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Corruption in South Africa stunting reforms: IMF

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Corruption in South Africa is hampering reforms needed to boost economic growth and greater transparency is needed at state-owned companies, a senior International Monetary Fund (IMF) official said on Tuesday.

IMF First Deputy Managing Director David Lipton said that cutting taxes and increasing government spending would not solve the problem of sluggish growth in Africa’s most sophisticated economy.

The IMF recently cut its growth forecast to only 0.1 percent for 2016 versus a previous estimate of 0.6 in May, citing the impact of severe drought and ineffective fiscal policy.

President Jacob Zuma’s unexplained decision to change finance ministers twice in four days in December and a series of political upheavals that followed had also hurt the economy’s prospects, Lipton said.

“The leadership changes at the National Treasury last December and other political developments have had an adverse impact,” he told a public lecture in Johannesburg.

“They have heightened concerns about governance, deepened political uncertainty and shaken investor confidence.”

Lipton also alluded to investors’ lack of faith in the management of South Africa’s 300-odd state-owned enterprises, many of which are over-staffed and under-productive.

A team commissioned by Zuma to review the firms recommended that some should be sold but nothing has happened.

“Support for money-losing companies is a growing drain on government coffers,” Lipton said.

As a solution, he suggested South Africa centralise the formulation of fiscal policy, reduce labour regulation uncertainty and root out public sector corruption.


(Reporting by Mfuneko Toyana; Editing by Ed Cropley)

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IMF agrees $150 mil credit facility with Niger

Comments (0) Africa, Business, Latest Updates from Reuters

NIAMEY (Reuters) – The IMF has agreed a $149.7 million extended credit facility to Niger, one of the world’s poorest countries, with the first $17.1 million tranche to be paid immediately, its finance minister said on Thursday.

“Niger continues to record key progress in the implementation of its programme,” Saidou Sidibe said in a statement.

Niger, a main supplier of uranium to French nuclear power plants, has suffered a double economic hit over the years from insecurity at the hands of Islamist Boko Haram militants operating in its southeast and poor harvests caused by erratic weather.

The IMF expects the economy to grow 5.2 percent this year, after some improvements in agriculture, oil and mining. The land-locked West African nation is currently ranked bottom of the U.N. Human Development Index out of 188 countries.



(Reporting by Boureima Balima; Writing by Tim Cocks, Editing by Angus MacSwan)


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Angola halves growth forecast, cuts spending as oil price bites

Comments (0) Africa, Business, Latest Updates from Reuters

LUANDA (Reuters) – Angola has halved its 2016 economic growth forecast and slashed government spending as lower oil prices hammer state revenues in Africa’s largest crude exporter, the finance ministry said on Monday.

Sub-Saharan Africa’s third-largest economy will grow 1.3 percent this year, compared with a previous forecast of 3.3 percent, the finance ministry said in a statement.

Government spending will be cut to $24 billion from $30 billion projected in the original 2016 budget as revenues were also slashed to $18 billion from $24.4 billion.

The statement, a rare disclosure by one of Africa’s most secretive states, said Luanda had borrowed $11.46 billion between November 2015 and June 2016, including $5 billion from the China Development Bank and $2 billion from other state-backed Chinese lenders.

Total government debt stood at $47.9 billion, including $25.5 billion in external loans, it added, although this figure does not include debt held by state-owned companies such as domestic oil firm Sonangol.

Cuts to public services have already had a major impact on the former Portuguese colony, with piles of uncollected rubbish lying rotting in the streets of the capital, in the shadow of half-finished concrete office blocks and shopping complexes.

Health experts say the spending reductions are partly to blame for a yellow fever outbreak that started in one of Luanda’s vast slums in December and which has spread throughout the country and as far afield as China.

The finance ministry confirmed it had ended emergency financing talks with the International Monetary Fund (IMF) because it had achieved “great fiscal equilibrium”.

However, it said it was still committed to a structural overhaul of an economy that remains perilously reliant on oil.

