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IMF, Kenya seal staff-level agreement, recommends fiscal consolidation

Published

4 months ago

June 12, 2024

The International Monetary Fund (IMF) and Kenya struck a staff-level agreement on Tuesday, according to the multilateral body, opening the door to the payment of roughly $976 million.

The fund stated that it would have instant access to $120 million provided its Executive Board approved a second review of Kenya’s Resilience and Sustainability Facility.

Additionally, the lender recommended the East African country to modify its 2024–2025 budget to incorporate more measures aimed at increasing income, given that a decline in the primary fiscal balance during the preceding fiscal year and a shortfall in tax collections were anticipated to maintain high domestic borrowing needs.

Kenya has struggled with cash since 2022, but in February it was able to partially repurchase another Eurobond that is expiring in June by selling a new $1.5 billion Eurobond from international markets, albeit at a hefty price.

The shilling strengthened versus the dollar as a result of the issuance, which also allayed investor fears about a possible default and restored trust in the economy among foreign investors. The fund suggested that making changes to the budget for 2024–2025 could help.

“Authorities have taken decisive steps towards fiscal consolidation by introducing several measures in the context of the draft 2024/25 Budget and the 2024 Finance Bill,” it added.

On Thursday, the finance minister will provide the parliament the budget for 2024–2025 (July–June). Parliament approved 4 trillion shillings ($31 billion) for the year’s total spending, which is more than the 3.75 trillion shillings the minister had given in June of last year for the 2023–2024 fiscal year. Later on, the budget was changed to 3.85 trillion shillings.

The Finance Bill 2024, a separate law including revenue-raising recommendations that some claim might bankrupt industries like financial services, transportation, manufacturing, and retail, will be introduced with the 2024–2025 budget.

The current $3.6 billion IMF agreement with Kenya was reached in April 2021. This evaluation is the seventh that the program has conducted.

Kenya will utilize a portion of a $1.2 billion World Bank budget support loan to pay around $500 million toward a maturing Eurobond this month, according to the central bank governor’s announcement last week.

VenturesNow

FDI inflows in South Africa slows in Q2, central bank says

Published

39 mins ago

September 26, 2024

Ifeoluwa Dada

According to central bank figures released on Thursday, South Africa saw inflows of foreign direct investment of 16.6 billion rand ($965.87 million) in the second quarter of 2024, compared with 24.4 billion rand in the first.

In its Quarterly Bulletin, the South African Reserve Bank stated that a non-resident business’s increased equity investment in a domestic broadcasting company was the main driver of the inflows.

From April through June, portfolio investments had outflows of 20.1 billion rand, down from 52.0 billion rand during the first three months of this year.

Between April and June of 2024, the South African GDP expanded by 0.4%1. The majority of the economy’s impetus on the production (supply) side was driven by the finance, manufacturing, trade, and electricity, gas, and water supply businesses.

From the demand (expenditure) perspective, growth was positively impacted by government, household, and inventory accumulation.

VenturesNow

Exxon to invest $10 billion in Nigeria

Published

4 hours ago

September 26, 2024

Ifeoluwa Dada

According to a presidential spokesperson, Stanley Nkwocha, on Thursday, who cited business executives, Exxon Mobil Corp has proposed a $10 billion investment in offshore oil operations as part of a new investment push in Nigeria.

The investment was disclosed following talks between Vice President Kashim Shettima and Exxon’s Nigeria CEO, Shane Harris, on Wednesday in New York during the U.N. General Assembly.

Exxon intends to concentrate on advancing the $10 billion-plus Owo project, a substantial deep-water project.

Even though it agreed to sell its onshore assets to Seplat Energy for $1.3 billion, the company still intends to invest $2.5 billion a year to sustain its operations in Nigeria and increase oil output by 50,000 barrels per day (bpd) over the next few years.

Exxon and the Nigerian president’s office are collaborating closely “to secure favourable fiscal arrangements that will make this significant investment possible,” according to a statement from Harris.

An Exxon representative did not immediately answer a request for comment.

The majority of Nigeria’s foreign exchange earnings and government revenue come from the production of oil, which rose by 10.15% in the second quarter to an average of 1.41 million barrels per day from 1.22 million barrels per day the previous year.

However, even after enacting a law three years ago to reduce regulatory uncertainty and draw in investments, Africa’s biggest oil producer still faces difficulties in its oil sector, including widespread theft and sabotage.

“This potential investment by ExxonMobil aligns perfectly with President Bola Tinubu administration’s vision for a more investment-friendly Nigeria,” Shettima said. “We are committed to creating an enabling environment for such transformative projects.”