities issuance; Increasing unsecured funding; Increasing FX positions; Increasing gross capital inflows; Increasing spread between interbank rate and policy/swap rate; Increasing funding costs in the wholesale market; Increased recourse to central bank liquidity windows; Swap rate of local currency against FX and FX implied volatility; Reversal of gross capital inflows.

### How Arab countries have implemented macroprudential policy (high-level findings)
- GCC central banks have used several macroprudential instruments over many years to mitigate exposures to real estate, personal loans, and group concentration risks.
- GCC countries implemented a number of macroprudential tools before the global financial crisis, particularly to contain retail lending, but these measures often came late in the credit boom.
- Key regional practices and facts:
  - Capital, provisioning, and liquidity requirements:
    - Most GCC countries have established a fixed ratio for general provisions, but none have dynamic or countercyclical measures, except Saudi Arabia, where banks are required to maintain a provisioning ratio of 100 percent of nonperforming loans (NPLs), a requirement raised to as high as 200 percent at the peak of the economic cycle.
    - In Kuwait, Oman, Qatar, and the UAE, the general provisioning ratio was adjusted upward after the crisis.
    - In Kuwait precautionary provisions are applied since 2008.
    - Other requirements—bank deposit reserves and liquidity levels—have been commonly used in the region.
  - Basel III regulations:
    - Basel III capital regulations have been implemented in all the GCC countries except in the UAE.
    - The framework for domestic systemically important banks (DSIBs) has been implemented in Bahrain, Kuwait, Oman, Saudi, and Qatar.
    - The framework is expected to be finalized in the near-term in the UAE.
    - The liquidity coverage ratio has been introduced in all the GCC countries except the UAE, the same with regard to leverage ratio.
  - Ceilings on personal loans:
    - DSTI ratios are commonly used in the region, except in Oman and Kuwait.
    - In Kuwait the applicable DSTI is 40 percent.
    - Most countries have imposed a cap on monthly repayments as a share of the monthly salary of the borrower; this limit ranges from between 33 percent (Saudi Arabia) and 50 percent (Bahrain, Qatar, and the UAE).
    - The UAE has set a ceiling on the total amount of personal loans; Oman has no such ceiling.
    - Qatar has imposed a differential ceiling on individual loans to nationals and expatriates.
    - Use of LTV ratios on mortgages is still uncommon, although the UAE has implemented a ceiling on LTV ratios. Only Qatar and Saudi Arabia have taken explicit measures; business practices in other countries have resulted in the ratio being around 80 percent.
  - Loan-to-deposit (LTD) ratios:
    - GCC countries have been ahead in imposing LTD ratios, with ratios varying from 60 percent in Bahrain to more than 100 percent in Qatar.
    - The UAE is an exception, where a related regulation prohibits loans that exceed stable resources as percent of bank’s capital.
    - Despite LTDs, constant LTD ratios failed to sufficiently slow credit growth during 2003–08 when average annual real growth in credit to the private sector in the GCC ranged from between 17 percent for Oman to 35 percent for Qatar.
  - Limits on real estate exposures:
    - Such limits were in place before the global crisis, but the regulatory definition of real estate did not adequately cover real estate–related lending and financing activities.
    - As a result, banks’ actual exposure to real estate was higher than regulatory caps suggested.
    - LTVs for real estate lending were generally not part of the toolkit prior to the crisis; after the crisis, LTVs are increasingly recognized as useful. All countries have some form of LTVs, except Bahrain.

### Oil-importers group: vulnerabilities and tools
- The oil-importers group (Egypt, Jordan, Lebanon, West Bank and Gaza, Morocco, Tunisia and Sudan) is characterized by high levels of banking concentration.
- Banks in this group are more vulnerable to business cycle shocks due to credit concentration in some sectors sensitive to the economic cycle (e.g., tourism and personal loans constitute around 71 percent of total credit facilities in Tunisia).
- Main risks: liquidity problems, credit concentration and large sectoral exposures.
- Broad-based macroprudential tools:
  - All countries in this group have some form of general provisioning requirements.
  - Lebanon: banks required to maintain a minimum general provision of 1.5 percent of the retail loan portfolio, gradually phased over 4 years beginning 2014.
  - In addition, banks are required to hold a general reserve of 1.5 percent of corporate and SME loans over a four-year period.

*Source: This box is based on information in Nier, Erland, W and others (2011).*

### 3.5 percent of retail loans (excluding housing) over 7 years starting 2014. In West Bank

### _wp1698 - 3.5 percent of retail loans (excluding housing) over 7 years starting 2014. In West Bank

### Loan-loss provisioning and general provisions
- West Bank: general provision requirements of 1.5 percent of direct performing loans and 0.5 percent of the off-balance sheet facilities.
- Sudan: general provision of 1 percent of credit facilities.
- Example requirement mentioned in title: 3.5 percent of retail loans (excluding housing) over 7 years starting 2014.
- Despite high levels of banks’ vulnerability to business cycle risks, none of these countries use time-varying loan loss provisioning requirements.

### Liquidity tools and foreign-exchange position limits
- Legal reserve requirements are widely used; liquidity ratios imposed on banks range between 60 and 70 percent of the total short-term banking obligations.
- Country-specific forex position and mismatch limits:
  - Egypt: long and short positions in any single currency cannot exceed 1 percent and 10 percent, respectively, of the capital base, and 2 percent and 20 percent, respectively, for all currencies.
  - Jordan: cannot exceed 15 percent for position in total currencies and 5 percent in individual currency.
  - Lebanon: limits of 1 percent of Tier 1 capital for net trading position and 40 percent of Tier 1 capital for global forex position.
  - Morocco: forex position under 20 percent of capital for all currencies and 10 percent per currency.
  - Tunisia: two limits on FX position: one in relation to net capital equity and another related to total loss on a position.
  - West Bank and Gaza: open position of each currency should not exceed 5 percent of the bank's capital base and the aggregate total of short and long positions should not exceed 20 percent of the bank's capital base for all currencies.
  - Sudan: foreign exchange position should not exceed 20 percent of capital.

### Basel III, liquidity coverage, and leverage ratio implementation
- Lebanon and Morocco: Basel III capital requirements enforced since 2014 for progressive implementation, respectively, by end-2015 and end-2018.
- Jordan and Tunisia: frameworks required to enforce these regulations expected to be finalized in the near-term.
- Jordan, Lebanon, and Morocco: working on a framework for introducing countercyclical capital buffers (CCBs).
- Frameworks for Domestic Systemically Important Banks (DSIBs): not finalized in any of these countries.
- Liquidity Coverage Ratio (LCR): being phased in in Morocco and Tunisia; others have not implemented this standard.
- Leverage ratio framework: not finalized in any of these countries.
  - Lebanon: central bank monitoring leverage ratio on a semi-annual basis and expects to set a minimum leverage ratio for banks in 2015.
  - Central Bank of Egypt: completing Pillar 2 of Basel II regulations and on track to implement Basel III regulations according to the internationally agreed timeline.