The finance ministry has cut its budgetary oil price assumption to $41 a barrel, from $45 previously. Crude oil output remains steady at 1.77 million barrels per day, it said.


(Writing by Joe Brock; Editing by Ed Cropley)

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IMF welcomes Nigeria’s decision to end currency peg

Comments (0) Africa, Business, Latest Updates from Reuters

WASHINGTON (Reuters) – The International Monetary Fund said on Thursday it welcomed the decision by Nigeria’s central bank to abandon its currency peg and adopt a flexible exchange rate policy, saying this was important to reduce fiscal and external imbalances.

IMF spokesman Gerry Rice told a weekly news briefing the Fund wanted to see how effectively the naira exchange market functions once the new float system is put into effect next Monday.

Nigeria’s central bank governor said in a letter to President Muhammadu Buhari the bank expects the naira to settle at around 250 to the dollar after it abandons the peg of 197 to the dollar it has supported for 16 months.

“I think the announcement yesterday to revise the guidelines for the operation of the Nigerian interbank foreign exchange market is an important and welcome step,” Rice told reporters. “It will provide greater flexibility in that market, the foreign exchange market.”

Senior IMF officials, including Managing Director Christine Lagarde, have urged Nigerian officials to allow the naira to fall to absorb some of the shock to the economy from a plunge in oil prices and revenues. OPEC member Nigeria is a major oil producer. IMF officials have said that Nigeria has not requested IMF financial assistance, but has been in consultation with the Fund on dealing with budget shortfalls.

“As we have said before, a significant macroeconomic adjustment that Nigeria urgently needs to eliminate existing imbalances and support the competitiveness of the economy is best achieved through a credible package of policies involving fiscal discipline, monetary tightening, a flexible exchange rate regime and structural reform,” Rice said. “Allowing the exchange rate to better reflect market forces is an integral part of that.”


(Reporting by David Lawder; Editing by James Dalgleish)

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IMF says Angola needs fiscal prudence in run-up to 2017 elections

Comments (0) Africa, Business, Latest Updates from Reuters

LUANDA (Reuters) – Angola needs to maintain fiscal prudence in the run-up to the 2017 elections, an International Monetary Fund (IMF) team said on Tuesday after a two-week visit to the oil producing country.

Angola’s economy grew fast after a 27-year civil war ended in 2002, peaking at growth of 12 percent three years ago, but a sharp drop in oil prices has sapped dollar inflows, dented the kwanza and prompted heavy government borrowing.

Oil output represents 40 percent of Angola’s gross domestic product and more than 95 percent of foreign exchange revenue in sub-Saharan Africa’s third biggest economy.

The IMF team said the outlook for 2016 remained difficult, despite the increase of oil prices in recent weeks.

The global lender also warned that economic activity will likely decelerate further, adding that a modest recovery could be expected in 2017 if shortages of dollars are tackled.

“The significant fiscal effort carried out last year was a very important step to assuage fiscal and public debt sustainability concerns,” Ricardo Velloso, who led the team, said in a statement.

“However, further steps are still needed to reduce vulnerabilities, and maintaining fiscal prudence in the run-up to the 2017 elections will be critical.”

The IMF team arrived in Angola on June 1 to discuss options on how to diversify the economy and reduce the dependence on the oil sector, Angolan authorities have said.


(Writing by Nqobile Dludla; Editing by James Macharia)

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Rwanda says eyeing $200 mln worth of short-term facility from IMF

Comments (0) Africa, Business, Latest Updates from Reuters

KIGALI (Reuters) – Rwanda said on Wednesday it had asked the International Monetary Fund to offer it a short term facility worth $200 million to help fend off foreign exchange risks in case the country’s reserves dwindled.

The central African state has previously said it had approached the IMF for help but had not revealed the amount involved.

“The IMF facility is actually to help us not going into problems and that facility is $200 million,” Finance Minister Claver Gatere said at a post-budget press briefing in the capital Kigali.

