VenturesNow

Zimbabwe aims to reconnect to global finance at debt summit

Published

1 month ago

November 27, 2024

To discuss ambitious plans to pay off debt arrears and restructure $12.7 billion in foreign debt, Zimbabwe’s president will hold a session of creditors and financial executives on Monday. The ultimate goal is to access global finance markets for the first time in almost twenty years.

It will be difficult for Zimbabwe, which has had various financial crises in recent decades, from recurrent episodes of hyperinflation to successive failed efforts to introduce new currency regimes, to pay down its debt load, representing 81% of its gross domestic product.

“The issue of arrears is a major albatross around our neck,” said Prosper Chitambara, a Harare-based independent economist.

It will be a long journey; at the moment, Zimbabwe cannot access even funds from the International Monetary Fund, which is the world’s lender of last resort. However, experts advise it’s crucial to pay off arrears.

“Once the arrears are cleared it will be cheaper to borrow and easier to attract investment,” Chitambara said.

Along with officials from the business sector, development organisations, and creditors, Zimbabwe’s president Emmerson Mnangagwa and Akinwumi Adesina, head of the African Development Bank (AfDB), will attend the one-day conference in Harare.

Funding for Zimbabwe, formerly a regional breadbasket that now struggles to feed its people, can only be unlocked by getting on track with bilateral creditors and settling arrears with the AfDB, World Bank, and European Investment Bank.

“The IMF is currently precluded from providing financial support to Zimbabwe” due to an unsustainable debt situation and external arrears, an IMF spokesperson said.

Zimbabwe’s initial goal is to become an IMF Staff-Monitored Program (SMP), which does not require executive board approval or financial assistance.

An SMP would help Zimbabwe re-establish sound economic policy, according to government officials. But the government has already missed two deadlines: last month and April when it was supposed to have an SMP in place.

Click to comment

VenturesNow

IMF, Egypt reach agreement for fourth review of Egypt’s $1.2 billion loan request

Published

2 days ago

December 26, 2024

Ifeoluwa Dada

Egypt and the International Monetary Fund (IMF) have reached a staff-level agreement over the fourth review of the Extended Fund Facility arrangement, which might lead to a $1.2 billion payout under the program.

In March, Egypt, struggling with rising inflation and cash shortages, consented to the $8 billion, 46-month facility. Its economic problems were made worse by a precipitous drop in Suez Canal revenue over the last year due to regional tensions.

Over the next two years, Egypt’s government has committed to raising its tax-to-revenue ratio by 2% of GDP, according to the IMF, emphasising removing exemptions rather than raising taxes.

According to a statement from the IMF, this would allow it to expand social expenditure to support vulnerable populations.

“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilization efforts,” the statement said.

According to the IMF statement, Egypt had also committed to maintaining its commitment to a flexible currency rate and to taking more urgent action to guarantee that the private sector became the primary driver of development.

The IMF’s executive board still has to accept the fourth review’s staff-level agreement.

VenturesNow

Libya’s eastern govt accepts petrol subsidy elimination

Published

2 days ago

December 26, 2024

Ifeoluwa Dada

In a recent statement, the eastern government of Libya claimed it had reached a consensus on a plan to eliminate gasoline subsidies and would draft a mechanism to carry out the accord.

Additional information on the idea was not released by the administration led by Osama Hamad, a challenger to the internationally acknowledged Tripoli-based government.

However, it is uncertain if Hamad’s government would be able to carry out the plan in the divided nation.

According to the Global Petrol Prices online tracker, a litre of gasoline costs just 0.150 Libyan dinars ($0.03) in OPEC member Libya, making it the second-cheapest in the world.

Following an uprising against former ruler Muammar Gaddafi in 2011, smuggling networks have thrived in the ensuing political unrest and armed fighting. In 2014, conflicting eastern and western governments separated the nation.

A World Bank analysis estimates that the annual value of fuel smuggling from Libya is at least $5 billion.

In a meeting with Mari Barrasi, the deputy governor of the Central Bank of Libya (CBL), located in Tripoli, and four members of the bank’s board of directors, Hamad in Benghazi supported the idea of removing subsidies.

The CBL’s Benghazi branch offices served as the venue for the conference.

The eastern parliament appointed Hamad in 2023 to succeed Abdulhamid Dbeibah, who had been put in position in 2021 under a U.N.-backed procedure that the parliament said had lost its legitimacy.

Dbeibah, who is located in Tripoli, stated in January that he will conduct a public poll on the topic of eliminating gasoline subsidies, but he hasn’t done anything about it since.

According to CBL figures, gasoline subsidies cost 12.8 billion Libyan dinars between January and November of this year. 4.8 Libyan dinars to $1 is the official exchange rate.