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Ethiopia signs $600 million loan, grant deal with World Bank

20 March 2018 Comments (0) Actualites, Africa, Economy, Infrastructure

ADDIS ABABA (Reuters) – The World Bank agreed a $600 million loan and grant to Ethiopia on Tuesday to fund roads and other infrastructure projects in urban areas.

The Washington-based bank said the funds would “help strengthen the capacity and performance of local urban governments, expand sustainable urban infrastructure and services, as well as promote local economic development”.

Ethiopia’s urban population is growing by 3.8 percent annually on average, one of the fastest rates in sub-Saharan Africa and presenting challenges to infrastructure, services and jobs, the bank said.

“To successfully manage urbanisation … cities are likely to require fiscal transfers for the foreseeable future. This programme will help cities to realise their revenue potential,” Abebaw Alemayehu, the World Bank’s team leader for the project, said in a statement.

The programme will also support projects in 73 towns across the country and benefit more than 6.6 million people, he said.

Under a 2015-2020 development plan, Ethiopia plans to set up less than 10,000 “rural development centres” in a bid to ease the influx of people to its capital Addis Ababa.

Earlier this month, the World Bank also approved a $375 million loan to Ethiopia to fund a national electrification project.

 

(Reporting by Aaron Maasho; Editing by Susan Fenton)

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Finance minister: Egypt’s external debt to reach $53.4 billion with IMF loan

1 August 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt’s finance minister said in a television interview on Sunday that Egypt’s external debt would reach $53.4 billion if his country receives an International Monetary Fund (IMF) loan.

Last week Egypt said it was seeking $4 billion a year over three years from the IMF to help plug a funding gap. The government hopes to finalise the deal in August.

A two-week IMF mission arrived in Cairo over the weekend to negotiate an IMF loan package.

 

(Reporting by Ali Abdelatti; Writing by Amina Ismail; Editing by Sandra Maler)

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Egypt says close to securing 3-year IMF loan programme

27 July 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt said on Tuesday it was close to agreeing an International Monetary Fund (IMF) lending programme to ease its funding gap and restore market stability and was seeking to secure $7 billion annually over three years.

Prime Minister Sherif Ismail ordered the central bank governor and minister of finance to complete negotiations for the programme with an IMF team that will visit Egypt in the next few days, the cabinet said in a statement.

“We are resorting to the IMF because the budget deficit is very high, between 11 and 13 percent within the past six years,” finance minister Amr el-Garhy, said in a phone interview with presenter Lamis El-Hadeedi on a private TV channel late on Tuesday.

In Washington, the IMF welcomed Egypt’s request for financial support and said it would send a mission to Egypt for about two weeks from July 30.

The cabinet statement, after a five-hour meeting, was the first official confirmation that talks with the IMF were under way. The statement said talks had been ongoing for three months.

“The prime minister stressed the need to cooperate with the IMF through the support program to enhance international confidence in the economy and attract foreign investment, and therefore achieve monetary and financial stability … targeting $7 billion annually to fund the program over three years,” the cabinet statement said.

The government is seeking $12 billion from the IMF, $4 billion a year, which will carry an interest rate of 1 or 1.5 percent, el-Garhy said. The package includes issuing $2-3 billion in international bonds which will be offered as soon as possible, between September and October, he added.

Economists welcomed the news, which came after a turbulent few weeks for Egypt’s currency, the pound, which has plummeted to new lows on the black market as confusion mounted over the direction of monetary policy.

“It’s great. Finally,” said Hany Genena, head of research at Beltone Securities Brokerage. “Confidence will be restored in the government and central bank. Secondly, we will see flotation of the pound, if not tomorrow, next week, the week after.”

Genena said he expected the Cairo stock market to surge after the news and for the currency to strengthen on the black market. The black market had already strengthened slightly from lows near 13 to the dollar on Monday.

Two black market traders contacted by Reuters said they were selling dollars at about 12.80 to 12.85 pounds after the IMF deal was announced.

“I think the stock index will hit 8,000 in the next couple of days,” Genena added. The benchmark EGX30 <.EGX30> closed up 0.3 percent at 7,540 on Tuesday.

