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Algeria’s economy recovering rapidly— AfDB

Published

1 month ago

August 17, 2024

A country report by the African Development Bank Group (AfDB) which will be formally presented in Algiers in mid-September, has projected Algeria’s GDP growth to be 4.0% in 2024 and 3.7% in 2025.

The projection which suggests rapid growth meant the North African country’s economic recovery is getting stronger; the country’s GDP grew by 3.6% in 2022 and 4.2% in 2023.

The research claims that the construction, industrial, services, and oil and gas industries all contribute to Algeria’s economic growth. The report highlights that employment patterns indicate a shift away from manufacturing and agriculture and towards the services sector.

However, it also notes that the GDP structure has not fundamentally changed and that additional reforms should be implemented to accelerate the structural transformation of the nation’s economy.

According to Mr Lassaad Lachaal, the national manager for Algeria at the African Development Bank, “For Algeria, the reform of the global financial architecture is an opportunity to position itself as a donor country to support progress towards the development programs of other African countries.”

The research shows that Algeria has the chance to establish itself as a donor nation to aid in the development initiatives of other African nations through the reform of the global financial architecture.

Algeria became one of the contributors to the AFD-16 financial cycle of the African Development Fund in 2023. Even with a $1 billion budget set aside for development projects in Africa, the nation will still require more funding to promote climate protection and green growth initiatives.

The Hamma Seawater Desalination Plant of Algerian Energy Company is situated close to the Port of Algiers on the Mediterranean Sea.

Short-term financial resources for Algeria’s structural change might be further enhanced by increasing the sustainability of the public finances and improving domestic financing mobilisation, the document notes.

The research’s theme aligns with the 2024 report titled “Driving Africa’s Transformation – The Reform of the Global Financial Architecture,” which examines the continent-wide African economic outlook.

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Nigeria’s central bank issues fresh guidelines for ‘Ways and Means’ to govt

Published

10 hours ago

September 18, 2024

Ifeoluwa Dada

The Central Bank of Nigeria (CBN) has issued new guidelines on Ways and Means which limit Ways and Means Advances to the federal government to 5% of the previous year’s revenue collection.

The apex bank made the position known in its fiscal year 2024-2025 monetary, credit, international trade, and exchange policy guidelines.

“Ways and Means Advances shall continue to be available to the Federal Government to finance deficits in its budgetary operations to a maximum of 5.0 per cent of the previous year’s actual collected revenue. Such advances shall be liquidated as soon as possible and shall in any event be repayable at the end of the year in which it was granted,” it said.

The Treasury Single Consideration (TSA) system requires these advances to take into consideration Ministries, Departments, and Agencies (MDAs) sub-accounts, which are linked to the Consolidated Revenue Fund.

The federal government’s consolidated cash situation will be more precisely reported, improving public financial management openness and resource availability. The CBN also stated that Ways and Means Advances must be repaid by the end of the fiscal year they were awarded, encouraging short-term borrowing.

In the Nigerian context, “ways and means” refers to the Federal Government’s ability to borrow money from the Central Bank of Nigeria (CBN). This means that the government may use “ways and means” to meet short-term needs or emergencies, which is why the CBN is referred to as the “lender of last resort.”

Over the past seven years, the facility had grown 2,900% to an extraordinary N23.7 trillion by 2023. This fast surge, which exceeded legal restrictions, increased inflation and Nigeria’s debt.

The CBN Act allows the bank to grant temporary advances to the federal government for budget revenue deficits at a rate deemed appropriate, but the total amount of such advances “shall not at any time exceed 5% of the previous year’s actual revenue of the Federal Government.”

In addition, it stipulates that “All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.”

The Senate and House recently enacted a bill to increase the CBN’s federal Ways and Means borrowing ceiling. The upper chamber of Nigeria’s legislature boosted the central bank’s loan capacity to the federal government from 5% to 10% of annual income.

Yemi Cardoso, CBN governor, announced earlier this year that the bank would stop making Ways and Means advances to the federal government until existing loans were returned. He said this is one of the bank’s key strategies to handle the country’s economic issues.

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Kenya, IMF discuss economic and fiscal issues

Published

16 hours ago

September 18, 2024

Ifeoluwa Dada

The International Monetary Fund (IMF) said on Tuesday that it had had productive discussions with Kenya’s government on its economic and fiscal goals after widespread protests prompted it to shelve tax rises.

In June, President William Ruto abandoned this year’s finance bill, leaving the deeply indebted government with a larger budget deficit, unpaid payments, and a delay in IMF funding.

“We remain fully committed to supporting the authorities in their efforts to identify a set of policies that could support the completion of the reviews under the ongoing program as soon as feasible,” the IMF said in a statement.

Kenya signed a four-year IMF loan in 2021 and another for climate change measures in May 2023, totalling $3.6 billion. The country secured a staff-level agreement with the IMF on its seventh review in June, but the protest and finance bill withdrawal delayed the executive board’s sign-off and payout.

Public debt helps development. Governments utilise it to fund spending, protect and invest in their citizens, and improve their futures. However, too quick governmental debt growth can be a burden. The developing world which Africa forms core is experiencing this.

Kenya’s government debt was 70.10% of GDP in 2023. Kenya’s government debt to GDP averaged 56.36% from 1998 to 2023, peaking at 78.30% in 2000 and falling to 38.20% in 2012.