### Ceilings on personal loans, DSTI and LTV ratios
- Personal loans share:
  - Example: credit to households constituted about 40 percent of total credit in Jordan at end-2013.
- Limits on Debt-Service-to-Income (DSTI) ratios:
  - Lebanon: 35 percent, and 45 percent if debt includes housing loans.
  - Tunisia: 40 percent.
  - West Bank and Gaza: 50 percent.
- Loan-to-Value (LTV) ratios for housing, car and mortgage loans:
  - Jordan, Lebanon, Tunisia, and Sudan: LTV ranging between 70 and 80 percent.
  - West Bank and Gaza: LTV depends on borrower's credit rating scores, ranging from 30 percent for the lowest graded borrowers to 85 percent for the highest graded borrowers.

### Limits on exposures and concentration measures
- Single-borrower and country limits widely used:
  - Lebanon: exposure to single borrower not exceeding 20 percent of Tier 1 capital; country-limits not exceeding 50 percent of Tier 1 capital and a minimum BBB rating; limits on non-resident bond issuances not exceeding 10 percent of Tier 1 capital.
  - Egypt: single exposure limit 20 percent of the capital base and 25 percent for group exposure.
  - Tunisia: total amount of incurred risks should not exceed three times the net core funds of the lending institution.
  - West Bank and Gaza: enforces between 10 percent and 25 percent of bank's capital base subject to prior approval from the PMA.
  - Jordan: maximum limit for real estate exposure of 20 percent of the total deposits in local currency and a 30 percent limit for foreign currency loans (only for exporting purposes).
  - Sudan: 25 percent ceiling on direct finance and 25 percent on indirect finance; related parties: total finance must not exceed 10 percent of their portfolio or 100 percent of their capital, whichever is lower.
- Limits on interbank exposures: exist in Lebanon (net credit exposure to unrelated foreign correspondents must not exceed 25 percent of Tier 1 capital; limits on net placements with related foreign banks and financial institutions should not exceed 25 percent of Tier 1 capital).
- Sector-specific capital buffers: none of the countries in this group use sector-specific capital buffers.
- Jordan: residential mortgage loans preferential risk weight of 35 percent if LTV does not exceed 80 percent, otherwise risk weight set at 100 percent.
- Concentration risk: main component in implementing ICAAP; many banks assign capital for specific sectors in ICAAP documents.

### Loan-to-deposit ratios
- Central Bank of Egypt: guiding limit of 75 percent.
- Tunisia: imposes a limit on domestic currency loans.
- Sudan: domestic lending must not exceed the available domestic resources and foreign lending must not exceed the available foreign resources.

### Iraq and Libya: third group features and macroprudential focus
- Banking-sector characteristics: dominance of public banks, high levels of liquid assets, low levels of financial deepening (credit to GDP), and high levels of non-performing loans.
- Broad-based macroprudential tools:
  - Caps on credit growth used to contain banks’ total exposure.
  - Iraq: since 2007, plan to increase capital base mandating commercial banks to increase capital base to a minimum of US$215 million; plan increased capital adequacy for private banks (now account for around 80 percent of the total capital base), while public banks’ capital base still needs strengthening.
- Liquidity tools:
  - Legal reserve requirements ranging between 15 and 20 percent of total deposits.
  - Liquidity buffers ranging between 25 and 30 percent of the total short-term obligations.
- Basel III: no schedule for implementation in either Iraq or Libya.
- Ceilings on personal loans:
  - Libya: no ceilings on personal loans.
  - Iraq: DSTI ratio for those holding positions of leadership in banks must not exceed 50 percent of their annual incomes; LTV ratio of 40 percent to limit exposure to real estate loans.
- Limits on exposure:
  - Libya: individual large exposures should not exceed 20 percent of the bank capital base; government entities are not allowed, by law, to borrow from commercial banks.
  - Iraq: loans to “natural and moral persons”—including public institutions—should not exceed 10 percent of bank capital and its total reserves; sectoral exposure capped at four times the level of capital and reserves; interbank lending limited to 10 percent of capital and sound reserves.
- Loan-to-deposit ratios:
  - Total credit must not exceed 70 percent of deposits in both countries.
- Additional country-specific notes:
  - Libya: assets of public banks account for 90 percent of the total assets in Libya.
  - Libya: liquid assets constitute around 60 percent of total assets in Libya.
  - Iraq: related rule—15 percent at maximum for person and his companies and relatives.

### Toward a more effective macroprudential policy framework in the Arab region (principal recommendations)
- Strengthening the institutional framework:
  - Clear mandate for financial stability and strengthened interagency coordination.
  - Appropriate accountability mechanisms to assess implementation efficacy.
  - Central banks well placed to lead given experience in monitoring and managing financial risks.
- Strengthening macroprudential instruments:
  - Expand range of instruments and refine existing ones to reduce leakages.
  - Focus on implementing Basel III regulations, CCBs, instruments targeting real estate risk, liquidity tools, and instruments for dealing with DSIBs.
- Strengthening regulatory capacity to monitor and assess systemic risks:
  - Develop financial stability risk map covering macroeconomic performance, credit growth, financial activities, interconnectedness, liquidity risk, contagion risk, real estate exposure risk, structural indicators and financial infrastructure.
  - Adopt an Early Warning System (EWS) built on analytical work, forecasting outputs and macro stress testing.
  - Establish ex ante crisis management and resolution regimes with clear division of responsibilities and burden sharing mechanisms.
  - Choose macroprudential tools effective at preventing the buildup of systemic risks.
  - Communicate macroprudential decisions to the market at appropriate times.
  - Continuous monitoring and updating of the risk map.
- Ensure effective policy coordination between macroprudential and macroeconomic policies, and between macro- and microprudential policies.
- Address challenges related to Basel III implementation, with special attention to liquidity standards.
- Share cross-sectional country experiences across the region to bridge implementation gaps.
- Pursue other financial reforms: develop domestic debt markets, strengthen bank resolution frameworks, strengthen corporate governance, financial disclosure, credit reporting systems, and insolvency regimes.

### Appendix I — Financial sector structure and challenges (key statistics and observations)
- Banking sector constitutes about 54.2 percent of the total size of the Arab financial sector; equity and bond markets contribute about 33 percent and 12.8 percent, respectively.
- Arab banking sector assets exceeded US$ 3 trillion by the end of 2013.
- Public banks dominate banking sector activities in some Arab countries, exceeding 70 percent of the share in certain countries.
- High levels of credit concentration in some jurisdictions; personal and real estate loans exceeded 40 per cent of the total banking assets in a number of Arab countries.
- Post-global financial crisis policy responses included limits on loan-to-deposit ratios, ceilings on some private loans, increasing non-performing loans provisions, asset purchases, supporting capital bases through injecting liquidity; costs in some GCC countries constituted 8 percent of GDP.

