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Nigeria and Kenya inching closer to interest rate cuts

15 March 2018 Comments (0) Actualites, Africa, Economy

JOHANNESBURG (Reuters) – Nigeria and Kenya will follow Ghana’s lead and cut rates in the third quarter, a Reuters poll found, as long as there is a monetary committee quorum in Abuja and an easier commercial lending policy in Nairobi.

A Reuters poll of 11 analysts for some of Africa’s major central banks, taken in the past four days, found the majority saying Nigeria and Kenya’s benchmark rates will remain at 14.0 and 10.0 percent respectively next week.

Eight of the 12 members still need to be appointed to Nigeria’s Monetary Policy Committee (MPC) – so there is unlikely to be a meeting next week – while Kenya remains hamstrung by a bill limiting commercial lending rates to 4 percentage points above its official rate.

Nigeria’s central bank was forced to cancel its January meeting as it was unable to reach a quorum. But the Senate plans to start screening new members for the interest rate committee after it held up some of President Muhammadu Buhari’s nominees in a political spat.

Inflation in both Nigeria and Kenya slowed recently, making both ripe for easier policy, and according to the poll there will be 200 and 100 basis points worth of cuts coming this year, respectively.

“There is a case for policy loosening in Nigeria and Kenya, but inflation in Nigeria has been stickier at least until February and the delay in appointing new members of the MPC has also held up policymaking,” said John Ashbourne, Africa economist at Capital Economics.

Nigeria has navigated several challenges in the past three years, dealing with dollar shortages and an economy that came out of its first recession in a generation in 2017.

But growth in the last quarter of 2017 rose to 1.92 percent compared to a 1.73 percent contraction in the same period of the previous year.

On Wednesday the International Monetary Fund approved a request by Kenya to extend by six months a stand-by loan that was due to expire at the end of March, giving it time to finish mandatory reviews.

Amending a bill on interest limits for commercial bank loans is one of the conditions the IMF needed to approve the “rainy day” loan facility and so an amendment could happen soon, said Aly-Khan Satchu, CEO of Rich Management in Nairobi.

The bill meant banks decided a large number of borrowers – mainly small traders and informal sector workers – were too risky to receive loans.

Unless the bill is scrapped or modified to take advantage of slower inflation and rates fall further, banks are likely to exclude yet more would-be borrowers from credit – effectively tightening rather than easing monetary conditions.

After 600 basis points worth of cuts in the past two years, Ghana is expected to press on and cut 100 basis points to 19.0 percent later this month and then continue chopping until it reaches 17.0 percent by end-year.

South Africa, Africa’s most industrialised economy, is also closer to cutting rates this year but it depends heavily on a decision by Moody’s ratings agency later this month. [ECILT/ZA]

(By Vuyani Ndaba)

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IMF tells Ghana to adopt new revenue plan before April review

2 March 2018 Comments (0) Actualites, Africa, Economy, Politics

ACCRA (Reuters) – Ghana must legislate new measures to boost revenues by at least 0.5 percent of gross domestic product before the IMF reviews a $918 million credit deal next month, the Fund said.

The West African nation must also outline plans to clean up the financial sector and show stronger commitment to cut debt, including limiting its next Eurobond for budget support to $500 million, IMF said in a document seen by Reuters.

Finance Minister Ken Ofori-Atta said last week the government planned to issue up to $2 billion of sovereign issuance by June to pay down debt that hit 68.7 percent of GDP last November and help finance the 2018 budget.

Ghana is seeking a combined fifth and sixth review of the IMF programme in early April, government and IMF sources told Reuters. The fifth review, originally scheduled for December, had delayed pending implementation of benchmark structural reforms.

“Parliament to adopt revenue measures equivalent to 0.5 percent of GDP (one billion cedis) by March 31 and do more later,” the Fund said. The document, dated Feb. 26, formed the basis for talks between an IMF staff mission and the government this week.

The mission left Accra on Thursday after discussing the actions required for the next review, as well as other reforms needed to exit the programme early next year. It is unclear if the talks were conclusive.

Ghana, which exports cocoa, gold and oil, is in its final year of the programme, designed to stabilise an economy dogged by high inflation and debt, and low growth.

