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IMF: Kenya’s $1.5 bln standby credit in place, but not accessible

21 February 2018 Comments (0) Actualites, Africa, Economy

NAIROBI (Reuters) – Kenya’s $1.5 bln standby credit facility remains in place until the end of March 2018, but the country cannot access it because conditions have not been met, the International Monetary Fund said on Wednesday, clarifying comments given a day earlier.

“The precautionary… arrangement remains in place until end-March 2018,” the IMF said in a statement.

“Kenya continues to have access to resources since June subject to policy understandings to complete the outstanding reviews.”

On Tuesday, Jan Mikkelsen, IMF representative in Kenya, told Reuters that access to the two-year precautionary facility was lost in June because a review had not been completed due to Kenya’s extended election season.

The two-year precautionary facility, set to expire next month, was put in place in case of unforeseen external shocks that could put pressure on Kenya’s balance of payments.

The East African economy has not tapped the facility, which was preceded by a smaller standby one-year credit line in 2015, as foreign exchange reserves held by the central bank have soared to record highs.

 

CONCERNS OVER DEBT

“The facility is in place but permission to access it has been withdrawn,” said Kenyan economist Anzetse Were. “This comes at a bad time… we’ve seen Moody’s downgrade us to B2 from B1, and this is particularly important in the context of Kenya trying to raise a Eurobond.”

Senior government officials have just finished a marketing roadshow abroad, and they plan to issue dollar-denominated notes for a minimum of $1.5 billion soon.

The IMF has expressed concern over the fiscal deficit, but government officials have said borrowing is necessary to fund the government’s ambitious infrastructure plans, which were a key plank of President Uhuru Kenyatta’s successful re-election campaign.

Kenya’s total debt has risen to about 50 percent of GDP, from 42 percent in 2013, as it borrowed locally and abroad to build infrastructure like a new railway line from Nairobi to the port of Mombasa.

When Kenya secured the precautionary facility, IMF officials said it was recognition of the country’s stable economic fundamentals, as that type of facility is usually reserved for more developed emerging economies.

 

By Duncan Miriri

(Writing by Katharine Houreld; Editing by Simon Cameron-Moore)

 

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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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Corruption in South Africa stunting reforms: IMF

20 July 2016 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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Angola halves growth forecast, cuts spending as oil price bites

11 July 2016 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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