*Source: IMF working paper content (excerpt).*

### Appendix II

### Appendix II — Macroprudential Policy Framework in Arab Countries (Macroprudential Toolkit: First & Second Group)

### General provisions and provisioning
- Saudi Arabia: Fixed level: 1.0 percent of total loans and 100 percent of NPLs.
- UAE: Must represent 1.5 percent of credit risk weighted assets. Will be modified after we implement Basel III.
- Qatar: NO.
- Bahrain: Min. 1.0 percent of net loans. Fixed 1.0 percent of cash items; 0.5 percent of non-cash Items.
- Kuwait: 2.0 percent for retail loans, 1.0 percent on all other standard loan, and 0.5 percent on loans and advances to SMEs.
- Egypt: YES. According to Obligor Risk Rating set at seven grades.
- Jordan: YES, they are called general banking risk reserves and are created for the performing loans.
- Lebanon: Banks and non-bank financial institutions are requested to take collective provisions on performing loans based on impairment tests. For retail loans (excluding housing) a minimum level of collective provisions has been imposed by the end of 2014 (1.5 percent of the loan portfolio to be gradually constituted over 4 years starting 2014). In addition, a general reserve of 1.5 percent of corporate and SME loans over 4 years (0.25 percent in each of the years 2014 & 2015 and 0.5 percent in each of the years 2016 & 2017) and 3.5 percent of retail loans excluding housing over 7 years (0.5 percent per year starting 2014).
- Morocco: 10.0 percent of the value of watch listed loans.
- Tunisia: Banks are obligated since 2011 to constitute collective provisions by deducting from their results to cover latent risks on current commitments and commitments that require a particular follow-up through the reservation of unpaid interest related to consolidated commitments.
- Palestine: 1.5 percent of direct performing loans and 0.5 percent of the off-balance sheet facilities.

### Time-varying / dynamic loan-loss provisioning
- Saudi Arabia: NO.
- UAE: NO.
- Qatar: NO.
- Bahrain: The CBT required banks to constitute additional provisions on their assets with seniority in class 4 exceeding or equaling 3 years to cover net risk pursuant to the following minimum proportions:
  - 40.0 percent for assets with seniority in class 4 of 3 to 5 years
  - 70.0 percent for assets with seniority in class 4 of 6 to 7 years
  - 100 percent for assets with seniority in class 4 exceeding or equal to 8 years
- Kuwait: NO.
- Egypt: NO.
- Jordan: NO.
- Lebanon: NO.
- Morocco: The instrument is for a microprudential use but could be increased or lowered in the future if needed for macroprudential policy requirement.
- Tunisia: NO.
- Palestine: NO.

### Reserve requirements on bank deposits
- Saudi Arabia: 7.0 percent on demand deposits and 4.0 percent on time and saving deposits.
- UAE: 14.0 percent on demand and savings deposits. 1.0 percent on time deposits. Effective tool to compel banks to keep liquid assets with the CB.
- Qatar: 4.75 percent of total deposits.
- Bahrain: 5.0 percent of Bahraini Dinars non-bank deposits, due at first week of every month.
- Kuwait: NO.
- Oman: 5.0 percent of deposits.
- Egypt: Banks are required to maintain 10 percent of their Egyptian pound deposits (excluding CD to individuals with maturities exceeding three years and direct exposure to a certain tranche of SMEs Companies) with the CBE as non-interest bearing reserve. Banks are required to place 10 percent of their foreign currencies deposits with the CBE as interest bearing.
- Jordan: 7.0 percent from average of bank deposits in JD (65.0 percent restricted and 35.0 percent free) and 7.0 percent from average of bank deposits in Foreign currency.
- Lebanon: Local Currency deposits: * 25.0 percent on demand deposits * 15.0 percent on time deposits. Foreign currency deposits: * 15.0 percent on demand and time deposits.
- Morocco: Reserve requirement have been lowered several times during last years in a context of banking system liquidity deficit.
- Tunisia: The level of the reserve requirement on banks is 1.0 percent of the outstanding deposits and other amounts due to clients.
- Palestine: 9.0 percent of deposits in each currency.

### Leverage ratios (capital to assets)
- Saudi Arabia: Deposit/(Capital + Reserve) not to exceed 15 times. Basel III Leverage ratio was introduced since 2011.
- UAE: NO.
- Qatar: 3.0 percent.
- Bahrain: 3.0 percent as per Basel III requirement will be implemented in 2017. In the meantime a 5.0 percent gearing ratio continues to apply.
- Kuwait: 3.0 percent minimum, and applicable from 31/12/2014.
- Oman: NO.
- Egypt: In the phase of implementation according to agreed schedule with Basel Committee.
- Jordan: Minimum limit 6.0 percent and it is calculated as Equity/Assets.
- Lebanon: The central bank developed templates for the calculation of the Leverage Ratio. These templates are submitted on a semi - annual basis since December 2013.
- Morocco: NO.
- Tunisia: NO.
- Palestine: NO.

### Ceilings on credit or credit growth
- Saudi Arabia: NO, However, SAMA closely monitor credit growth in general and credit to private sector in particular.
- UAE: NO.
- Qatar: NO.
- Bahrain: NO.
- Kuwait: NO.
- Oman: Ceiling on Personal Loans is 35.0 percent of total credit, Housing Loans 15 of total credit, Real Estate Loans 60.0 percent of higher of banks' net worth or time and savings deposits.

### Limits on loan-to-deposit (LTD) ratios and lending limits
- Saudi Arabia: 85.0 percent Lending to Stable Resources ratio. Lending includes loans plus Interbank lending more than three months. Stable Resources include Capital & Reserves, Time Deposits, 85.0 percent of demand and savings deposits, Interbank borrowings more than 6 months.
- UAE: 90.0 percent (loan-to-seposit ratio).
- Qatar: In the range of 60.0 percent to 65.0 percent on an individual bank basis.
- Bahrain: LTD ratio was replaced by a maximum lending limit. The limit is calculated by multiplying the sources (Deposits, interbank placements, CD’s, medium and long-term loans, issued bonds/ Sukūk) by specific percentage based on the maturity buckets. The allowed lending percentages are as the following:
  - (i) Remaining maturity up to 3 months: 75 percent;
  - (ii) remaining maturity more than 3 months until one year: 90 percent;
  - (iii) remaining maturity more than one year: 100 percent.
- Kuwait: 87.5 percent.
- Oman: (no entry).

- Egypt: Guide limit of 75 percent is used on local and foreign currency separately.
- Jordan: NO.
- Lebanon: NO.
- Morocco: NO.
- Tunisia: NO.
- Palestine: NO.

