TUNIS (Reuters) – Tunisia’s central bank will reduce its interventions so the value of the dinar steadily declines, but it will prevent a dramatic slide in the currency, the finance minister said on Tuesday.

The strategy is part of Tunisia’s talks on reforms with the International Monetary Fund. The IMF is pushing Tunisia to overhaul its finances and reduce public spending, especially public-sector wages, where spending is among the highest in the world compared with gross domestic product.

Part of those negotiations have been finding ways to encourage exports and reduce reliance on imports, a strategy which would benefit from a weaker dinar.

“The central bank is going to minimise its interventions to reduce the value of the dinar in a gradual slide of the dinar,” Finance Minister Lamia Zribi told local Express FM Radio. “But we will avoid a brutal devaluation like that in Egypt.”

The dinar reached 2.5 dinars to the euro on Monday.

Egypt floated its currency, the pound, last year, letting it fall by 32.3 percent.

The IMF on Monday agreed to release a delayed $320 million tranche of Tunisia’s $2.8 billion in loans. It had been held up by concerns over Tunisia’s lack of progress in its reforms.

The agreement to release the funds came after talks in Tunis that included setting priorities for progress in the reforms. Those include increasing tax revenue, reducing the public wage bill through civil-service reforms and reducing energy subsidies, according to an IMF statement.

The IMF also called for tighter monetary policy that would counteract inflationary pressures, and said “greater exchange rate flexibility would help narrow the large trade deficit.”

The finance minister said the reforms on public works may include early retirement, reforms to loss-making public companies and social funds.

“For our part we are willing to advance the reforms and avoid the painful reforms such as lifting subsidies completely,” she said.

Tunisia has been held up by as an example of a democratic transition since the overthrow of former President Zine El-Abidine Ben Ali in 2011. It has enacted a new constitution, held free elections and adopted compromise-style politics to overcome tensions between secular and Islamist leaders.

But economic reforms have lagged and many people are concerned about the cost of living, unemployment and rural marginalisation, especially in southern and central regions that were the heartland of the 2011 uprising.

($1 = 2.3148 Tunisian dinars)

(Reporting by Tarek Amara; Writing by Patrick Markey)

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RABAT (Reuters) – Morocco plans to start the first stage of liberalising its dirham currency in the second quarter of this year, though the process to full flexibility may take 15 years, the central bank governor said on Tuesday.

“We will begin the first phase of liberalising the dirham in the second quarter,” Governor Abdellatif Jouahri told Reuters at an Arab finance ministers meeting in Rabat. “I can’t tell how long the duration of each phase will take, it depends on the market.”

(Reporting by Samia Errazzouki; writing by Patrick Markey)

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By Tarek Amara

TUNIS (Reuters) – Tunisia’s economy will start to regain momentum this year after six years of slow growth, driven by the revival of the vital tourism industry and the return to state phosphate production, Prime Minister Youssef Chahed said.

Chahed was speaking in an interview with state television late on Sunday, addressing concerns about the economy after hundreds of youths protested over the last week in some towns, demanding development and employment.

Tunisia has been praised as an example of democratic transition since the overthrow of former President Zine El-Abidine Ben Ali in 2011. But many people are concerned about the cost of living, unemployment and the marginalisation of rural towns – factors that fueled the uprising that sparked the Arab Spring revolts.

“The tourism sector is better now and will grow by 30 percent this year. Phosphate production returned to old levels and we expect a good agricultural season,” Chahed said.

He said that tax revenues rose by 14 percent in the first quarter of this year.

The prime minister said that this upward trend was still fragile and threatened by the inflammatory discourse of some politicians and by random strikes and protests that have hurt investor interest in the country.

Tunisia expects economic growth to rise to 2.5 percent in 2017 after failing to exceed 1 percent for the last six years.

The government is under pressure from international lenders to reduce public spending and cut its deficit as part of economic and financial reforms that have been delayed for years by political infighting and inertia.

A delegation from the International Monetary Fund last week arrived in Tunisia for talks on accelerating the North African country’s economic reforms, after postponing the payment of a second tranche of aid worth $350 million, out of a $2.8 billion loan programme.

The IMF put back the payment scheduled last December citing a lack of progress in overhauling the public sector wage bill, public finances and state banks among other issues.

Chahed said talks with the multinational lender “look positive and I am optimistic after negotiations” because reforms were progressing according to a specific timetable in the public sector and social funds.

“We are in good shape for these reforms and we are the first government that has the courage to start these delicate reforms that have been stalled for years,” he said, without giving details.

Tunisia is expected to sell stakes in three state-owned banks and cut up to 10,000 public sector jobs.

Chahed said parliament will discuss this month “an economic emergency” bill that will allow the government to bypass bureaucratic hurdles and speed up large-scale projects as it seeks to boost growth and create jobs.

(Editing by Patrick Markey and Hugh Lawson)

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By Duncan Miriri

NAIROBI (Reuters) – The World Bank cut Kenya’s economic growth forecast for this year by half a percentage point on Wednesday to 5.5 percent, citing drought, sluggish private sector credit growth and rising prices of oil.

The country is estimated to have expanded by 5.9 percent last year, the highest annual expansion in half a decade.

But the outlook has been hit by months of dry weather, that left 2.7 million people in need of food aid, and a drop in annual private sector credit growth to 4 percent in February from 17 percent at the end of 2015.

In its latest report on the Kenyan economy, the World Bank said growth would pick up after this year, driven by the expected normalisation of rainfall, a firmer global economy, a rebound in tourism and the resolution of challenges curbing credit growth.

“GDP growth is expected to accelerate to 5.8 percent and 6.1 percent in 2018 and 2019 respectively,” the Bank said.

