VenturesNow

Ethiopia’s Eurobond status downgraded to ‘default’ after missed payment

Published

12 months ago

December 28, 2023

The rating on Ethiopia’s only international government bond has been downgraded to “default” from “near default” status by ratings agency, Fitch.

The downgrade comes after the East African country failed to make a $33 million coupon payment on a $1 billion Eurobond, becoming Africa’s third debt default case in as many years.

Ethiopia declared earlier this month that it planned to formally enter default. Following the COVID-19 pandemic and a two-year civil war that came to an end in November 2022, the nation has faced extreme financial hardship.

Additionally, Ethiopia’s long-term foreign currency rating was downgraded from “C” to “RD,” or restricted default, by the agency. It does not give sovereigns ratings of “CCC+” or lower outlooks.

Early in 2021, Ethiopia requested debt relief under the Common Framework of the Group of 20. But progress was first slowed down by the COVID-19 pandemic’s effects and a two-year civil war. In a call with bondholders on December 15, Ethiopian officials said that while the coupon was reasonable, it was not paying to treat all of its creditors equally.

“Statements by the Ministry of Finance suggest that the non-payment reflects the effort to provide equal treatment to private creditors following agreements with official creditors to suspend debt service,” Fitch said in a statement.

Numerous African nations, including Egypt, Tunisia, Nigeria, Ghana, Zambia, and others, are struggling with significant foreign debt. Zambia, Ghana, and Ethiopia will all be a part of a comprehensive “Common Framework” restructuring.

VenturesNow

Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

2 hours ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”

VenturesNow

Tanzania tells IMF economy projected to grow by 6% in 2025

Published

4 hours ago

December 20, 2024

Ifeoluwa Dada

Tanzania’s economy is expected to grow by about 6% in 2025 from an estimated 5.4% growth in 2024, its finance minister and central bank governor said in a letter to the International Monetary Fund (IMF).

Some of the potential risks to the performance in the near term would include intensification of regional conflicts, increased commodity price volatility, a global economic slowdown and natural disasters related to climate change, Finance Minister, Mwigulu Nchemba, and Central Bank Governor, Emmanuel Tutuba, said.

Real GDP increased by 5.3% in 2023 from 4.7% in 2022, propelled by private investments on the demand side and manufacturing, construction, and agriculture on the supply side.

Strict monetary policy and moderate food and energy prices contributed to the decline in inflation from 4.3% in 2022 to 3.8% in 2023. In 2023, the Tanzanian shilling lost 8% of its value due to a lack of foreign exchange.