Egypt’s economy has been struggling since a mass uprising in 2011 ushered in political instability that drove away tourists and foreign investors, both major earners of foreign currency. Reserves have halved to about $17.5 billion since then.

The dollar shortage has forced Egypt to introduce capital controls that have hit trade and growth, while the value of the Egyptian pound has plummeted on the black market in recent weeks as expectations of a second devaluation this year mount.

The government has pushed ahead with its reform programme, including plans for a value added tax (VAT) and subsidy cuts that were put on hold when global oil prices dropped.

A VAT bill is in its final stages of preparation but has faced resistance in parliament due to concerns over inflation, which has touched seven-year highs since the currency was devalued by 13 percent in March.

Egypt’s ambitious home-grown fiscal reform programme formed the basis of a $3 billion three-year loan deal with the World Bank that was signed in December. But the cash has yet to be disbursed since the World Bank is waiting for parliament to ratify economic reforms including VAT.

A cabinet minister told Reuters last month that Egypt had started negotiations with the IMF and that the central bank was leading the talks.

A statement released by Capital Economics, an independent economic research company, also welcomed the news.

“If approved, this would help to plug Egypt’s external financing requirement and improve the economy’s growth prospects,” it said. “This would make a sizeable dent in Egypt’s gross external financing requirement, which we estimate to be around $25 billion over the coming year.”

 

(Reporting by Amina Ismail and Lin Noueihed; Additional reporting by David Lawder in Washington; Writing by Lin Noueihed; Editing by Tom Heneghan and James Dalgleish)

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

2 June 2016 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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Mozambique says loans to state firms necessary for security

27 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

MAPUTO (Reuters) – Mozambique provided guarantees on loans to state firms Proindicus and Mozambique Asset Management to protect strategic national infrastructure and help maintain naval equipment, a government spokesman said.

The spokesman’s comment, in a statement, followed disclosure by the International Monetary Fund last week that Mozambique had admitted to having more than $1 billion of undisclosed debt and that the two parties were evaluating the implications of the disclosure.

Earlier, a source at the Fund had told Reuters that Proindicus, owned by the interior and defence ministries and the state security services, had been lent $504 million by Credit Suisse and $118 million by Russia’s VTB.

Another loan of $535 million had gone to Mozambique Asset Management, another state company set up to build a shipyard in the northern city of Pemba, that source said.

In his statement dated Tuesday but acquired by Reuters on Wednesday, spokesman Mouzinho Saide said the government had granted a $622 million loan guarantee to Proindicus in 2013, and $535 million to Mozambique Asset Management the following year.

“We faced security threats, such as piracy … illegal immigration, drug trafficking … and illegal fishing,” Saide said after a meeting of Mozambique’s cabinet.

He said the government had also been keen to ensure protection of the assets of oil and gas companies operating in Mozambique’s exclusive economic zone.

The loans are in addition to an $850 million ‘tuna bond’ issued in 2013 and restructured last month because the southeast African nation was struggling to meet repayments.

The IMF source said the extra borrowing had pushed Mozambique’s foreign debt to $9.64 billion, a level “very close to unsustainability”.

 

(Reporting by Manuel Mucari; Writing by Stella Mapenzauswa; Editing by Richard Balmforth)

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World Bank set to provide Egypt with first $1 billion of $3 billion loan

13 April 2016 Comments (0) Latest Updates from Reuters, Middle East, Politics

CAIRO (Reuters) – The World Bank will provide the first $1 billion tranche of a $3 billion loan to Egypt after parliament approves the government’s economic programme, World Bank vice president Hafez Ghanem said at a news conference late Tuesday.

Parliament is expected to pass the program in April.

Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolt and ease a dollar shortage that has crippled import activity and hampered recovery.

The lender had agreed to provide the first $1 billion in December but is waiting for the government’s economic programme, which outlines the broad strokes of its reform plans, to be passed by parliament.

The government presented a programme to parliament in late March that aimed to reduce the budget deficit while protecting the poor.