The Fund said the government must publish by end of March an agreement between the Finance ministry and Bank of Ghana to reinforce zero financing of the budget deficit, a core condition of the programme.

The government of President Nana Akufo-Addo, inaugurated in January 2017 said it inherited $2.3 billion in accumulated debt owed to power utilities and has launched long-term bonds for repayment. It is also probing unpaid contract arrears of around $1.6 billion.

The IMF said while the country made progress, the central bank must adopt a fully market-based foreign exchange management policy and cut non-performing loans.

The government aims to cut the budget deficit to 4.5 percent of GDP in 2018 from a revised 6.3 percent while inflation is projected to fall to 8.9 percent. It sees GDP growth at 6.8 percent from a projected 7.9 percent in 2017.

 

(Reporting by Kwasi Kpodo; editing by John Stonestreet)

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Africa’s major central banks embarking on policy easing cycle ride

20 July 2017 Comments (0) Latest Updates from Reuters

By Vuyani Ndaba

JOHANNESBURG (Reuters) – Africa’s major central banks are entering an easing cycle as they try to stimulate growth after months of drought, austerity drives and confidence issues across the continent, a Reuters poll found on Thursday.

Much of southern and eastern Africa is still recovering after an El Niño-related drought wilted crops last year. Poor business confidence in South Africa and foreign exchange restrictions in Nigeria have also hampered growth.

“We expect that African monetary policy is entering a widespread and protracted period of policy easing. This will provide a boost to growth,” said John Ashbourne, Africa analyst at Capital Economics.

Ghana, which agreed a three-year fiscal discipline deal with the International Monetary Fund in exchange for aid in 2015, cut 100 basis points from its benchmark interest rate in May and is expected to do the same on Monday, putting it at 21.50 percent.

Medians in the poll predict South Africa will make a first quarter trim of 25 basis points to 6.75 percent and while Kenya will hold steady on Monday it is expected to cut 100 basis points to 9.00 percent in the second quarter of next year.

Nigeria is expected to hold rates at 14.0 percent on Tuesday, and through this year, but will reduce borrowing costs by 175 basis points across 2018.

BATTERED CONFIDENCE CHIPS AT GROWTH

Aly-Khan Satchu, CEO of Nairobi-based Rich Management said policymakers in Africa’s biggest economies have lost credibility and it would be difficult to regain that.

To try to reduce demand for dollars, Nigeria banned the importing of 41 items, but that only fuelled the gap between the official and black market rates for its naira currency.

The policy, alongside a commodity price slump that hurt oil exports, has since 2015 forced its central bank to hike the benchmark rate 300 basis points to 14 percent as it tried to deal with much faster inflation and restore the currency’s strength.

Nigeria — Africa’s biggest economy — fell into recession for the first time in 25 years in 2016 but is expected to turn in growth of 1.0 percent this year and 2.5 percent the following.

South Africa is expected to expand 0.7 percent this year after escaping a six-month recession last quarter that was partly due to weak confidence and drought.

Confidence in South Africa’s economy has been sapped by the chopping and changing of finance ministers four time since the end of 2015 by President Jacob Zuma. The last change in March triggered a credit rating downgrade to “junk” status.

Kenya is expected to grow 5.2 percent this year and 5.9 percent next.

Growth slowed to 4.7 percent in the first quarter, hit by a credit slow down after authorities late last year capped the interest banks could charge on loans.

However, Ghana is expected to fare better than most, growing 6.1 and 6.8 percent in 2017 and 2018 respectively, supported by the IMF programme, recovering from 3.5 percent last year.

On Tuesday, President Nana Akufo-Addo said Ghana would not extend its three-year aid programme with the IMF beyond April 2018, but the fund urged it to do so to allow time to complete the programme’s goals.

 

 

(Editing by Jonathan Cable/Jeremy Gaunt)

 

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Ghana president says will not extend three-year IMF aid programme

19 July 2017 Comments (0) Latest Updates from Reuters

ACCRA (Reuters) – Ghana will not extend its three-year aid programme with the International Monetary Fund beyond April 2018, President Nana Akufo-Addo said on Tuesday, despite continuing fiscal difficulties.