### Liquidity requirements / buffers
- Saudi Arabia: Liquid Assets to Deposits is at least 20.0 percent.
- UAE: NO.
- Qatar: Liquidity coverage ratio to be 60 percent in 2014, increasing by 10.0 percent each year and reaching 100 percent by 2018.
- Bahrain: Currently banks must meet stock liquidity requirements (i.e. 25.0 percent liquid assets ratio).
- Kuwait: 18.0 percent of domestic currency customer deposits.
- Oman: YES.
- Egypt: All Banks operating in Egypt are required to maintain a liquidity ratio of 20 percent for local currency and 25 percent for foreign currency. Liquidity Ratios according to Basel Committee pre-set time line (NSFR-LCR).
- Jordan: Legal Liquidity Requirement (LLR): minimum threshold 70 percent in JD and 100 percent in all currencies. Foreign currency liquidity ratio: Net liquid assets in foreign currency should be no less than 10.0 percent of deposits and other commitments in foreign currency.
- Lebanon: Net Liquid Assets in FC include: * Placements at the Central Bank excluding required reserves. * Net instruments (excluding Lebanese Eurobonds) maturing within one year. Deposits and Other commitments include: * Total customers' deposits (all maturities) * All other creditors maturing within one year.
- Morocco: For the time being, the instrument is for a microprudential use but could be increased or lowered in the future if needed for macroprudential policy requirement.
- Tunisia: NO.
- Palestine: NO.

### Limits on real estate exposure and sectoral exposure
- Saudi Arabia: NO.
- UAE: Real Estate Exposure cannot exceed 20.00 percent of the funding. Funding includes all customers deposits, capital market funding and interbank deposits. Effective tool to limit over exposure to this sector.
- Qatar: Real estate finance should not exceed 150.00 percent of the bank's capital and reserves.
- Bahrain: NO.
- Kuwait: NO.
- Oman: Exposure 60.00 percent of bank’s net worth or 60.00 percent of all time and saving deposits other than government and interbank deposits, whichever is higher.
- Egypt: The regulation sets a limit of 5 percent of the bank's total loan portfolio included under the mortgage finance law.
- Jordan: Maximum limit of 20.0 percent of customer deposits in local currency.
- Lebanon: Although no limits are imposed, the Banking Control Commission closely monitors exposures to the real estate and other sectors in order to avoid any excessive concentration in these sectors.
- Morocco: NO.
- Tunisia: 20.0 percent of total loans portfolio.
- Palestine: NO.

- Limits on other sectoral exposure (selected entries):
  - Qatar: Ceiling for credit facilities at 20.00 percent and credit facilities and investment at 25.00 percent of bank's capital and reserves for single customer. Credit facilities granted by all banks to a single borrower group should not exceed QR 3bn.
  - Kuwait: Lending to KSE Trading shares should not exceed 10 percent of total credit facilities portfolio extended to the resident customers, or 25 percent of the bank's capital in its comprehensive concept, whatever is lower.

### Limits on interbank exposures
- Saudi Arabia: NO.
- UAE: Domestic Interbank exposures over 1 year cannot exceed 30.0 percent of bank capital base. Overseas Interbank are limited to 30.0 percent of bank capital base. Capital base is defined as per Basel II.
- Qatar: 25.0 percent of bank's capital and reserves for Category I banks and financial institutions, 10.0 percent for Category II and 5.0 percent for Category III.
- Bahrain: NO.
- Kuwait: On overseas interbank exposures, 'Limits are as under for overseas interbank exposures;
  - Per party limit for lending to bank is 5.0 percent of net worth of the lending bank
  - Aggregate limit is 30.0 percent of net worth (banks and non- banks combined)
  - Aggregate overseas exposure (bank and non-bank including lending, and placements) is 120.0 percent.
- Oman: NO.

- Egypt: NO.
- Jordan: A limit exists on balances between banks in foreign currencies.
- Lebanon: Limit on net credit exposure to unrelated foreign correspondents: Total net credit exposures per foreign correspondent must not exceeds 25.0 percent of Tier 1 capital. Banks & non-bank financial institutions are prohibited from lending and placing with foreign correspondents rated below BBB or unrated, except for operational purposes. Limit on net placements with related foreign banks and financial institutions: Total net placements should not exceed 25.0 percent of Tier 1 capital.
- Morocco: NO.
- Tunisia: Setting an upper ceiling for banks' placements abroad (55.0 percent of total deposits). Forcing banks to diversify their placeements by financial institutions and country depending on the rates of the credit rating agencies. Prohibiting banks from depositing balances in non rated institutions for more than 15.0 percent of their total outside placements. setting an upper ceiling for banks' placements abroad at the level of the state with 40.0 percent of bank outside placements (bank outside placements at the state should not exceed 40.0 percent of bank outside placements).
- Palestine: NO.

### Sector-specific capital buffer / risk weights
- Saudi Arabia: NO.
- UAE: NO.
- Qatar: NO.
- Bahrain: The following risk weights apply:
  - 1. SME’s 75.0 percent
  - 2. Trading in Real Estate Lending 150.0 percent
  - 3. Trading in Share lending 150.0 percent.
- Kuwait: SMEs - 75.0 percent.
- Oman: (no entry).

### Loan-to-value (LTV) ratios and margin requirements
- Saudi Arabia: 70.0 percent for real estate finance.
- UAE:
  - For UAE nationals:
    - on first property (a) if property value less than AED 5 M; 80.0 percent (b) if value more than AED 5 M: 70.0 percent.
    - On subsequent properties : maximum 65.0 percent
  - For expatriates:
    - on first property (a) if property value less than AED 5 M: 75.00 percent (b) if value more than AED 5 M: 65.00 percent.
    - On subsequent properties : maximum 60 percent
- Qatar: Limits introduced recently.
- Bahrain: 70.0 percent for real estate finance for salaried people and 60.0 percent for others.
- Kuwait: NO.
- Oman: For undeveloped land purchase 50.0 percent , existing property purchase 60.0 percent, 70.0 percent for construction use only. All of the above is only for residential property only. On housing and vehicle loans, Margin requirements of 20.0 percent on housing and vehicle loans, which translates into LTV of 80.0 percent.
- Egypt: NO. Ratios are closely monitored. For the purpose of Basel II regulations the residential mortgage loans should have a preferential risk weight of 35.0 percent in which the LTV doesn't exceed 80.0 percent and other than that it gets a 100 percent risk weight.
- Jordan:
  - LTV Housing Loans: 75.0 percent of the value of the house
  - LTV Car Loans: 75.0 percent of the value of the car
  - LTV Real Estate Commercial Loans: 60.0 percent of the real estate project
- Lebanon: NO.
- Morocco:
  - 70.0 percent of the project cost for loans medium and long term loans
  - 80.0 percent for loans with mortgage loans
  - 80.0 percent for car loans.
- Tunisia: YES.
- Palestine: NO.