The World Bank told Reuters in December that the first tranche was focused on “10 prior actions for policy and institutional reforms” already implemented. The second and third tranches are linked to additional reforms the government plans.

A long-delayed Value Added Tax (VAT) that has yet to be implemented but was included in the government programme was one of the reforms agreed to as part of the first tranche, Ghanem said.

Ghanem said that there would not be specific conditions placed on future tranches but highlighted certain changes the lender would like to see, such as a shift in food subsidy policy away from reduced prices to direct cash transfers for the poor.

Egypt has delayed a number of difficult reforms, from a VAT that would increase government revenues and a civil service law that would trim the country’s public workforce, to an ambitious plan to wean the country off costly energy subsidies that has since been scaled back.

Egypt’s economy is currently growing at around 4.2 percent with a budget deficit of about 11.5 percent, the prime minister said last month.

Saudi Arabia, along with other Gulf oil producers, have pumped billions of dollars, including grants, into Egypt’s flagging economy since the army toppled President Mohamed Mursi of the Muslim Brotherhood in 2013 after mass protests against his rule.

But Egypt has said it would rely less on grants from its neighbours moving forward and would focus instead on attracting foreign investment that could relaunch its dollar starved economy.

Last week it signed an agreement with Saudi Arabia to set up a 60 billion Saudi riyal ($16 billion) investment fund among other investment agreements including an economic free-zone to develop Egypt’s Sinai region.

 

($1 = 3.7488 riyals)

 

(Writing by Eric Knecht; Editing by Toby Chopra)

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Angola to open loan talks with IMF as oil price bites

6 April 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

LUANDA (Reuters) – Angola will begin loan negotiations with the International Monetary Fund (IMF) this month as lower oil prices hammer the finances of Africa’s second-largest crude exporter, the Finance Ministry said on Wednesday.

Angola’s economy has grown rapidly since a 27-year civil war ended in 2002, peaking at 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 gross domestic product and more than 95 percent of foreign exchange revenue. Brent crude traded below $39 a barrel on Wednesday, down more than 30 percent compared with a year ago. [O/R]

“The government of Angola is aware that the high dependence of the oil sector represents vulnerability for the public finances and the economy in an extensive way,” the Finance Ministry said in a statement.

“The government requested the support of the IMF for a supplementary programme … taking account of the decline in the price of petroleum.”

Finance Minister Armando Manuel told Reuters in March that Angola had no plans to approach the IMF for loans.

Angola will work with the IMF to design reforms aimed at improving fiscal discipline, simplifying the tax system and increasing transparency in public finances and the banking sector, as part of loan talks, the ministry statement said.

It added that the focus of its economic diversification efforts will be growing the agriculture, fisheries and mining sectors.

The ministry said the government was also implementing an ambitious programme of fuel subsidy reforms to shore up the country’s finances.

 

(Reporting by Herculano Coroado; Writing by Joe Brock; Editing by Alison Williams)

 

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IMF to resume Malawi loan programme

24 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LILONGWE (Reuters) – The International Monetary Fund will resume Malawi’s $150 million extended facility programme which was suspended last year after a scandal involving abuse of state money, the country’s finance minister said on Thursday.

“The IMF has given us a green-light to the resumption of the programme which allows them to disburse about $30 million of the remainder of the total $150 million,” Goodall Gondwe told Reuters.

“The advice we get from the IMF is very important because they provide a very valuable yardstick of how we can manage our economy and we will continue doing well especially on public finance management so that we are not off track again.”

The IMF had suspended the programme following a scandal in which senior government officials siphoned millions of dollars from state coffers. Other international donors, led by Malawi’s former colonial ruler, Britain, also halted direct aid to the southern African nation over the scandal.

IMF Mission Chief Oral Williams said in a statement on Wednesday that Malawi had demonstrated a concerted effort to put the programme back on track, including improvements in public financial management.

Malawi has struggled to grow its economy due to declining export earnings from tobacco and in the absence of aid, which had previously accounted for 40 percent of its budget.

The IMF said it expects Malawi’s economy to grow by 3 to 4 percent this year after expanding by 3 percent in 2015.