The president’s announcement is a surprise turnaround after government officials said last month that Ghana was considering a request by the Washington lender to extend the programme to December 2018.

An extension would have reassured markets of the government’s commitment to fiscal discipline, analysts say.

Akufo-Addo said, however, the government was on target with its policy to restore growth and create private sector jobs.

“There is no question about the IMF programme being extended beyond April 2018. We want to complete it and move on,” Akufo-Addo told reporters.

The $918-million agreement was signed in April 2015 to address problems of slow growth and high public debt.

The IMF said in May that an extension was needed after Ghana failed to meet certain deal requirements on schedule.

 

(Reporting by Kwasi Kpodo; Editing by Edward McAllister and Alison Williams)

 

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Ghana seeks Swiss support to process more cocoa

13 July 2017 Comments (0) Latest Updates from Reuters

ACCRA (Reuters) – Ghana is seeking collaboration with Switzerland to boost its cocoa output and process more of the beans in the face of price volatility, President Nana Akufo-Addo said on Wednesday.

Ghana, the world’s second largest producer and top grower Ivory Coast, which together account for more than 60 percent of the world’s cocoa supply, have been hit by a sharp drop in world prices that have seen cocoa futures plummet by around a third.

While Ivory Coast responded by slashing its guaranteed farmgate prices, Ghana has maintained the price at which it buys cocoa from farmers since the season opened in October.

Ghana exports at least 70 percent of its beans mainly to Europe through forward contracts.

“Ghana, under my presidency, will no longer become mere producers and exporters of cocoa beans, and will continue the policy of processing more and more of our cocoa,” Akufo-Addo told reporters after a meeting with Swiss President Doris Leuthard in Accra.

Both sides agreed to undertake joint projects to add value to Ghana’s beans, Akufo-Addo said without giving details.

Ghana, which also exports gold and oil is under a three-year aid programme with the International Monetary Fund to restore fiscal stability to its economy, dogged by high public debt, deficits and consumer inflation.

 

(Reporting by Kwasi Kpodo; Editing by Greg Mahlich)

 

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Nana Boateng Osei and his sustainable vision for Ghana

26 August 2016 Comments (0) Africa, Business, Leaders

bôhten

Nana Boateng Osei is the young man behind the stylish luxury eco-eyewear company: Bôhten. He hails from a Ghanaian family that is deeply proud of its heritage. He has travelled the world, conceived various outlandish business ideas and even appeared on the Canadian version of Dragon’s Den. Today his company Bôhten is going from strength to strength, while also giving back to his home country, Ghana.

Travel, the Big Apple, education and Lilo

Osei’s early life certainly wasn’t dull. Due to his father’s job as a diplomat for the Foreign Ministry of Ghana, Osei and his siblings spent long periods of time in countries such as the U.K, the U.S, Yugoslavia and South Africa. His family eventually settled to live permanently in New York City. However, they held on tightly to their Ghanaian roots; Osei has said that at home his family would always speak Twi and eat traditional Ghanaian dishes. They became closely involved in the Bronx’s large Ghanaian community and retained strong links with family in their home nation.

In 2007, Osei moved to Canada to study at Environmental Science at the University of Ottawa. It was while at University that he first began to create and pursue his own business ideas. In 2009, Osei opened a marketing firm Lilo Enterprises, which was designed to connect sustainable and environmental product manufacturers to consumers. Lilo foreshadowed the creation of Bôhten, highlighting the causes that Osei holds dear. He also flirted with other unorthodox businesses such as vertical gardens and limousine services during this time.

Ghanaian beginnings and the Dragons’ Den

Bôhten eyewear was born from the culmination of multiple ideas. Firstly, Osei was inspired by a trip back to Ghana where he was moved by the natural beauty of the area. Also, some of his family worked in the local wood business which interested him. These factors swirled with his love of fashion and passion for sustainability. He said “At some point, my interests began to play off of each other and during that trip, the seed of the idea for using reclaimed wood for glasses was planted.”

