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South Africa to withdraw from emergency reserves to reduce growing debt

Published

3 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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Nigeria’s inflation hits 28-year high of 33.69% in April

Published

22 hours ago

May 16, 2024

Ifeoluwa Dada

Nigeria’s consumer inflation reached a 28-year high of 33.69% in April, up from 33.20% in March, according to statistics agency figures released on Wednesday.

President Bola Tinubu’s administration has slashed petrol and energy subsidies and devalued the local naira currency twice.

To manage pricing pressures, the central bank has hiked interest rates twice this year, including the highest hike in almost 17 years. The central bank governor has stated that rates will remain high for as long as necessary to reduce inflation. The bank will host another rate-setting meeting next week.

When compared to the previous year, the inflation rate in April 2024 was 11.47 percentage points more than in April 2023, when it stood at 22.22 percent. This implies that the headline inflation rate has increased dramatically during the last year.

According to the National Bureau of Statistics, food and nonalcoholic beverages remained the largest contributor to inflation in April. Food inflation, which accounts for most of the inflation basket, rose to 40.53% yearly from 40.01% in March.

Price pressures have left millions of Nigerians facing the biggest cost-of-living crisis in decades, as they fight to satisfy their most basic necessities.

Tinubu has offered a 35% salary increase for state personnel to alleviate pressure on government workers. To assist disadvantaged households, his government has resumed a direct cash transfer program and provided at least 42,000 tons of grains such as corn and millet.

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Uganda discusses power line to South Sudan with China’s Sinohydro

Published

2 days ago

May 15, 2024

Ifeoluwa Dada

According to the president’s office, Uganda is in negotiations with Sinohydro Corporation Limited of China to build a $180 million power transmission line that would enable Uganda to export electricity to South Sudan, which is severely short on energy.

Ugandan President Yoweri Museveni received a group led by Vice President of Sinohydro Corporation Yang Yi Xin on Monday as part of the negotiations, according to a late-morning statement from Museveni’s office.

The project, according to the statement, will entail building a new substation and expanding two existing ones in addition to building a 138-kilometre high-voltage transmission line to provide power to South Sudan.

“We are very much willing to help develop this project with the required finance if needed,” Xin was quoted as telling the president.

The statement stated that Museveni endorsed Sinohydro’s proposal to carry out the project. Uganda and South Sudan inked a power sales deal in June of last year, enabling Uganda to sell electricity to South Sudan.

To enable Uganda to export electricity to South Sudan, the two nations inked a power sales deal in June of last year. The Chinese firm is completing a $1.5 billion, 600-megawatt hydropower project on the River Nile in Northern Uganda that is meant to be the source for electricity exports to South Sudan.