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IMF agrees to Somalia pleas, delays loan deadline by 3 months. Here’s why

Published

2 years ago

May 22, 2022

Somalia can take a breath of relief while managing its debt crisis as the International Monetary Fund (IMF) has agreed to delay the loan deadline by at least three months.

The agreement, which could free up the country’s access to budgetary funding from external lenders, was made known in a statement by the monetary body.

The approval came after IMF senior staff met with new President Hassan Sheikh Mohamud alongside other Somali top government officials this week.

According to the IMF, failure to meet the new ECF conditions, and hence a cut-off, would heighten economic risks for Somalia.

“Near-term risks include the evolution of the pandemic, prolonged drought or new climate shocks, resurgence of desert locust infestation, security risks, and additional pressures on international food and energy prices,” the lender said in a statement.

The Executive Board of the IMF had granted additional interim assistance to Somalia under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative in the amount of SDR 0.68 million (about US$ 0.97 million) on a lapse of time basis.

Somalia pleaded with the IMF earlier in the month to extend its financial support by three months to Aug. 17.

Related Topics:Featured Somalia Somalia and IMF

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Nigerian oil regulator implements regional fuel standards

Published

3 hours ago

April 26, 2024

Ifeoluwa Dada

Nigeria’s oil authority has clarified that the recent changes to diesel fuel sulphur content standards are part of a regional effort to make things more uniform and are not meant to loosen rules for local refineries.

A report from S&P Global last week said that the West African fuel market had changed a lot after Nigeria raised the maximum diesel sulphur content from 200 parts per million (ppm) to around 650 ppm. This caused worries that the country might be lowering its standards to allow diesel made in Nigeria that is higher than the 200 ppm limit.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), on the other hand, said it was only following a 2020 decision by the Economic Community of West African States (ECOWAS) that all of the regions had to slowly switch to better fuels.

Fuels that have a lot of sulfur can hurt engines and make the air dirty. As of right now, the ECOWAS rule lets locally-made fuel have more sulfur until January 2025. After that, a standard of less than 5 parts per million will be used for all oil, whether it is refined in West Africa or brought in from another country.

Farouk Ahmed, the head of the NMDPRA, told Reuters that the new limits are in line with ECOWAS’s choice to require stricter fuel specifications. The new rules will go into effect in January 2021 for non-ECOWAS imports and January 2025 for ECOWAS refineries.

“We are merely implementing the ECOWAS decision adopted in 2020,” Ahmed said.

“So a local refinery with a 650 ppm sulphur in its product is permissible and safe under the ECOWAS rule until January next year where a uniform standard would apply to both the locally refined and imported products outside West Africa”, Ahmed said.

Ahmed said that importers were told that the amount of sulphur allowed was going down, from 300 parts per million in February to 200 parts per million this month. This was done long before the huge Dangote refinery started providing diesel.

Diesel with a sulphur level of between 1,500 ppm and 3,000 ppm could be brought in by importers before.

The switch to cleaner fuels is in line with efforts to protect the environment around the world and makes sure that all area refiners have the same chances.

Nigeria recently had its worst blackout in decades because of a problem with its energy supply. The high cost of alternative energy sources has been a huge problem for both businesses and individuals, with the price of diesel being the most affordable choice for businesses.

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IMF predicts Kenya’s economy to overtake Angola

Published

3 hours ago

April 26, 2024

Ifeoluwa Dada

The International Monetary Fund (IMF) says that this year, Kenya will pass Angola to become the fourth biggest economy in sub-Saharan Africa. South Africa, Nigeria, and Ethiopia will then follow it.

Kenya is expected to stay in that spot until the end of 2029 as its GDP grew from $113.7 billion (Ksh13.37 trillion) in 2022 to $108.9 billion (Ksh15.14 trillion) last year, based on the current exchange rate. Ethiopia’s lead over Kenya has grown, and in two years it will pass Nigeria to become the second-largest economy in the area.

In 2020, Ethiopia’s economy was smaller than Kenya’s but it has continued upward and is expected to have reached $159.74 billion (Sh21.165 trillion) by 2023, making the gap between the two countries even bigger. Also, Ethiopia’s economy is likely to stay in second place for three years, until 2029.

Some people think that Ethiopia’s gross domestic product (GDP), which is the value of all the goods and services made in the country, is higher than it is. The country just got out of a civil war that lasted two years and destroyed its economy. It is one of the African countries that has not paid one of its debts.

According to the African Development Bank, East Africa will continue to grow fastest in Africa. In 2024 and 2025, growth is expected to reach 5.1% and 5.7%, respectively. The expected strong economic performance of countries in the region is reflected in the growth acceleration of 1.6% points from 3.5% in 2023 to 7% in 2024. Seven economies are expected to grow by 5% or more in 2024: Rwanda (7.2%), Ethiopia (6.7%), Djibouti (6.2%), Tanzania (6.1%), Uganda (6%), Burundi (5.8%), and Kenya (5.4%).

Charlie Robertson, who is in charge of macro strategy at investment management firm FIM Partners UK Ltd., called the exchange rate between the pound and the erg a “fantasy exchange rate.”

“Ethiopia is maintaining a hugely overvalued exchange rate which is not supported by reality,” said Robertson in an email response.

The stated exchange rate for the Ethiopian Birr is 57, but the FIM Partners FX model says that it should be about 97% of the dollar. The IMF says that Ethiopia’s economy grew by 7.2% last year, from a base of $118.97 billion to $193.0 billion. This was the fastest GDP growth in sub-Saharan Africa.

Kenya’s economy, on the other hand, grew more slowly, by only 5.5% in 2023. This was because the country’s economy came out of a year marked by drought and tight global financial markets because of the war in Ukraine. This month, Kenya is likely to share its official GDP numbers for 2023.

“But at a realistic exchange rate, [Ethiopia’s] GDP was probably $90 billion. Kenya’s GDP by comparison was $109 billion in 2023. So, if you use the official figure, you’d say Ethiopia’s economy was about 50% bigger than Kenya – but in reality, Kenya’s economy is bigger.”