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Rwanda’s central bank raises lending rate. Here’s why

Published

1 year ago

August 17, 2023

In an effort to continue a decreasing trend in the country’s inflation rate, Rwanda’s central bank raised its primary lending rate by another 50 basis points on Thursday to 7.5%.

The apex bank hinted that the move would be its final tightening cycle as the governor, John Rwangombwa stated that the bank was continuing to exercise caution due to geopolitical tensions and the possibility of unforeseen climate occurrences that could have an impact on agricultural productivity.

Yearly inflation is still above the National Bank of Rwanda’s recommended 2%-8% goal range despite having peaked at 21.7% in November of last year and decreasing to 11.9% in July.

“If nothing else happens, or unexpectedly happens, from our projections we don’t expect any further increase (in our policy rate) going forward,” Rwangombwa told a news conference.

“This decline is expected for all main components: core, energy and fresh food inflation. We don’t see this rate increasing further, and we remain optimistic that inflation further reduces to our benchmark by next year…”, Rwangombwa said while explaining the policy.

By year’s end, Rwangombwa predicted that the inflation rate would be below 8% and about 5% the next year.

Living conditions in the landlocked nation of East Africa significantly improved thanks to the country’s robust economic growth, which averaged 7.2% per year over the ten years leading up to 2019. The economy also recovered effectively from the decline brought on by the coronavirus pandemic.

According to the analysis of the Monetary Policy Committee (MPC) in May, inflationary pressures are reducing despite still being strong due to ongoing global economic issues and a decrease in domestic agricultural production.

Although higher food costs and robust domestic demand have contributed to continuously high inflation, the International Monetary Fund stated in June that strong output in manufacturing and services has more than compensated for decreased agricultural production and construction.

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IMF, Egypt reach agreement for fourth review of Egypt’s $1.2 billion loan request

Published

6 hours ago

December 26, 2024

Ifeoluwa Dada

Egypt and the International Monetary Fund (IMF) have reached a staff-level agreement over the fourth review of the Extended Fund Facility arrangement, which might lead to a $1.2 billion payout under the program.

In March, Egypt, struggling with rising inflation and cash shortages, consented to the $8 billion, 46-month facility. Its economic problems were made worse by a precipitous drop in Suez Canal revenue over the last year due to regional tensions.

Over the next two years, Egypt’s government has committed to raising its tax-to-revenue ratio by 2% of GDP, according to the IMF, emphasising removing exemptions rather than raising taxes.

According to a statement from the IMF, this would allow it to expand social expenditure to support vulnerable populations.

“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilization efforts,” the statement said.

According to the IMF statement, Egypt had also committed to maintaining its commitment to a flexible currency rate and to taking more urgent action to guarantee that the private sector became the primary driver of development.

The IMF’s executive board still has to accept the fourth review’s staff-level agreement.

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Libya’s eastern govt accepts petrol subsidy elimination

Published

6 hours ago

December 26, 2024

Ifeoluwa Dada

In a recent statement, the eastern government of Libya claimed it had reached a consensus on a plan to eliminate gasoline subsidies and would draft a mechanism to carry out the accord.

Additional information on the idea was not released by the administration led by Osama Hamad, a challenger to the internationally acknowledged Tripoli-based government.

However, it is uncertain if Hamad’s government would be able to carry out the plan in the divided nation.

According to the Global Petrol Prices online tracker, a litre of gasoline costs just 0.150 Libyan dinars ($0.03) in OPEC member Libya, making it the second-cheapest in the world.

Following an uprising against former ruler Muammar Gaddafi in 2011, smuggling networks have thrived in the ensuing political unrest and armed fighting. In 2014, conflicting eastern and western governments separated the nation.

A World Bank analysis estimates that the annual value of fuel smuggling from Libya is at least $5 billion.

In a meeting with Mari Barrasi, the deputy governor of the Central Bank of Libya (CBL), located in Tripoli, and four members of the bank’s board of directors, Hamad in Benghazi supported the idea of removing subsidies.

The CBL’s Benghazi branch offices served as the venue for the conference.

The eastern parliament appointed Hamad in 2023 to succeed Abdulhamid Dbeibah, who had been put in position in 2021 under a U.N.-backed procedure that the parliament said had lost its legitimacy.

Dbeibah, who is located in Tripoli, stated in January that he will conduct a public poll on the topic of eliminating gasoline subsidies, but he hasn’t done anything about it since.

According to CBL figures, gasoline subsidies cost 12.8 billion Libyan dinars between January and November of this year. 4.8 Libyan dinars to $1 is the official exchange rate.