Gatere said Rwandan authorities expected the IMF to announce a decision on their request “tonight” (Wednesday).

In the budget speech, Gatere said Rwanda’s overall expenditure in 2016/17 fiscal year would rise to 1.95 trillion francs ($2.60 billion) from 1.81 trillion francs in the year ending this June.


(Reporting by Clement Uwiringiyimana; editing by Elias Biryabarema/Mark Heinrich)


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IMF team in Angola for loan talks, economy diversification on agenda

Comments (0) Africa, Business, Latest Updates from Reuters

LUANDA (Reuters) – A team from the International Monetary Fund is visiting Angola to negotiate a loan facility after lower oil prices hammered the finances of Africa’s second largest crude exporter, the Ministry of Finance said on Wednesday.

The ministry said the IMF team will be in Angola from June 1 to June 14 and would discuss options on how to diversify the economy and reduce the dependence on the oil sector.

“The initial negotiations focused on recent economic developments, fiscal, monetary and exchange rate policy in the country, as well as the evaluation of the reforms that the government has been implementing,” the ministry said in a statement.

Angola said in April that it would begin loan negotiations with the IMF on a three-year loan facility.

Angola’s economy grew rapidly after a 27-year civil war ended in 2002, peaking at growth of 12 percent three years ago, but a sharp drop in oil prices has sapped dollar inflows, dented the kwanza and prompted heavy government borrowing.

Oil output represents 40 percent of Angola’s gross domestic product and more than 95 percent of foreign exchange revenue.


(Reporting by Herculano Coroado; Writing by Olivia Kumwenda-Mtambo; Editing by Alison Williams)

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African governments seek bailouts as commodity prices fall

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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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Angola president continues central bank shakeup, replaces deputy governors

Comments (0) Africa, Latest Updates from Reuters, Politics

LUANDA (Reuters) – Angolan President Jose Eduardo dos Santos replaced two deputy central bank governors on Wednesday, his office said in a statement, the latest round of shake-ups at the bank as the oil-rich African country seeks assistance from the IMF.

Dos Santos in March appointed little-known Valter Filipe da Silva as Angola’s new central bank governor after José Pedro de Morais resigned.

His office said Gualberto Manuel Amaro Lima Campos and Cristina Florencia Dias Van-Dúnem had been dismissed and replaced by António Manuel Tiago Dias and Suzana Maria de Fátima Monteiro Camacho.

The economy of Angola, Africa’s second-largest oil exporter after Nigeria, has been hammered by the oil price fall, and the government is in talks with the World Bank and International Monetary Fund about possible financial assistance.

Three directors of the bank’s board were also dismissed and replaced.


(Reporting by Herculano Coroado; Editing by Ed Stoddard and Dominic Evans)

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Ghana must continue fiscal consolidation to contain debt levels: IMF

Comments (0) Africa, Business, Latest Updates from Reuters

ACCRA (Reuters) – Ghana must press on with its fiscal consolidation programme to tackle its high public debt irrespective of unfavourable commodity prices, an International Monetary Fund team said on Wednesday at the end of a visit to the country.

Ghana, which exports gold, cocoa and oil, signed a three-year, $918 million deal with the IMF a year ago to restore fiscal balance and the review team said it was broadly satisfied with implementation of the programme.

“The required fiscal adjustment is on track,” mission head Joël Toujas-Bernaté told reporters. “Given the high level of public debt, fiscal consolidation needs to continue notwithstanding the headwinds from low commodity prices.”

Ghana’s public debt stands around 70 percent of GDP, a level the IMF described in the past as “distressing”.

The government plans to issue a Eurobond of up to $1 billion this year to finance the budget amid concerns that market conditions are not favourable for the sale.

Toujas-Bernaté said it was up to Ghana to determine the appropriateness of the transaction at this time, adding that the government could utilise its “good” cash balance should market conditions remain unfavourable.


(Reporting by Kwasi Kpodo; Editing by Matthew Mpoke Bigg and Mark Heinrich)

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