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South Africa to withdraw from emergency reserves to reduce growing debt

Published

10 months ago

February 21, 2024

South Africa’s National Treasury announced on Wednesday that the government would take $8 billion over the following three years from emergency reserves kept at the central bank in order to curb the country’s growing debt.

The most industrialised economy in Africa has not expanded significantly in over ten years, as the state budget has been increasingly consumed by escalating debt servicing expenses.

Finance Minister Enoch Godongwana stated during the presentation of the 2024 budget that the unconventional decision to remove 150 billion rand ($7.93 billion) from the Gold and Foreign Exchange Contingency Reserve Account (GFECRA) would not jeopardise the solvency of the central bank and would instead leave ample reserves to withstand shocks to the currency rate.

The Treasury stated that GFECRA, which records gains and losses on the nation’s foreign exchange reserve operations, has a balance of more than 500 billion rand, which is greater than likely reserve losses due to rand appreciation.

The next fiscal year, which ends in March 2025, will give the government 100 billion rand; the next two years, it will receive 25 billion rand each.

Duncan Pieterse, the director general of Treasury, informed reporters that the government was essentially substituting more costly borrowing with the reserve account.

Investor confidence regarding the government’s financial needs led to a minor increase in the rand and a strengthening of the nation’s sovereign dollar bonds.

A general election scheduled for May 29th is approaching, and given the dire state of the economy, it is possible that the ruling African National Congress party may lose its legislative majority for the first time since apartheid ended thirty years ago.

Related Topics:Emergency reserve Featured South Africa

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Moroccan annual inflation rises to 0.8% in November

Published

1 day ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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

Published

2 days 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.”