### Debt / Loan-to-income (DTI / LTI) ratios and debt servicing limits
- Saudi Arabia: Total monthly repayments for personal loans and credit cards should not exceed 33.0 percent of income (personal loans & credit cards) and 25.0 percent for retirees.
- UAE: Loan servicing can not exceed 50.0 percent of gross salary plus any regular income. Effective tool to prevent over indebtedness.
- Qatar: NO.
- Bahrain: NO.
- Kuwait: Monthly installment limits have been set, capping at 40.0 percent for employed individual and 30.0 percent for a retired individual.
- Oman: 50.0 percent of net salary for personal loans other than housing loan, 60.0 percent including housing loan.
- Egypt: NO. Ratios are closely monitored.
- Jordan: NO. The banks should set the debt burden ratio in their credit policies.
- Lebanon: Debt servicing to income: 35.0 percent; it can go up to 45.0 percent in case the borrower benefits from a housing loan.
- Morocco: NO.
- Tunisia: 40.0 percent of the income for loans to individuals. This standard is generally respected by banks despite the fact that it is a customary rule.
- Palestine: 50.0 percent.

### General countercyclical capital buffer / requirement
- Saudi Arabia: NO. However, SAMA has encouraged Saudi banks to increase their capital buffer on a countercyclical basis. Banks' capital buffer rose by 100 percent during the period from 1992 to 1997 and by 250 percent during the period from 2003-2007.
- UAE: NO. The details are currently being worked out and will be implemented from 2016.
- Qatar: NO. In times of excess credit growth, banks will be subject to a countercyclical buffer that varies between 0 percent - 2.5 percent of the bank’s total risk-weighted assets, that must be met with CET1 form of capital.
- Bahrain: In Process, Up to 2.5 percent of Risk Weighted Assets, primary guide Credit to GDP ratio, Private Credit to Non-oil GDP with a set of complementary indicators.
- Kuwait: (no entry).
- Oman: (no entry).
- Egypt: In the phase of implementation according to agreed schedule with Basel Committee.
- Jordan: NO, A special study was conducted in this regard which showed that there is no need to apply this buffer.
- Lebanon: In preparation.
- Morocco: ONGOING.
- Tunisia: NO.
- Palestine: YES, A geopolitical reserve 15 percent of net profit.

### Domestic Systemically Important Banks (D-SIB) capital buffer and treatment
- Saudi Arabia: NONO.
- UAE: NO. The details are currently being worked out and will be implemented from 2016.
- Qatar: D-SIB's are subject to more frequent reporting and inspection. The CBB is evaluating the possibility of requiring such banks to hold more capital.
- Bahrain: Banks identified as DSIBs will be required to hold additional capital buffers ranging from 0.5 percent to 2 percent in the form of CET1. DSIBs charge will be applied in 2016.
- Kuwait: YES, Currently at 1 percent, can be increased up to 2.5 percent.
- Oman: (no entry).
- Egypt: Important Banks are closely monitored by the Supervision Department.
- Jordan: YES, A special study was conducted in this regard and in the process of issuing instructions.
- Lebanon: In preparation.
- Morocco: ONGOING.
- Tunisia: NO.
- Palestine: YES, Note: PMA in process of developing a methodology and instructions for dealing with DSIBs.

### Limits on domestic and foreign currency loans, FX positions, and maturity mismatch
- Limits on domestic currency loans:
  - Saudi Arabia: NONO.
  - UAE: NONO.
  - Qatar: NONO.
  - Bahrain: NONO.
  - Kuwait: NO.
  - Oman: For non-residents, lending to non-residents in domestic currency is prohibited.
  - Egypt: YES. According to income.
  - Jordan: NO.
  - Lebanon: NO.
  - Morocco: Loans of more than 7 years and up to 15 years are granted by banks deposits in the limit of 3.0 percent of the volume of their deposits, eventually in special savings accounts and under form of certificates of deposit.
  - Tunisia: - onshore Banks are only allowed to lend short term credits in domestic currency to offshore companies.
  - Palestine: NO. Palestine does not have a national currency.

- Limits on foreign currency loans:
  - Saudi Arabia: NO, however SAMA approval is needed.
  - UAE: NONO, Banks are advised to follow prudential banking norms.
  - Qatar: NONO.
  - Bahrain: For non-residents, lending to non-residents in foreign currency.
  - Kuwait: YES. According to income in FX YES, 30.0 percent. The loan should be for exporting purposes only.
  - Oman: NO.
  - Egypt: NO.
  - Jordan: NO.
  - Lebanon: NO.
  - Morocco: NO.
  - Tunisia: NO.
  - Palestine: NO. Palestine does not have a national currency.

- Limits on open FX currency position / currency mismatch:
  - Saudi Arabia: NONO.
  - UAE: NO. The floor for ratio of foreign currency assets to foreign currency liabilities is fixed at 100 percent.
  - Qatar: NO.
  - Bahrain: Each bank is given a limit based on their individual profile which is reviewed by the Central Bank of Kuwait.
  - Kuwait: Forex Open Position 40.0 percent of capital and reserves.
  - Oman: NO.
  - Egypt: Long and short positions in any single currency should not exceed 1 percent and 10 percent of the capital base, respectively. While long and short positions for all currencies should not exceed 2 percent and 20 percent of the capital base, respectively.

- Limits on maturity mismatch (selected entries):
  - Kuwait: May not exceed 15.0 percent for the “At sight” band or 20.0 percent for the “One month” band.
  - Oman: 7 Days and under 10.0 percent; 1 month and under 20.0 percent; 3 months and under 30.0 percent; 6 months and under 40.0 percent. For time buckets up to 1 year, gaps of not more than 15.0 percent of cumulated liabilities.
  - Egypt / others: (no uniform entry).

### Limits on exposure concentration and large exposures
- Saudi Arabia: Per party limit of 15.0 percent of bank’s net worth.
- UAE: The legal limit is 25.0 percent to be reduced to 15 percent by 2019.
- Qatar: Exposures include on and off balance sheet items converted using CCF. Individual Large borrower: 25.0 percent of capital base. Government entities exposure: 25.0 percent individual limit and aggregate limit 100 percent of capital base. Capital base is calculated as per Basel II. Real estate finance should not exceed 150.0 percent of the bank's capital and reserves. Ceiling for credit facilities at 20.0 percent and for credit facilities and investment at 25.0 percent of bank's capital and reserves for single customer. Credit facilities granted by all banks to a single borrower group should not exceed QR 3bn.
- Bahrain: A bank may not incur an exposure to an individual counterparty or group of closely related counterparties (not connected to the reporting bank) which exceeds 15.0 percent of the reporting bank’s (consolidated) capital base without the prior written approval of the CBB. Equivalent limits are in place for parties connected to the bank.
- Kuwait: 15.0 percent per obligor, 400.0 percent for total large exposures.
- Egypt: (see mortgage and sectoral limits above).
- Jordan: (see other entries).
- Lebanon: (see interbank and placement limits above).
- Morocco: (see placement ceilings above).
- Tunisia: (no entry).
- Palestine: (no entry).

