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Kenya cools talk on debt default as delay in public service salaries continues

Published

2 years ago

April 11, 2023

President William Ruto’s chief economic adviser, David Ndii has maintained that the country will not default on its debt repayment obligations despite delayed payment of civil service salaries.

“Nairobi has no plans to go down that route”, said Ndii.

“We are not insolvent. We can finance repayments. It is a significant sacrifice but we are actually able to pay,” he added on Monday.

He said default was a “very bad idea” since it would force the government to “spend the next three to four years in very protracted debt restructuring negotiations.”

The delay has been due to a cash squeeze caused by massive interest payments. There are speculations Kenya could default on its loan deals like Ghana and Zambia.

Kenya’s debt has increased from 180 shillings nearly ten years ago to 680 billion shillings ($5.09 billion) this year, placing additional strain on the government cash flow.

Meanwhile, the situation has drawn reactions from the leader of the opposition in the national assembly, Opiyo Wandayi.

“Civil servants and MPs have gone to Easter without salaries,” Wandayi said in a statement issued during the weekend. Lawmakers had not received their March salary by April 7, a delay from the usual payment time of between March 26-30.

The International Monetary Fund recently warned public debt and inflation in most African countries were at “levels not seen in decades” and says several countries face “difficult sociopolitical and security situations.”

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Angola’s draft budget estimates 1.65%/GDP deficit in 2025

Published

6 hours ago

November 1, 2024

Ifeoluwa Dada

Draft budget documents show that Angola’s government expects a 1.65% GDP budget deficit in 2025, up from 1.46% this year.

According to finance ministry records on its website, Africa’s second-largest crude oil exporter’s 2025 budget is predicated on $70 per barrel of oil. Brent crude futures were around $74 per barrel on Friday.

In an interview with Reuters last week, Vera Daves de Sousa, the finance minister of Angola, stated that the southern African nation was under a lot of strain due to the possibility of declining oil prices.

Additionally, according to the draft budget, economic growth would pick up speed in the non-oil sectors, increasing from 3.3% this year to 4.1% next year.

According to the finance ministry, yearly inflation will drop from nearly 29% to 16.6% by the end of next year.

Last week, Daves de Sousa told Reuters that Angola was considering asking the International Monetary Fund for a funding program.

Its most current IMF program, worth $3.7 billion, was authorised in 2018 after the country’s earnings were severely damaged by the collapse of global petroleum prices.

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IMF predicts 4% Middle East, North Africa growth next year

Published

6 hours ago

November 1, 2024

Ifeoluwa Dada

The International Monetary Fund (IMF) has said that Middle East and North Africa growth would rebound to 4% next year if oil output curbs were phased out, and headwinds, including wars, subsided.

As geopolitical and macroeconomic concerns remain, the IMF’s latest Regional Economic Outlook, launched in Dubai, predicts “sluggish” growth of 2.1% in 2024.

The IMF noted that risks to the outlook for the overall area, including the Caucasus and Central Asia, “remain tilted to the downside,” and called for an acceleration of structural reforms, notably in governance and labour markets, to raise chances for medium-term growth.

Jihad Azour, the IMF’s director for the Middle East and Central Asia department, said in an interview that the MENA growth estimate for 2024 has been revised downwards by 0.6% from April’s report, mainly due to the extension of the Israel-Hamas conflict and further extensions of OPEC+ voluntary oil production cuts.

He said the “good news” was that inflation was gradually being brought under control across the region. He predicted that the region would average the 3% goal rate in 2024, except for Egypt, Iran, and Sudan.

The outlook, however, differs significantly throughout the region. According to Azour, oil-exporting nations should be better equipped to handle such threats thanks to “strong” growth in the non-oil sector.

Non-oil growth in the Gulf Cooperation Council (GCC) region has mostly outpaced overall growth despite lower oil prices and production this year, thanks to government-led investment programs that support domestic demand. The GCC includes Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman.

Oil importers from the Middle East and North Africa are still more susceptible to protracted hostilities and significant funding requirements.

“Even as these issues gradually abate, uncertainty remains high and structural gaps will likely hold back productivity growth in many economies over the forecast horizon,” the IMF report said.

Since January 2024, the IMF has authorised $13.4 billion in fresh investment for Middle Eastern and Central Asian nations, including initiatives in Jordan, Pakistan, and Egypt.