In 2012 he started initial work on Bôhten while still at University. He derived the company from his own name, Boateng, which means prosperity in Twi. Osei got the chance to pitch his business in the infamous Dragons’ Den during a student special episode. While he impressed with his pitch, he didn’t receive an offer from the Dragons, who felt the business was too young.

Osei wasn’t deterred by the Dragons’ decisions. He went on to bring family members into the business to help him grow the organization. Osei has said that with hindsight, investment partners may have stifled his creative freedom, and that the company has managed to move forward without them by knuckling down and getting things done.

The exposure from appearing on the show led to skyrocketing sales and growth. Some say the Dragons missed out.

A sustainable vision for Ghana

Sustainability is at the heart of the business; Bôhten uses reclaimed wood from items such as chairs and tables, all sourced in Western Africa. Additionally Osei wants to use Bôhten as means to better the economy in Ghana. The company currently manufactures its glasses in Canada. However, later this year the firm intends to open a full-scale manufacturing plant in Ghana. The plant going live will be the realization of a long term ambition for Bôhten. “Our ultimate mission is to create a zero-waste facility in Africa that will not only serve to create jobs but also educate people the importance of eye care, sustainable design and social entrepreneurship.”

Osei says that eye care is woefully inadequate in Africa. He explained that the high levels of UV radiation on the continent are responsible for some of the issues that African’s face. To combat such problems, Osei has partnered Bôhten with eyesight charity Sightsavers. For every sale Bôhten makes, the company will make a donation to Sightsavers programs, aimed at eradicating avoidable blindness in West Africa.

As Bôhten grows, so will the benefits that it brings to Ghana and other nations in the region. Nana Boateng Osei is tenacious, compassionate and conscientious individual; a great example for Ghana and Africa as a whole.

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Nana Boateng Osei and his sustainable vision for Ghana

22 August 2016 Comments (0) Africa, Featured, Leaders

Nana Boateng Osei

Nana Boateng Osei and his company Bôhten have created an innovative and sustainable product that is benefiting his home country of Ghana.

Nana Boateng Osei is the young man behind the stylish luxury eco-eyewear company Bôhten. He hails from a Ghanaian family that is deeply proud of its heritage. He has travelled the world, conceived various outlandish business ideas and even appeared on the Canadian version of Dragon’s Den. Today his company Bôhten is going from strength to strength, while also giving back to his home country, Ghana.

Travel, the Big Apple, education and Lilo

Osei’s early life certainly wasn’t dull. Due to his father’s job as a diplomat for the Foreign Ministry of Ghana, Osei and his siblings spent long periods of time in countries such as the U.K, the U.S, Yugoslavia and South Africa. His family eventually settled to live permanently in New York City. However, they held on tightly to their Ghanaian roots; Osei has said that at home his family would always speak Twi and eat traditional Ghanaian dishes. They became closely involved in the Bronx’s large Ghanaian community and retained strong links with family in their home nation.

In 2007, Osei moved to Canada to study Environmental Science at the University of Ottawa. It was while at University that he first began to create and pursue his own business ideas. In 2009, Osei opened a marketing firm Lilo Enterprises, which was designed to connect sustainable and environmental product manufacturers to consumers. Lilo foreshadowed the creation of Bôhten, highlighting the causes that Osei holds dear. He also flirted with other unorthodox businesses such as vertical gardens and limousine services during this time.

Ghanaian beginnings and the Dragons’ Den

Nana Boateng Osei

Bôhten eyewear was born from the culmination of multiple ideas. Firstly, Osei was inspired by a trip back to Ghana where he was moved by the natural beauty of the area. Also, some of his family worked in the local wood business, which interested him. These factors swirled with his love of fashion and passion for sustainability. He said, “At some point, my interests began to play off of each other and during that trip, the seed of the idea for using reclaimed wood for glasses was planted.”

In 2012 he started initial work on Bôhten while still at University. He derived the company from his own name, Boateng, which means prosperity in Twi. Osei got the chance to pitch his business in the infamous Dragons’ Den during a student special episode. While he impressed with his pitch, he didn’t receive an offer from the Dragons, who felt the business was too young.