*Appendix II — Macroprudential Policy Framework in Arab Countries (extracted tables and entries from the Macroprudential Toolkit: First Group and Second Group).*

### 15.0 percent for position in total

### _wp1698 - 15.0 percent for position in total

### FX position limits and net trading position
- 15.0 percent for position in total currencies and 5.0 percent per currency.
- Net trading position: 1.0 percent of Tier 1 capital.
- Global FX Position: 40.0 percent of Tier 1 capital.
- Banks are allowed to hold a fixed position in foreign currency up to 60.0 percent of their equity in LBP. This fixed position is deducted from the calculation of the net trading position.
- Banks are required to maintain their FX position under 20.0 percent of capital for all currency and 10.0 percent per currency.
- 2 limits on FX position in relation to net capital equity:
  - in currency basis
  - in global currencies basis
- 1 limit related to total loss on a position.
- Open position of each currency (difference between assets and liabilities) short (-) or long (+) should not exceed +/- 5.0 percent of bank's capital base and the aggregate total of shorts and longs should not exceed +/- 20.0 percent of bank's capital base for all currencies regardless of the sign (+) or (-).

### Limits on maturity mismatch and liquidity ladder
- Maturity ladder displays the banks assets and liabilities according to their maturities and is comprised of 8 buckets.
- The CBE obliged banks to calculate the gap between total assets and liabilities for each bucket and specify an internal limit acceptable for individual and cumulative gaps.
- Specific instructions regarding Liquidity maturity ladder (instructions no. 41/2008 and 43/2008.). The bank liquid position should be positive after the fifth bucket.
- Article 156 of the code of money and credit stipulates that banks should ensure adequate matching between the maturities of their assets and liabilities.

### Minimum resource maturities for mortgage loans (requirements listed)
- The mortgage loans having an initial period between 10 and 15 years must be backed with resources minimum maturity of 10 years.
- The mortgage loans having an initial period between 15 and 20 years must be backed with resources minimum maturity of 15 years.
- The mortgage loans having an initial period between 20 and 25 years must be backed with resources minimum maturity of 20 years.

### Limits on exposure concentration (single borrower, groups, country, non-resident investments)
- Limits on bank's exposure to single borrower and related parties:
  - 20 percent of their capital base if the exposure is to one counterparty,
  - 25 percent of the bank’s capital base if the exposure is to a group of related counterparties,
  - Overall large exposure exceeding 10 percent of bank’s capital base should not exceed in total 8 times the bank’s capital base.
- 10.0 percent up to 25.0 percent of bank's capital base subject to a prior approval from the PMA.
- Per borrower / Group of Borrowers:
  - One borrower using facilities in Lebanon and Abroad: 20.0 percent of Tier 1 capital.
  - One borrower using facilities abroad only: 10.0 percent of Tier 1 capital.
  - Total facilities of Large borrowers: 400.0 percent of Tier 1 capital (Large borrower is a borrower whose facilities exceed 10.0 percent of Tier 1 capital).
- Per Country / Group of Countries:
  - Total facilities used in one country rated BBB and above: 50.0 percent of Tier 1 capital.
  - Total facilities used in one country rated below BBB or unrated: 25.0 percent of Tier 1 capital.
  - Total facilities used in all countries rated below BBB or unrated: 100.0 percent of Tier 1 capital.
  - Total facilities used abroad: 400.0 percent of Tier 1 capital.
- Other Concentration Limits (BDL):
  - limit per non-resident issuer of bonds: 10.0 percent of Tier 1 capital.
  - Investments in non-resident bonds rated below BBB or unrated and investments in structured products rated below A and not capital guaranteed are not allowed.
  - Limit on total investments in non-resident bonds (that should be rated BBB and above): 50.0 percent of Tier 1 capital.
  - Limit on total investments in nonresident structured products (that should be rated A and above and capital guaranteed): 25.0 percent of Tier 1 capital.
  - operations on derivatives for speculative purposes are not allowed.

### Aggregate incurred risk and related-party limits (lending institutions)
- The total amount of incurred risks should not exceed:
  - 3 times the net core funds of the lending institution, for beneficiaries whose incurred risks for each of them, amount to 5.00 percent or more of the aforesaid net core funds (against 5 times the net core funds at the present time),
  - 1.5 times the net core funds of the lending institution, for beneficiaries whose incurred risks amount, for each of them, to 15.00 percent or more of the aforesaid net core funds (against twice the net core funds presently).
- The total amount of incurred risk on relevant parties as defined by Article 23 of lawn ° 2001-65 of 10 July 2001 on lending institutions must not exceed once the net core funds of the lending institution.
- The incurred risks on the same beneficiary shall not exceed 25.00 percent of the net core funds of the bank.

### Lending-period, PD within 12 month, LTV, and credit rating matrix
- Lending Period (Years) / PD within 12 month (%) / LTV / Code of credit rating:
  - 25 / 0-8 / 85% / A and B
  - 25 / 8-18 / 80% / C
  - 15 / 18-61 / 60% / D
  - 7 / 61-100 / 30% / E

