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Highest in East Africa, Uganda’s trade surplus with Congo DR hits $53 million

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According to the Ministry of Finance’s Performance of the Economy report, Uganda had the largest trade surplus with the Democratic Republic of the Congo (DRC) in January, totalling $53.07 million (Ush208.9 billion).

The report, which summarises the monthly performance of several economic sectors, found that the Democratic Republic of the Congo (DR Congo) was the recipient of more exports from Uganda than any other member state of the East Africa Community (EAC), followed by South Sudan ($41.68 million, or Sh164 billion), Rwanda ($23.1, or Sh90.9 billion), and Burundi ($5.25 million, or Sh20.6 billion).

Uganda did, however, report deficits of $88.41 million (Ush348 billion) with Tanzania and $12.39 million (Ush48.7 billion) with Kenya. Meanwhile, exports to its EAC partner states increased to $231.47 million during the performance period, while its imports remained at $209.17 million.

With 37.6% of the total market share, the EAC continued to be Uganda’s top export destination, followed by the EU and the Middle East. Uganda, however, trades at a $267.64 million deficit with Asia, $118.15 million with the rest of Africa, and $6.64 million with Europe.

According to the Ministry of Finance report, Uganda’s total export revenue in December was $616.36 million, up 0.2% from $615 million in November of the previous year. This increase was mostly attributable to higher export revenues from cotton, tobacco, and simsim.

A 6.7% decrease in coffee exports from $470.68 million was recorded as a result of heavy rains delaying harvests and drying out freshly harvested coffee.

Between November 2023 and December 2023, the value of imports fell by 3.1% to $886.24 million, mostly as a result of decreased imports from the private sector, which included, among other things, wood and wood products, electricity, petroleum products, and animals.

With China and India being the main contributors, accounting for 61.9% of the region’s imports, Asia continued to be Uganda’s largest source of imports, accounting for 41.2% of the country’s total imports.

Other noteworthy regions with respective shares of 23.6%, 15.1%, and 10.2% were the Middle East, the East African Community, and the rest of Africa.

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IMF says South Africa needs to do more to cut spending, lower debt-to-GDP ratio

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A top official from the International Monetary Fund has revealed that South Africa needs to do more to cut spending and lower its debt-to-gross domestic product ratio. The multilateral body stressed that the ratio is expected to rise from 74% in 2022 to almost 86% by 2029.

Era Dabla-Norris, deputy head of Fiscal Affairs, said that the government could cut back on transfers to state-owned businesses, make cuts to subsidies that don’t help specific companies, and make big changes to the way the economy works to boost growth.

She told a news conference that South Africa’s energy and logistics problems had to be fixed right away.

A Statista study shows that between 2023 and 2028, the South African national debt was expected to keep going up by a total of 163.3 billion U.S. dollars, or 59.99%.

The national debt is expected to hit a new high point of 435.46 billion U.S. dollars in 2028, after going up for ten years in a row. Notably, the national debt has steadily risen over the past few years.

The IMF says that the general government’s gross debt is made up of all its debts that need to be paid back with interest and/or capital at some point in the future.

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Nigeria’s central bank insists depleting external reserves not due to Naira defence

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According to the Central Bank of Nigeria (CBN), the big drop in the country’s foreign exchange reserves was not due to the defence of the Naira. Instead, it was done to partly pay off debts owed to creditors.

Furthermore, the bank said it wanted to stay out of the market as much as possible, hoping to create an environment where costs are set by willing buyers and sellers.

The CBN governor, Olayemi Cardoso, clarified on Wednesday while the International Monetary Fund and World Bank held their Spring Meetings in Washington, D.C., USA following curiosity around the big drop in the country’s foreign exchange reserves—about $2.16bn in just 29 days—even though the government was working hard to keep the naira stable, underlying important it is to let the market decide prices instead of depending too much on the bank to step in.

The CBN website showed that as of April 15, 2024, the foreign exchange stocks had dropped to $32.29bn, a big drop from March 18, 2024, when they were $34.45bn. Also, the funds grew by $1.28bn over 43 days, from February 5, 2024, to March 18, 2024.

The apex had earlier stated that the rise was due to more money being sent back to Nigeria by Nigerians living abroad and more interest from foreign buyers in local assets, such as government debt securities. The top bank also said that the rise was caused by changes in the foreign exchange market and more oil being produced, among other things.

Cardoso maintained that the bank would not get involved in the exchange unless unusual circumstances arose. He also made it clear that the recent small change in reserves had nothing to do with protecting the naira. He said that there will be an increase soon because the country is getting an extra $600 million into its funds.

He said, “I want to make this as clear as possible, it is not in our intention to defend the naira. and as much I have read in the recent few days, some opinions concerning what is happening with our reserves and if the central bank is defending the naira. If you think about what our overall policy and philosophy has been here, you can see it is counterintuitive.

“What we are encouraging is for the market to be a willing-buyer and willing-seller price discovery system, and ultimately I perceive a future where the central bank would not intervene except in very unusual circumstances. What is important to us is that there is sufficient liquidity in the market. We recorded trading of $1bn, sometimes it is $600m or $700m as the case may be and that will continue. So as long as we have a vibrant currency market, why do we need to intervene? There has been little amount given to the Bureau de Change to get that segment going and a small amount of money has gone into that to catalyse because individuals must have access to funds for school fees, health and the rest.”

Foreign currency shortages in the country have been a problem for a long time for the CBN. That governments, commercial banks, merchant banks, other financial institutions (OFIs), or public officials cannot directly or indirectly own Bureaux de Change (BDCs) was ruled in February.

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