VenturesNow

AfDB demands improved terms, $25 billion to prevent “lost decade”

Published

4 months ago

June 7, 2024

According to the director of the continent’s development bank, Akin Adesina, Africa needs $25 billion, faster debt restructurings, and more favourable financing terms for the Africa Development Fund to prevent a lost decade.

Adesina, the continent was suffering from “long fiscal COVID” and the world was not doing enough to support it in getting past the years of hardship brought on by the pandemic and interest rate spikes, which had forced many countries into default.

“The G20 Common Framework, which is the bilateral and multilateral path to do (debt restructuring), must work faster for Africa,” Adesina said in a speech on Friday at London’s Chatham House, adding: “We can’t afford to have a lost decade.”

He also demanded a $25 billion restocking of the African Development Fund, the African Development Bank’s concessional lending division that provides loans to economically disadvantaged nations. The most ever replenishment committed, at $8.9 billion, during the funding cycle spanning 2023 to 2025.

This week, Zambia became the first nation to complete a debt rework under the Common Framework, a framework created by the G20 to assist developing nations in renegotiating unsustainable debt with all creditors, including China, which has significantly increased its loans to developing nations over the previous ten years.

However, Zambia’s authorities and others have complained that the nearly four gruelling years it took were too long for the procedure. In addition, Adesina reported that 22 African nations are at significant risk of financial trouble and that debt servicing obligations will reach $74 billion this year, up from $17 billion in 2010. Ethiopia and Ghana are also in default.

“This is because concessional financing has declined,” he said, adding: “You can’t do development at commercial rates. We have to make sure that the global financing system delivers more for Africa and avoid economic divergences that are coming about because of slow economic recovery in Africa from COVID.”

Adesina subsequently to journalists that the Paris Club, the established consortium of mostly Western creditor countries, needed to be permanently enlarged and that the Common Framework needed to incorporate quicker credit committee formation.

“The Paris Club was all about concessional lenders. But the world has changed,” he said, adding that expanding it was important “because it will allow you to reach a faster dialogue and a resolution”.

VenturesNow

IMF assessing implications of Senegal financial audit

Published

15 hours ago

October 17, 2024

Ifeoluwa Dada

The International Monetary Fund (IMF) has revealed that a staff team has travelled to Senegal to begin evaluating the ramifications of data adjustments that emerged from a government audit of previous and ongoing initiatives that the IMF had sponsored.

IMF staff will continue to collaborate closely with the authorities in the upcoming weeks to assess the macroeconomic impact and lay out the next measures, the Fund said in a statement, even though the government’s findings have not yet been certified.

Last month, an audit of Senegal’s finances, commissioned by recently elected President Bassirou Diomaye Faye, revealed that the country’s deficit at the end of 2023 was over 10% of GDP, as opposed to the 5% that the previous administration had estimated.

Following the Fund’s evaluation in June, the government announced that it had chosen not to proceed with Senegal’s request for an IMF disbursement in July. Since then, the West African nation has been in talks with the IMF about corrective action.

From October 9 to October 16, an IMF staff team travelled to Senegal to examine the preliminary audit findings.

The next steps “will include assessing whether any misreporting occurred during previous and current IMF-supported programs”, the statement said.

VenturesNow

Namibia central bank drops key rate again to boost growth

Published

15 hours ago

October 17, 2024

Ifeoluwa Dada

The Monetary Policy Committee (MPC) of Namibia’s central bank unanimously decided to cut the repo rate by 25 basis points to 7.25%, the same size of cut as at the August meeting.

The central bank cited the country’s economy’s need for additional support and the unexpectedly rapid decline in inflation as reasons for the second consecutive meeting of its main interest rate cut.

“The MPC noted the growing momentum in the international monetary policy easing cycle, the retreat in domestic inflation over the medium term, along with the recent downside surprise in the September 2024 inflation print,” Bank of Namibia Governor Johannes Gawaxab said in a statement accompanying the decision.

The nation in southern Africa saw its annual inflation decline sharply from 4.4% in August to 3.4% in September.

The central bank’s most recent meeting on Wednesday downgraded the average inflation forecast for this year from 4.7% to 4.3%.

The revision was ascribed to a more optimistic outlook for global oil prices as well as a more robust domestic currency rate.

According to the bank, credit extension to the private sector is still muted, indicating that more assistance for the home economy is necessary.
“The domestic economy, while growing at a moderate pace, was operating below full capacity,” Gawaxab said.

In 2024, growth is expected to drop to 3.1% from 4.2% in 2023.

Regarding a $750 million redemption of Eurobonds that is scheduled for late 2025, Namibia’s governor of the central bank stated that 82% of the $500 million it wishes to retire at maturity has already been put aside.

The government is still hoping to refinance the $250 million that is left! stated Gawaxab.In 2024, growth is expected to drop to 3.1% from 4.2% in 2023.