Osei wasn’t deterred by the Dragons’ decisions. He went on to bring family members into the business to help him grow the organization. Osei has said that with hindsight, investment partners may have stifled his creative freedom, and that the company has managed to move forward without them by knuckling down and getting things done.

The exposure from appearing on the show led to skyrocketing sales and growth. Some say the Dragons missed out.

A sustainable vision for Ghana

Sustainability is at the heart of the business; Bôhten uses reclaimed wood from items such as chairs and tables, all sourced in Western Africa. Additionally Osei wants to use Bôhten as means to better the economy in Ghana. The company currently manufactures its glasses in Canada. However, later this year the firm intends to open a full-scale manufacturing plant in Ghana. The plant going live will be the realization of a long term ambition for Bôhten. “Our ultimate mission is to create a zero-waste facility in Africa that will not only serve to create jobs but also educate people the importance of eye care, sustainable design and social entrepreneurship.”

Osei says that eye care is woefully inadequate in Africa. He explained that the high levels of UV radiation on the continent are responsible for some of the issues that African’s face. To combat such problems, Osei has partnered Bôhten with eyesight charity Sightsavers. For every sale Bôhten makes, the company will make a donation to Sightsavers programs, aimed at eradicating avoidable blindness in West Africa.

As Bôhten grows, so will the benefits that it brings to Ghana and other nations in the region. Nana Boateng Osei is tenacious, compassionate and conscientious individual; a great example for Ghana and Africa as a whole.

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Ghana says on track to halve budget deficit after IMF deal

18 August 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

ACCRA (Reuters) – Ghana is on target to halve its fiscal deficit this year after its $918-million aid deal with the International Monetary Fund, Finance Minister Seth Terkper said on Wednesday.

His comments appeared designed to allay uncertainty over the deal that emerged this month when parliament rejected a key component that was designed to promote fiscal discipline. The following day the government suspended a planned Eurobond issue.

The government issued a bill to eliminate central bank financing of the budget deficit in line with the requirements of the deal but on Aug. 2 parliament passed the bill with an amendment allowing financing of up to 5 percent.

Ghana’s public debt eased to 63 percent of GDP in May from 72 percent at the end of 2015, while consumer inflation dropped to 16.7 percent in July from 19 percent in January, Terkper said, citing the impact of the deal that began in April 2015.

The central bank expects inflation to slow to 8 percent, plus or minus two, by September 2017.

“We are set to halve the deficit from 12 percent in 2012, and we have also started stemming the rate of growth of the public debt,” he told a meeting of private businesses in Accra.

Ghana, which exports cocoa, gold and oil, signed the assistance programme to bring down inflation and the budget deficit and stabilize the currency.

Terkper said the debt stock could rise marginally to 65-66 percent of GDP on planned disbursements towards the end of the year but will remain below 70 percent.

Ghana pulled out of a planned five-year $500 million amortising Eurobond this month because investors demanded a yield higher than the single digits the government had expected.

Terkper led the government finance team on the deal and said his team only suspended pricing of bids.

“We did not call off the 2016 bond …. What we did was to suspend pricing …. We must sometimes hold our nerves when we’re in the capital market to look for the right window before we strike in order to get the best results,” he said.

Ghana will on Thursday begin pumping oil from a second offshore oil field, Tweneboa-Enyenra-Ntomme or TEN, in addition to its flagship Jubilee production which began in late 2010.

 

(By Kwasi Kpodo. Editing by Matthew Mpoke Bigg)

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Ghana lawmakers back budget funding bill; breach terms of IMF deal

3 August 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ACCRA (Reuters) – Ghana’s parliament on Tuesday overwhelmingly rejected a core condition of a $918 million International Monetary Fund (IMF) aid deal on Tuesday, breaching the terms of a three-year programme meant to fix an economy dogged by high public debt.

The lawmakers passed the Bank of Ghana (BoG) Amendment Bill to allow central bank financing of the government’s budget deficit up to a ceiling of 5 percent of the previous year’s total revenue, instead of the zero financing demanded by the IMF.

Until now the bank was authorised to finance the deficit at up to 10 percent of revenue.

