18th January 2024
Nigeria's $1.5B Aid
Nigeria is in talks with the World Bank for up to $1.5 billion to alleviate its severe dollar shortage. Finance Minister Wale Edun expressed confidence in receiving $1 billion to $1.5 billion for budgetary support, citing ongoing reforms under President Bola Tinubu. The reforms, including scrapping fuel subsidies and adjusting the exchange-rate policy, attracted international investor support but led to surging inflation and a 50% decline in the naira. Nigeria is also considering tapping the eurobond market later this year. In a positive move, Nigeria's central bank resolved the entire $7 billion forex forwards liability for 14 banks and has begun initiating settlements with foreign airlines.
Sunak Quells Rwanda Rebellion
British Prime Minister Rishi Sunak appears poised to overcome a rebellion within his Conservative Party against his asylum plan to send migrants to Rwanda. Facing critics demanding a tougher immigration bill, Sunak offered minimal concessions. Despite deep concerns among rebels, many are reluctantly backing the legislation to avoid potential government collapse. With elections approaching and the Conservatives trailing in polls, some fear rejecting a bill perceived as curbing immigration rates. Sunak's likely victory comes at a cost, intensifying party divisions and resulting in the loss of two Conservative deputy chairs. Challenges for his Rwanda scheme persist in the House of Lords.
Davos Insights: Kganyago's Outlook
South African Central Bank Governor, Lesetja Kganyago, anticipates inflation to average 5% this year as the disinflation process begins. While food costs rise, November saw a slowdown in annual inflation to 5.5%. Kganyago emphasizes data-dependent decisions for potential rate cuts, waiting for sustainable declines to 4.5%. Daily power cuts have hampered growth, but renewable energy investments may alleviate the strain. Logistic challenges in state-owned Transnet and upcoming elections could impact inflation. Kganyago foresees contestation affecting the labor market and domestic inflation. The South African Reserve Bank will revisit forecasts in its upcoming monetary policy committee meeting.
Ghana Secures Debt Moratorium
Ghana has successfully negotiated a debt payment moratorium with official creditors until May 2026, with bilateral obligations totaling $5.4 billion set to be repaid in two tranches after 16 and 17 years. Finance Minister Ken Ofori-Atta revealed these details during the World Economic Forum in Davos. The agreement, finalized in just over a year, marks one of the swiftest debt restructurings under the Group-of-20 Common Framework. The deal's terms will influence talks with commercial lenders. Ghana's eurobonds, boosted by the agreement, experienced significant gains, and the government anticipates reaching a deal with eurobond investors by end-March.