### Macroprudential toolkit comparisons (selected entries)
- Libya / Iraq (selected instruments and values):
  - Reserve Requirements on Bank Deposits: 20.0 percent (Libya); 15.0 percent on total deposits (Iraq).
  - Leverage Ratios (Capital to Assets): YES (Libya); Not exceeding eight times of the capital and reserves for all banks (Iraq).
  - Ceiling on Credit or Credit Growth: YES. The total credit ratio must not exceed 8 times of capital and banks reserves (Libya); [Iraq entry not explicitly given for ceiling].
  - Limits on Loan-to-Deposit (LTD) Ratios: 70.0 percent (Libya); YES, according to adopted standard the total credit must not exceed 70.0 percent of the total deposits (Iraq).
  - Liquidity Requirements / Buffers: YES, 25.0 percent (Libya); Liquidity ratio must not exceed 30.0 percent of gross total assets/liabilities (Iraq).
  - Limits on Real estate Exposure: 30.0 percent (Libya); NO (Iraq).
  - Limits on Other Sectoral Exposure: NO (Libya); Concentration of credit must not exceed 4 times of capital and reserves (Iraq).
  - Limits on Interbank Exposures: NO (Libya); Credit not to exceed 10.0 percent of lending bank's capital and sound reserves (Iraq).
  - Loan-to-Value (LTVs) Ratios: NO (Libya); 60.0 percent of real estate value (Iraq).
  - Debt/Loan-to-Income (DTI/LTIs) Ratios: NO (Libya); The loan provided to the occupants of leadership positions in banks must not exceed 50.0 percent of total annual incomes (Iraq).
  - General Countercyclical Capital Buffer/Requirement: NO (Libya); YES, capital adequacy standard is adopted (Basel 2) by 12.0 percent (Iraq).
  - Domestic Systemically Important Banks Capital Buffer: NO (Libya); YES, 250 billion Iraqi dinars o its equivalent (Iraq).
  - Limits on Domestic Currency Loans: NO (Libya); 10.0 percent for moral and natural person. 15.0 percent for person and his companies and relatives from first and second class (Iraq).
  - Limits on Foreign Currency Loans: NO (Libya); YES (Iraq).
  - Limits on open FX Currency Position/Currency Mismatch: NO (Libya); YES (Iraq).
  - Limits on Maturity Mismatch: NO (Libya); Most of provided loans are short-term loans and represent the first rank for the period 1 to 2 years then mid loans they are limited and related to real estate loans (Iraq).
  - Limits on Exposure Concentration: 20.0 percent (Libya). Additional notes: Government entities are not allowed to borrow from Commercial bank, by law. All of the above mentioned ratios are microprudential tools applied by Banking Supervision Department at the Central Bank of Libya. The loans provided must not exceed 10.0 percent for natural and moral person including public institutions of (10.0 percent) of bank capital and its total reserves.

### Macroprudential framework: Institutional mandates and coordination (selected regional excerpts)
- First Group (KSA, UAE, QATAR, BAHRAIN, KUWAIT, OMAN): central bank commonly has the formal mandate for macroprudential policy; departments responsible include Monetary Policy and Financial Stability Department, Financial Stability Division, Financial Stability and Statistics Department, Financial Stability Department.
- Coordination between macroprudential and microprudential policies: examples of established committees and sub-committees to align macro and micro-prudential regulations, information sharing, and policy response assessment.
- Second Group (EGYPT, Jordan, Lebanon, Morocco, Tunisia, Palestine, Sudan): mixed presence of formal mandates; central banks and committees (e.g., Committee for coordination and surveillance of Systemic Risks (CCSRS)) involved; Financial Stability Units established in several jurisdictions; coordination mechanisms with banking supervision and monetary policy described.
- Third Group (LIBYA, IRAQ):
  - Libya: Does any institution have a formal mandate for macroprudential policy? NO. If no formal mandate, plans: YES, The Central Bank of Libya took the initiative of addressing the issue of Macroprudential policy by forming a committee to draft a proposal in order to introduce the subject to all concerned parties.
  - Iraq: YES. Which institution: Central Bank of Iraq. Formal mandate made explicit in: Banking law and executive instructions issued according to it. Department responsible: Banking and Credit Control Dept.

### Basel III implementation schedule (selected entries)
- Capital Adequacy Ratio:
  - 2015: Final rule in force: the domestic legal and regulatory framework is already applied to banks.
  - To be finalized in the near future Implemented from 2014 6.5 percent
  - 2014: 12.0 percent
  - 2015: 12.5 percent
  - 2016: 13.0 percent
  - 2015: Common Equity Tier 1 - 7 percent
  - 2016: Tier 1- 9 percent
  - 2017: Total CRAR 12 percent
  - 2018: Capital Conservation Buffers currently 0.625, full effect

*Italic: Source PDF: _wp1698 - 15.0 percent for position in total*

### 2.5 percent by 2019

### 2.5 percent by 2019

### Basel III implementation timelines and capital buffers
- Countercyclical Capital Buffers up to 2.5 percent, full effect by 2019.
- Framework for DSIBs:
  - 2016: The framework for DSIBs has been implemented beginning 2016. To be finalized in the near future. Implemented from 2016. Number of banks=5.
  - 2015: 1 bank designated as D-SIB.
  - 2016: 0 percent - 2 percent (countercyclical buffer range reported).
  - 2016: 1 percent additional CET1 for designated D-SIB.
  - Phased additional CET1 in 40 bps (2017), 30 bps (2018) and 30 bps (2019).
  - No additional Capital buffer indicated for some designated banks; Resolution Recovery Plan submitted to the CBB / Subject to more intensive Supervision.

- Country group summaries:
  - Egypt/Jordan/Lebanon/Morocco/Tunisia: BDL and BCCL setting DSIB definitions; ongoing studies for number of banks; circular to be adopted by the end of 2015 on additional capital/timeline (Jordan/Lebanon region notes).
  - Libya/Iraq: No adoption of Basel III; Central Bank adopted Basel II or CAMEL systems instead.

### Liquidity standards: LCR and NSFR schedules
- Liquidity coverage ratio (LCR) and NSFR phase-in:
  - Liquidity coverage ratio to be 60 percent in 2014, increasing by 10 percent each year and reaching 100 percent by 2018. NFSR to be 70 percent in the current year, increasing by 10 percent each year to reach 100 percent by 2018. (text reports both LCR and NFSR targets)
  - Specific annual LCR minima reported:
    - 2015: LCR min. 60 percent
    - 2016: LCR 70 percent
    - 2017: LCR min 80 percent
    - 2018: LCR min 90 percent
    - 2019: 100 percent LCR
  - NSFR minimum standard:
    - 2015: 100 percent
    - 2016: 100 percent
    - starting from 60 percent in 2015 up to 100 percent by 2019 (note: mixed language in source).
- Country/regional notes:
  - Final circular #107020 on amended LCR was issued on 10 July 2013 and in force (specific jurisdiction referenced in source).
  - Egypt/Jordan/Lebanon/Morocco/Tunisia: LCR timeline given as 2015: 60 percent, 2016: 70 percent, 2017: 80 percent, 2018: 90 percent, 2019: 100 percent. NSFR regulation implementation not yet planned in some jurisdictions.
  - Tunisia/other central banks performed Quantitative Impact Studies and are preparing NSFR templates.

### Leverage ratio implementation
- Status and calibration:
  - 2016: Leverage ratio is Monitored quarterly at a minimum of 5 percent since January 2011 on the basis of BCBS document of December 2010. Disclosure will start in 2015 as per the BSCS requirements. Any other adjustments to definition and calibration will be made by 2017.
  - Already implemented in some jurisdictions. Ratio set at 3 percent.
  - 2017: Disclosure starts.
  - 2018: Migration to in 2018.
  - Historical ratios reported:
    - 2014: 3 percent
    - 2015: 3 percent
    - 2015: 3 percent (source repeats this line).
- Country/regional notes:
  - Egypt/Jordan/Lebanon/Morocco/Tunisia: Templates developed and submitted semi-annually; BDL will set a minimum leverage ratio for banks in 2015; ongoing studies.

