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Uganda refinances $2 billion worth of state debt paper

Published

1 month ago

September 9, 2024

Amidst mounting concerns about Uganda’s economy’s debt crisis, the total value of refinanced government securities exceeded 50% of all Treasury Bills and bonds issued in the fiscal year 2023–2024. This scenario portends higher borrowing prices.

Rolling over maturing Treasury Bills and bonds by extending their expiration date, paying outstanding interest, and applying new pricing terms are all considered forms of refinancing government debt securities.

According to the Finance Ministry’s most recent data, the entire projected value of refinanced securities was estimated at Ush8, 358.5 billion ($2.2 billion) during the same period, while government-issued Treasury Bills and bonds were valued at Ush15,021.3 billion ($4 billion) in the fiscal year 2023–2024.

The remaining Ush6, 662.8 billion, or $1.78 billion, was set aside to pay for regular budgetary expenses.

The data shows that Treasury bonds worth US$ 893.4 billion ($238.5 million) were refinanced in June 2024, whereas Treasury bonds worth Ush599.7 billion ($160 million) were refinanced in May 2024.

July 2024 saw the raising of a total of Ush1, 576.3 billion ($420.9 million) from the domestic debt market.

According to the statistics, budget expenditure for the first quarter of 2024–2025 was allotted Ush1,048.6 billion ($279.9 million), with the remaining Ush527.7 billion ($140.9 million) going towards debt refinancing.

Financial market sources quoted by The East Africa that the primary objective of the refinancing operations is Treasury Bonds with high interest rates and a five- to 15-year lifespan.

“Whenever the government announces a refinancing exercise for some government securities, interest rates on Treasury Bills and bonds tend to go up because investors feel the government is desperate for money. However, the increase in government debt servicing costs tied to refinancing is not big. It could be less than one per cent to date.

When the total amount of maturing Treasury Bills and bonds plus investor interest exceeds available tax revenues, refinancing of government securities becomes essential. In such a case, paying debt redemption costs and interest might leave the government with no money left over for other budgetary goals.

Conversely, refinancing reduces the amount of debt owed by deferring redemption charges and paying off investor interest commitments.

Foreign investors are extremely concerned about inflation and exchange rate fluctuations in the local economy, while local investors are keenly interested in inflation movements and their impact on returns on investment,” according to Dr Kenneth Egesa, Communications Director of the Bank of Uganda (BoU).

“Refinancing involves rolling over maturities of government debt securities for a longer duration in the domestic debt market. Through refinancing, the government can borrow old money and take care of existing needs.

For example, the Ministry of Health recently requested cash of US$ 35 billion ($9.3 million) for the deployment of medical intern doctors, but this request has not been met due to severe budget cuts across all sectors.

“It has crippled government operations as there is limited liquidity. Some investors are looking at only short-term lending to government of not more than three years,” noted Dr Fred Muhumuza, a local economist.

Related Topics:debt burden Featured Uganda

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Fortuna Mining says Burkina Faso won’t scrap permits

Published

1 hour ago

October 9, 2024

Ifeoluwa Dada

The Burkina Faso government does not intend to revoke Fortuna Mining’s current mining permits within the nation, the Canadian company said on Monday.

Ibrahim Traoré, the leader of the Junta, stated on Saturday that Burkina Faso intended to remove some mining permissions from international businesses and work towards increasing local gold production. However, he did not specify which permits would be revoked.

The entire index fell on Monday as shares of gold miners with projects in the West African nation plummeted precipitously at the Toronto Stock Exchange.

Fortuna Mining’s stock was down 9% at 3:25 PM ET (19:25 GMT). The owner of the Bombero gold mine, Orezone Gold Corp., had a 9% decrease on the TSX.

In addition to addressing several subjects on Saturday to mark two years as president, gold producer Endeavour Mining said Traor hinted that some mining permits would be cancelled.

Endeavour asserted that it is unaware of any intentions to cancel any of the company’s mining permits and that the government continues to support the business.

Growing insecurity has made things more difficult in West African country despite its rich mineral resources. ACLED, a U.S.-based crisis-monitoring organisation, asserts that in 2023, over 8,000 individuals lost their lives in the nation, even though the junta promised to suppress groups linked to Al Qaeda and the Islamic State.

Burkina Faso has witnessed a boom in the mining sector since the early 2000s, primarily in the gold but also in the zinc and manganese industries. At the moment, the country is Africa’s fifth-largest producer of gold.

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Nigerian govt begins 2025 retirees’ enrollment

Published

2 hours ago

October 9, 2024

Ifeoluwa Dada

Nigeria’s National Pension Commission has declared that it has formally begun the process of enrolling potential retirees in 2025, highlighting the significance of early planning.

The commission demanded that ministries, departments, and agencies refrain from any last-minute rush that can interfere with the enrolment process and make it more difficult for retirees to adjust to their new stage of life.

At a workshop held by the National Pension Commission on Monday in Abuja to launch the online enrolment process for pension desk officers of MDAs funded by the Federal government’s Treasury for 2024, Omolola Oloworaran, the acting director-general of the commission, revealed this information.

Currently, 7,348,028 people in Nigeria, or 10.58% of the country’s working population, are registered members of the National Pension Scheme. The commission reported that it paid N1.1tn to 129,435 life annuity applicants in the second quarter of 2024, reflecting advances in pension benefits.

During her speech, the acting director general (DG) said that the purpose of this exercise is to gather precise information so that the federal government may evaluate the Accrued Pension Rights of potential retirees and make the appropriate budgetary adjustments.

The commission, she continued, has advanced significantly by automating the enrolment procedure and launching an online enrolment application that makes retiree enrolment, verification, and registration easy.

Oloworaran said, “At the National Pension Commission, we hold firmly to our statutory responsibility of ensuring a seamless pre-retirement verification and enrolment process for employees of Federal Government Treasury-funded MDAs. Each year, we embark on this exercise to gather accurate data for determining the Accrued Pension Rights of prospective retirees, so that the Federal Government can make the necessary budgetary provisions.

“Today’s session is not just a routine gathering; it is part of PenCom’s commitment to building the capacity of stakeholders, specifically you, the Pension Desk Officers, whose roles are indispensable in this process. Since 2021, we have made significant strides by automating the enrolment process, and introducing an Online Enrolment Application that allows seamless registration, verification, and enrolment of retirees.

“This system, comprising the Retiree, MDA, PFA, and PenCom modules, represents the future of pension administration in Nigeria. As PDOs, you are the linchpin in this process, ensuring that retiree information is properly uploaded and verified. Hence, this workshop aims to equip you with the skills and knowledge needed to effectively use the application and address any challenges that arise during the enrolment process. We are also here to confront the issues of the past head-on.”