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South Africa’s Reserve Bank excepted to hike interest rate at next meeting

Published

2 years ago

May 14, 2022

In a bid to raise contraction of the sale and repurchase agreement rating as a result of inflation forecasts caused by rising costs in the second quarter of 2022, the South African Reserve Bank (SARB) is expected to lift its repo rate by 25 basis points in May and 50 basis points in Q3 at its next meeting.

In a survey conducted by renowned economists between, the country’s Central Bank has concluded that it would hike its repo rate by 25 basis points to 4.50% at its May policy meeting, almost in line with a poll carried out in March.

A majority in the survey predicted that the SARB will hike again in the third quarter by 50 basis points to 5.00% compared with only once in the third quarter to 4.75% in the March poll.

According to the survey, the SARB is then expected to pause in November at 5.00%, and then hike by 25 basis points every quarter, but pausing at 5.75% at the final policy meeting of 2023.

An economist and researcher with Gina Schoeman, in a research note, said hefty goods price rises have pushed inflation expectations above the 4.5% mid-point target and the SARB is understandably more concerned now about second-round effects.

“We forecast consecutive 25 basis point hiking with the door open for a 50 basis point move if second round effects surprise to the upside,” Schoeman said.

However, the SARB’s official aim is to keep inflation in the 3%-6% range while South Africa’s annual inflation rate rose to 5.9% in March from 5.7% in February, driven mainly by food and fuel price rises following Russia’s invasion of Ukraine.

Another economist, Mpho Molopyane, at Rand Merchant Bank, said if the reprieve were to be extended for another 10 months, this could shave 0.2 percentage point from this year’s headline consumer price inflation.

“The added benefit would be much lower second-round effects to core inflation and food prices, which could lead to a further moderation in headline CPI inflation,” said Molopyane.

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Nigeria wants $2.25 billion World Bank loan

Published

15 hours ago

April 23, 2024

Ifeoluwa Dada

Nigeria’s Finance Minister, Wale Edun, has revealed that the country is seeking up to $2.25 billion in World Bank loans and expects the bank’s board to approve the request in June.

The move was announced in a statement following the International Monetary Fund/World Bank spring meetings in Washington, D.C as the country also aims to issue diaspora bonds later this year to attract much-need foreign exchange into the country.

The World Bank loans would include $1.5 billion for development policy and $750 million for program-for-results, the statement said. It also said that the bank would meet in June to decide whether to approve the plan in its entirety.

The multilateral body is yet to comment on the revelation at press time.

Nigeria one of Africa’s biggest oil producers has struggled lately mainly over industrial-scale crude oil theft, and troubles getting foreign currency, which caused its naira currency to drop to all-time lows against the U.S. dollar. It has since recovered, though.

Already, the country is on record levels of debt, high unemployment, and large amounts of money from the central bank. However, Edun has insisted that the government had cut the money it borrowed from the central bank in half.

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Ghana’s finance minister anticipates debt restructuring MoU with lenders

Published

1 day ago

April 22, 2024

Ifeoluwa Dada

Ghana’s Finance Minister has announced that the country’s two main creditors will send him a draft Memorandum of Understanding (MoU) on a restructuring deal in May, signifying a major progress in the country’s debt reform.

Once the MoU is signed, it will make public the deal that was made in January to restructure $5.4 billion in loans with its official creditors, such as China and France.

The restructuring is a big step toward Ghana getting rid of its debt as it works to get out of the worst economic crisis in a generation. It should also allow the country to get more money from its $3 billion IMF program.

Mohammed Amin Adam said he was sure the International Monetary Fund (IMF) and the World Bank would work together at the Spring Meetings in Washington, D.C. In June, the Monetary Fund’s executive board will agree to review its staff-level deal.

From 2023 to 2028, Ghana’s national debt to gross domestic product level was supposed to go down by 15%. This guess says that the number will have gone down every year for six years, ending at 69.96% in 2028.

Ghana didn’t pay back most of its foreign loans in December 2022 because it became too expensive to do so. But now it needs to work out a deal with private holders of about $13 billion in foreign bonds. It has also changed most of its domestic debt.