The main risks facing the economy were the weather and any slowdown in economies of major trading partners, the bank said.

It urged the government to stick to its fiscal consolidation path and to review last year’s changes to the banking law, which capped commercial lending rates at 4 percentage points above the central bank rate.

Henry Rotich, the finance minister, set the deficit for the fiscal year starting in July at 6 percent of economic output and promised to reduce it further towards 4 percent in the 2019/20 fiscal year.

The budget deficits, which have driven up borrowing, have been used to fund a range of public investments in roads, railways and energy generation, the government says.

The cap on commercial lending rates, which was imposed last September, has been partly blamed for the slowdown in credit growth.

The World Bank said Kenya can quicken economic growth by boosting its construction sector, through offering innovative housing financing through the creation of mortgage refinance companies and the provision of housing finance guarantees.

There were less than 25,000 mortgages in Kenya and mortgage debt made up just 3.15 percent of the GDP in 2015, the bank said.

“Unlocking the residential housing market through the development of the housing finance market can provide a wide range of income opportunities,” the bank said.

(Editing by Jeremy Gaunt)

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By Stanley Carvalho and Chijioke Ohuocha

DUBAI/LAGOS (Reuters) – The Nigerian arm of Abu Dhabi telecom group Etisalat is yet to agree a deal on restructuring a $1.2 billion loan with local banks after it missed a payment, a company source told Reuters.

Etisalat Nigeria told Reuters last month that it was in talks with lenders to restructure the loan.

The source, who is not authorised to speak to media, said that Etisalat and the group of 13 Nigerian lenders were yet to agree on a debt restructuring proposal.

The source was speaking on the sidelines of Etisalat’s annual general meeting in Abu Dhabi on Sunday, where Chief Executive Saleh Al Abdooli declined to comment on the debt talks when asked by Reuters.

Etisalat did not respond to a request for comment.

Nigerian regulators agreed with local banks in March to pursue a default deal rather than a receivership for Etisalat Nigeria so as not to deter investors and to avoid a wider debt crisis.

Sources have said that Etisalat would consider selling its stake in the Nigerian entity after the debt deal is agreed.

(Editing by Susan Fenton)

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CAIRO (Reuters) – Egypt’s urban consumer inflation rose at a slower pace in March and core inflation dipped, the first signs of stabilising prices after the shock from a huge currency depreciation.

President Abdel Fattah al-Sisi is under increasing pressure to revive the economy, keep prices under control and create jobs to avoid a backlash from the public.

Urban inflation rose for the fifth consecutive month to reach an annual 30.9 percent, the official CAPMAS statistics agency said on Monday, its highest point in more than three decades.

However the rise from 30.2 percent in February was the smallest since Egypt abandoned its currency peg in November, driving up the price of imports.

The pound currency has since depreciated by roughly half and in Egyptian cities and towns, food and beverage inflation reached 41.8 percent year on year in March.

Annual core inflation, on the other hand, declined for the first time in eight months, reaching 32.25 percent in March from 33.1 percent in February, the central bank said in a statement.

“The deceleration in core inflation is in line with the expected headline deceleration in March,” said Reham El Desoki, senior economist at Arqaam Securities.

“March 2017 was a month void of significant inflationary pressures, where price rises slowed and a lower customs dollar rate stabilized the cost of imports,” El Desoki said

Egypt abandoned its currency peg of 8.8 to the U.S. dollar on Nov. 3 but the pound has been stable around 18 per dollar for the past two weeks.

March’s annual urban consumer inflation figure is the highest since June 1986, when it reached 35.1 percent, according to Reuters data. However, monthly urban inflation eased to 2 percent in March from 2.6 percent in February.

The central bank accompanied the November float with a 3 percent interest rate hike to fight price pressures but inflation is expected to keep climbing as the government pushes on with economic reforms, including fuel subsidy cuts.

The economic reforms helped Egypt secure a $12 billion loan programme from the International Monetary Fund in November.

Egypt’s central bank has held interest rates steady at four monetary policy meetings since the currency flotation although some economists expect further rate hikes this year.

IMF mission chief for Egypt Chris Jarvis said in January the fund expects inflation to begin dropping sharply by the second quarter of 2017. [ID:nC6N1DO017]

(Reporting by Asma Alsharif; Editing by Toby Chopra)

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JOHANNESBURG (Reuters) – South Africa’s bourse will investigate an increase in the trading of certain securities in the hours before former finance minister Pravin Gordhan was recalled from an international investor roadshow, BusinessDay newspaper reported on Monday.

On March 27, news broke that President Jacob Zuma had ordered Gordhan to return immediately from a trip to Britain and the United States. Gordhan was later dismissed in a cabinet reshuffle.

The newspaper reported that the Johannesburg Securities Exchange was examining trading in securities that were affected by news of the recall.

Officials at the exchange would not initially confirm or deny the report when contacted by Reuters.

The report said that the exchange would seek to identify activity that might warrant further investigation by the Financial Services Board’s market abuse department.

“The news precipitated material moves in the value of numerous listed securities including currency futures,” the exchange’s director of market regulation Shaun Davies is quoted as saying by the paper.

Davies declined to say which securities were being investigated, but it is likely that banking stocks will be among them, the BusinessDay said.

The rand weakened by about 2.5 percent ahead of the news, according to Thomson Reuters data, falling further after the recall was confirmed.

Speculation of large bets on currency futures at around the same time also surfaced, causing market watchers to speculate the currency was being “shorted”, local media reported.

Short-selling refers to the selling of instruments that have been borrowed, in anticipation of a fall in prices.

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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