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South Africa’s Reserve Bank excepted to hike interest rate at next meeting

Published

3 years ago

May 14, 2022

In a bid to raise contraction of the sale and repurchase agreement rating as a result of inflation forecasts caused by rising costs in the second quarter of 2022, the South African Reserve Bank (SARB) is expected to lift its repo rate by 25 basis points in May and 50 basis points in Q3 at its next meeting.

In a survey conducted by renowned economists between, the country’s Central Bank has concluded that it would hike its repo rate by 25 basis points to 4.50% at its May policy meeting, almost in line with a poll carried out in March.

A majority in the survey predicted that the SARB will hike again in the third quarter by 50 basis points to 5.00% compared with only once in the third quarter to 4.75% in the March poll.

According to the survey, the SARB is then expected to pause in November at 5.00%, and then hike by 25 basis points every quarter, but pausing at 5.75% at the final policy meeting of 2023.

An economist and researcher with Gina Schoeman, in a research note, said hefty goods price rises have pushed inflation expectations above the 4.5% mid-point target and the SARB is understandably more concerned now about second-round effects.

“We forecast consecutive 25 basis point hiking with the door open for a 50 basis point move if second round effects surprise to the upside,” Schoeman said.

However, the SARB’s official aim is to keep inflation in the 3%-6% range while South Africa’s annual inflation rate rose to 5.9% in March from 5.7% in February, driven mainly by food and fuel price rises following Russia’s invasion of Ukraine.

Another economist, Mpho Molopyane, at Rand Merchant Bank, said if the reprieve were to be extended for another 10 months, this could shave 0.2 percentage point from this year’s headline consumer price inflation.

“The added benefit would be much lower second-round effects to core inflation and food prices, which could lead to a further moderation in headline CPI inflation,” said Molopyane.

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IMF mission concludes 4th loan program assessment in Egypt

Published

4 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.