But growth may be weather-dependent the Fund said, after an El Nino weather pattern triggered drought and heatwaves, threatening the staple maize and other crops.

 

(Reporting by Mabvuto Banda; Editing by Catherine Evans)

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Zimbabwe expects first IMF loan in nearly two decades this year

16 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

HARARE (Reuters) – Zimbabwe expects a loan from the International Monetary Fund(IMF) in the third quarter of this year, the first since 1999, after paying off foreign lenders by the end of June, the central bank governor said on Wednesday.

President Robert Mugabe’s government last week agreed to major reforms including compensation for evicted white farmers and a big reduction in public sector wages as the government tries to woo back international lenders.

Central bank governor John Mangudya said the IMF would decide the exact amount of the loan to issue at a later date. The fund had agreed to double the amount available for Zimbabwe, known as a financial quota, to $984 million, he said.

“We are talking about the third quarter, that’s when you see most of the action happening,” Mangudya told Reuters in an interview, referring to when Harare expected the loan.

Zimbabwe would also receive an $896 million loan from an unnamed country to pay off arrears to the World Bank.

In addition, the African Export-Import Bank would provide $601 million for Harare to clear arrears to the African Development Bank (AfDB).

Zimbabwe would then receive the same amount as a grant from the AfDB, Mangudya said.

The Southern African country’s foreign debt stands at $8.3 billion, of which $1.8 billion is arrears.

Zimbabwe is trying to emerge from years of international isolation, largely blamed on Mugabe’s policies, including the seizures of farms from white farmers.

The worst drought since 1992 has left 4 million Zimbabweans facing hunger.

Mangudya said the drought had forced the government to lower its growth target for 2016 to below 2 percent from 2.7 percent. The IMF and World Bank forecast growth of 1.4 percent and 1.5 percent respectively.

Once Zimbabwe clears its arrears, it would be ready for rating by international ratings agencies, with a view to issue international bonds in future, said Mangudya.

Mangudya said he supported the government’s decision to take over diamond mining in Marange because the government was receiving little money from the operations.

“After the rating we will then go for the Eurobonds and all to raise money on the international capital markets,” he said.

The government had issued $250 million in treasury bills to raise money for its operations in 2015, Mangudya said, adding that the bank would soon start holding public auctions of treasury bills to enhance transparency in state borrowing.

The central bank also issued $1 billion in bills last year to creditors of the bank, which owes $1.35 billion.

 

(By MacDonald Dzirutwe. Editing by James Macharia and Tom Heneghan)

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African Development Bank approves $1.1 billion in loans to Tanzania

26 February 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

DAR ES SALAAM (Reuters) – The African Development Bank (AfDB) has approved a loan package worth $1.1 billion to Tanzania to be paid out over five years to fund infrastructure projects and improve public sector governance, it said.

The line of credit will be used primarily to support the transport and energy sectors and improve the business environment in east Africa’s second-biggest economy.

The loans would support “transport and energy to promote domestic and regional transport connectivity and improve access to reliable, affordable and sustainable electricity,” AfDB said in a statement late on Thursday.

“The second pillar prioritises strengthening of financial management and improving the enabling environment for private sector investment and finance for sustainable job creation.”

The government plans to spend $14.2 billion to construct a new standard gauge rail network in the next five years financed with external loans. It also plans to build a new $10 billion port at Bagamoyo, expand existing airports and invest in new roads.

Tanzania, like its neighbour Kenya, wants to profit from its long coastline and upgrade existing rickety railways and roads to serve growing economies in the land-locked heart of Africa.

Tanzania boasts economic growth of 7 percent a year, yet it is largely driven by state investment and poverty remains stubbornly high.

It also has natural gas reserves that are estimated at more than 57 trillion cubic feet (tcf) and the central bank believes 2 percentage points would be added to its annual economic growth simply by starting work on a plant to process that would draw in billions of dollars of investment.

“Board members underscored the need for Tanzanian authorities to ensure that the country’s high GDP growth delivers robust economic transformation, poverty reduction and improved livelihoods,” AfDB said.

 

(Reporting by Fumbuka Ng’wanakilala; Editing by Toby Chopra)

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