### Capital adequacy (CAR) and conservation buffers
- Minimum capital requirements and buffer timelines:
  - Banks required to gradually abide by capital requirements by the end of 2015:
    - Min CET1 Ratio ≥ 5.5 percent
    - Min T1C Ratio ≥ 7.5 percent
    - Min TC Ratio ≥ 9.5 percent
  - Capital conservation buffer of 2.5 percent of Risk-Weighted Assets to reach by the end of 2015:
    - Min CET1 + Capital Conservation Buffer ≥ 8 percent
    - Min T1C + Capital Conservation Buffer ≥ 10 percent
    - Min TC + Capital Conservation Buffer ≥ 12 percent
  - CAR (additional capital) reported: Core tier I (8 percent), tier I (9 percent), CAR (12 percent). Timeline: In force since 2014 - progressive implementation until end 2018. Operational risk and market risk not yet considered in the CAR in one jurisdiction. Regarding the regulation in force the core tier 1 is 7 percent in another note.
  - BDL is expected to issue a framework on Countercyclical Capital Buffer (region-specific).

### Financial stability frameworks and stress testing
- Adoption of Early Warning Systems and Financial Stability Offices:
  - KSA/UAE: Macroprudential dashboard launched; financial stability index under development; Financial Stability Unit created in 2008; financial stability division established in SAMA; annual financial stability reports issued since 2012 in some jurisdictions.
  - Qatar/Bahrain: QCB and CBB monitor various financial stability indicators; Financial Stability Reviews (FSRs) published (QCB since 2009; CBB semi-annually). CBB produces an internal Early Warning Report semi-annually for D-SIBs.
  - Kuwait/Oman: Early Warning Mechanisms in development; Oman has Financial Stability Office and publishes annual Financial Stability Reports (Oman: first in 2013, second in 2014). Central Bank of Kuwait established Financial Stability Office in June 2011 and publishes an annual Financial Stability Report in both English and Arabic.
  - Egypt/Jordan/Lebanon/Morocco/Palestine/Sudan: Macroprudential units and financial stability departments exist or are being established; FSRs published in various years (e.g., Lebanon first FSR published 2014, July 24th).

- Stress testing responsibilities and practices:
  - SAMA (Saudi Arabia) and UAE: Financial stability units conduct periodic capital and liquidity stress testing; IMF next generation balance sheet stress testing tool used in 2014 in one jurisdiction.
  - CBB (Bahrain): Conducts semi-annual sensitivity stress testing for D-SIBs focusing on credit and liquidity risks; uses IMF-developed stress testing tools modified for Bahraini system.
  - QCB (Qatar): Conducts stress tests for credit, liquidity, market and cross-border risks; results published in FSRs.
  - Egypt: CBE implements top-down and bottom-up stress testing since 2010; Macroprudential Unit conducts top-down and oversees bottom-up tests.
  - Lebanon: Central bank implemented top-down stress tests (balance sheet sensitivity, interbank contagion, macro stress tests); Banking Control Commission responsible for stress testing banks.
  - Palestine/Sudan: Stress testing conducted by PMA quarterly and by banks semi-annually; stress testing instructions developed and implemented by banks and PMA.
  - Libya/Iraq: Department of banking supervision publishes annual reports and is responsible for stress testing; arrangements currently under review in some cases.

### Financial stability indicators — selected statistics (country groups)
- First Group (selected entries preserved exactly as in source):
  - Capital Adequacy Ratio examples (2014 and historical series provided for countries including KSA, UAE, Qatar, Kuwait, Oman). Sample values:
    - KSA 2005–2014 series includes: 20.6, 16.0, 16.9, 17.6, 17.6, 18.2, 17.9, 17.9 (etc. as listed).
    - UAE 2005–2014 series includes: 17.0, 17.0, 14.0, 13.0, 20.0, 22.0, 21.0, 21.0, 19.0, 18.0.
    - Qatar 2005–2014 series includes: 24.8, 15.1, 13.5, 15.5, 16.1, 16.1, 20.6, 18.9, 16.0, 12.8.
  - NPLs to Loans examples:
    - KSA series includes: 2.0, 2.1, 1.4, 3.3, 3.0, 2.2, 1.7, 1.3, 1.1.
    - UAE series includes: 8.0, 6.0, 3.0, 3.0, 5.0, 6.0, 7.0, 9.0, 8.0, 7.0.
    - Oman series includes: 22.0, 19.1, 16.3, 15.0, 13.4, 12.4, 12.4, 12.5, 12.2.
  - Provisioning Rate (general plus specific) examples:
    - KSA series includes values such as 182.0, 143.0, 153.0, 89.8, 116.0, 133.0, 145.0, 163.0.
    - UAE series includes values such as 95.0, 98.0, 100.0, 99.0, 85.0, 84.0, 87.0, 83.0, 92.0, 102.0.
  - Return on Assets and Return on Equity samples provided for multiple years and jurisdictions (values preserved in source tables).

- Second Group (selected entries preserved exactly as in source):
  - Capital Adequacy Ratio examples:
    - Egypt series includes: 13.7, 14.7, 14.8, 14.7, 15.1, 16.3, 15.9, 14.9, 13.7.
    - Jordan series includes: 17.6, 21.4, 20.8, 18.4, 19.6, 20.3, 19.3, 19.0, 18.4, 17.4.
    - Morocco series includes: 11.5, 12.3, 10.6, 11.2, 11.7, 12.3, 11.7, 12.3, 13.3, 13.5.
  - NPLs to Loans examples:
    - Egypt series includes: 26.5, 18.2, 19.3, 14.8, 13.4, 13.6, 10.5, 9.8, 9.3.
    - Jordan series includes: 6.6, 4.3, 4.1, 4.2, 6.7, 8.2, 8.5, 7.7, 7.0, 7.0.
    - Sudan series includes: 7.0, 19.0, 26.0, 22.0, 21.0, 14.0, 13.0, 12.0, 8.0, 7.0.
  - Provisioning Rate (general plus specific) examples:
    - Egypt series includes: 51.0, 76.2, 74.6, 92.1, 100.4, 92.5, 94.5, 97.1, 99.8.
    - Jordan series includes: 78.4, 80.0, 67.8, 63.4, 52.0, 52.4, 52.3, 69.4, 77.0, 76.4.

- Third Group (selected entries preserved exactly as in source):
  - Iraq Capital Adequacy Ratio series includes: 29.5, 33.4, 31.4, 28.0, 26.0, 31.0, 30.0, 28.0, 33.0, 28.4.
  - Iraq NPLs to Loans series includes: 15.6, 10.6, 9.7, 6.5, 5.9, 2.8, 3.0, 2.2, 8.1, 8.4.

*Italic line: Source: _wp1698 - 2.5 percent by 2019 (PDF chapter content provided).*

### References

### _wp1698 - References

### References list

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*Source: _wp1698 - References*

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