Implementation of the zero financing requirement is one of the targets the government was expected to meet in order for the Fund to conclude Ghana’s third programme review and disburse the next tranche of aid.

However, Deputy Finance Minister Cassiel Ato Forson told Reuters that, despite the law, the government will not finance its deficit with central bank funds.

“We have demonstrated enough that the government is committed to expenditure control and we will remain on course, irrespective of today’s decision by parliament,” he said.

 

 

(Reporting by Kwasi Kpodo; Editing by Aaron Ross and John Stonestreet)

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African governments seek bailouts as commodity prices fall

19 May 2016 Comments (0) Africa, Featured, Politics

angola imf

Angola is the latest nation to seek an aid package from the International Monetary Fund as its oil-dominated economy falters.

As its economy buckles under the weight of falling oil prices, Angola is turning to the International Monetary Fund (IMF) for a bailout.

By one estimate, the West African nation faces a shortfall of $8 billion, or 9 percent of its gross domestic product, this year. Angola last borrowed from the IMF in 2009.

Angola is one of several cash-strapped African countries that are turning to the IMF for financial help as prices drop for commodities such as oil and minerals.

Ghana agreed to an aid package in 2015, it’s first from the IMF in six years. Zambia is also in talks for IMF aid, which would be its first since 2008. Zimbabwe has also asked the IMF for its first loan in nearly two decades.

Meanwhile, the IMF stopped a $55 million loan to Mozambique – part of a bailout approved last year – after discovering the country had failed to report $1 billion in unreported loans it owes.

South Africa and Nigeria may also be forced to turn to the IMF as their economies struggle.

Angola faces shortfall

Angola’s request was an about-face after the nation repeatedly said it would not turn to the IMF for help in the current crisis because the aid would come with too many conditions.

But the country’s reserves have fallen as oil prices stayed below $45 a barrel and the government is reluctant to cut services in advance of elections in 2017.

Oil accounts for 95 percent of Angola’s exports and about half of the government’s revenue. In addition to slumping oil revenues, the country has suffered a retrenchment by China, which has its own economic problems.

Monetary agency requires transparency

In exchange for IMF aid, the Angolan government is likely to be forced to be more transparent about its financial dealings as the international agency typically scrutinizes the finances of countries it assists.

One criticism of Angola’s economy is the extent to which it is controlled by President José Eduardo dos Santos, who has ruled the country for more than three decades. While nearly half of the country’s population subsists on just over $1 per day, dos Santos’ daughter, Isabel dos Santos, is the richest woman in Africa, raising questions about the source of her wealth. Isabel dos Santos has denied using state money to enrich herself.

“The IMF stands ready to help Angola address the economic challenges it is currently facing by supporting a comprehensive policy package to accelerate the diversification of the economy, while safeguarding macroeconomic and financial stability,” Min Zhu, IMF deputy managing director, said in a statement.

One expert urged caution. Ricardo Soares de Oliveira, an Angola expert at Oxford University, noted that a study in 2011 by IMF staff found that the government could not account for $32 billion between 2007 and 2010.

“The IMF should use the leverage it has to extract serious concessions and tangible reforms from the government,” de Oliveira said.

Ghana receives bailout

Angola is the not the only country turning the IMF.

Ghana, an oil and gold producer, received a three-year, $918 million bailout in 2015. The country saw the value of its crude exports cut in half between 2014 and 2015, falling to $1.5 million in the first three quarters of last year as both prices and demand fell. Gold exports fell by nearly one third to $2.4 million.

In December, the IMF also agreed to a $283 bailout loan package for Mozambique that required the southern African nation to disclose all of its borrowing. In April, the IMF said it stopped a disbursement of $55 million after learning the country had not reported millions in loans by Credit Suisse Group and the Russian VTB Group.

Mozambique, a natural gas producer, saw exports fall by 14 percent in 2015.

Zambia, Africa’s second largest copper producer, saw a shortfall of 8 percent of gross domestic product in 2015 and is also seeking IMF assistance in 2016. Zimbabwe also expects an IMF loan in the third quarter of this year.

In addition to the IMF aid, the World Bank said it expects to lend up to $25 billion this year to countries reeling from falling commodity prices.

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