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In bid to arrest currency decline, Zimbabwe suspends bank lending

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The Zimbabwean government has ordered comnercial banks in the country to stop lending money to government at all levels, businesses and individuals with immediate effect, in a bid to arrest the steady decline of the country’s currency and shore up the economy.

The order which came on Saturday directly from President Emmerson Mnangagwa, is designed to stop speculations against the Zimbabwean dollar and is part of a number of measures to arrest its rapid devaluation on the black market.

According to Mnangagwa, the step is also meant to arrest the currency’s depreciation, which he said is threatening Zimbabwe’s economic stability.

“Lending by banks to both the government and the private sector is hereby suspended with immediate effect, until further notice,” Mnangagwa said in a statement.

The President also accused unnamed speculators of borrowing Zimbabwe dollars at below-inflation interest rates and using the money to trade in forex.

Other measures taken by the government to arrest the currency decline include an increased tax on forex bank transfers, higher levies on forex cash withdrawals above $1,000, and the payment of taxes which used to be charged in forex in local currency.

The southern African country which has been grappling with dwindling economic growth, had reintroduced a local currency in 2019 after abandoning it in 2009 when it was hit by hyperinflation.

However, the Zimbabwean dollar, which is officially quoted at 165.94 against the US dollar, has continued to slide on the black market, where it is trading between 330 and 400 to the dollar.

The devaluation of the Zimbabwe dollar’s black market exchange rate, which is used in most financial transactions in the country has been driving up inflation with a year-on-year inflation rising to 96.4% in April, up from 60.6% in January.

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World Bank predicts Mozambique economy growing at 5.7% on average

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The World Bank has predicted that the economic growth in Mozambique is expected to accelerate in the medium term averaging 5.7% between 2022 and 2024, as a result of demand recovery and economy benefits from the start of liquefied natural gas production this year.

In a report released Thursday, the World Bank said the start of LNG production at the offshore Coral Project and the expected resumption of other LNG projects would help spur the southeast African nation’s growth in the intervening year.

The World Bank said a three-year extended credit facility arrangement agreed by Mozambique with the International Monetary Fund (IMF) and budget support from other partners would further help to strengthen its economic recovery.

The IMF’s executive board had, in May, approved a $456 million program for the country, the first since the global lender suspended support to Mozambique six years ago.

However, the World Bank warned that risks remained for Mozambique’s growth, especially from rising import prices due to the conflict in Ukraine, a possible surge in COVID infection waves, and insurgency in the north.

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Nigeria, Algeria, Niger to revive Saharan gas pipeline talks

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The governments of Nigeria, Algeria and Niger Republic have held talks to revive a gas pipeline project across the Sahara which had been put on hold for over 40 years, with the potential opportunity for Europe to diversify its gas sources as the world faces a short fall as a result of the Russian-Ukraine war.

The three countries, represented by their various Petroleum Ministers, met in Abuja, Nigeria’s capital on Wednesday and resolved to set up a task force to revive the project and designated an entity to update the feasibility study.

A statement by Niger’s Oil Ministry after the two-day meeting stated that the Trans-Saharan gas pipeline project estimated at $13 billion, could send up to 30 billion cubic metres a year of supplies to Europe.

The statement added that the energy ministers of the three countries will meet again in Algiers at the end of July to “validate the proposals of the newly installed task force.”

“The pipeline should allow Europe to diversify its sources of natural gas supply but also allow several African states to access this high value energy source,” the statement said.

“With a length of 4,128 kilometres (2,565 miles), the pipeline would start in Warri, Nigeria, and end in Hassi R’Mel, Algeria, where it would connect to existing pipelines that run to Europe,” it said.

The gas pipeline idea was first proposed more than 40 years ago with an agreement signed between the three countries in 2009, but progress stalled stalled following a lack of follow through by the countries.

Earlier this month, Nigeria also took steps to revive another gas pipeline project that would pass through West Africa, Morocco to Europe.

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