Ghana plans to issue a three-year domestic dollar bond next week to develop local funding sources to support the economy, deal arrangers told Reuters this week.
The bond, open only to Ghanaians, is the second after a debut issue in October last year, a two-year bond with a six percent yield that raised $94.64 million. The issue size has not been announced but sources said the government is targeting a range of $50 million-$100 million. Bids will open on Tuesday until final pricing on Thursday.
The bond, which will mature in 2020, will be issued through book-building to be arranged by Barclays Bank, Stanbic Bank and brokerage firm Strategic African Securities. Settlement is slated for Nov. 13.
“It’s not really about the size. Rather, the motivation is to continue to develop a local funding market, and the target is those investors and businesses that directly generate dollar revenues,” a co-arranger said.
Ghana is emerging from a fiscal crisis that has left it with a large budget deficit and public debt, forcing the government into an aid deal with the International Monetary Fund that has now been extended by a year to April 2019.
Mauritius needs to tighten monetary policy and modernise its framework to respond to shocks and tackle inflationary pressures, the International Monetary Fund said.
In a statement late on Monday, the IMF said its directors had noted on their yearly consultative mission to Mauritius that "inflation has picked up on the back of supply shocks, but there are signs of further building inflationary pressures".
"The mission recommends tackling inflationary pressures by tightening monetary policy, while modernizing the monetary policy framework to strengthen policy response to shocks," it said. The Indian Ocean island's Key Repo Rate (KRR) has been held steady at 4 percent over the last year.
The IMF mission said it expected headline inflation to remain above 5 percent during the second half of 2017 onwards, mostly on account of second-round effects. Mauritius's inflation fell to 5.3 percent year on year in July from 6.4 percent a month earlier, data from its statistics office showed.
The fund also projected real GDP growth in 2017 at 3.9 percent on the back of improved performance in the construction sector. The forecast is in line with the government's projections.
The International Monetary Fund (IMF) has revised Botswana's 2017 and 2018 economic growth forecast due to rising diamond demand, investment in the water and power sector and reforms to attract investment.
The IMF on Wednesday lifted diamond-producer's 2017 and 2018 economic growth forecast to 4.5% and 4.8% respectively.
"The forecast assumes a gradual pace of reforms to improve the efficiency of the public sector and foster private sector activities," the IMF said. Following a downturn in 2015, growth is expected to gradually increase supported by a recovery in the diamond market and moderate fiscal stimulus, the IMF said in the report.
The latest forecast is higher than the IMF's previous forecast for Botswana contained in its Africa regional economic outlook report released in April, which forecast growth at 4.1% in 2017 and 4.2% in 2018.
The IMF’s growth projection is more bullish than government forecasts. Finance Minister Kenneth Matambo said in February during the national budget presentation that the local economy was expected to grow by 4.2% this year.
Nigeria and the International Monetary Fund disagree over how much the economy will grow this year, with the government saying 2.2 percent and the Fund opting for just 0.8 percent.
Either would be an improvement on last year, when Nigeria suffered its first recession in more than two decades as low crude prices and oil production slashed government revenues and caused chronic dollar shortages.
The government's forecasts, seen by Reuters on Thursday, are contained in a document titled: 2018-2020 Medium Term Fiscal Framework and Strategy Paper, which forms the basis for its 2018 budget, dated July 27. It projects a big bounce back, to 2.2 percent this year, 4.8 percent in 2018 and 4.5 percent in 2019, before reaching 7 percent in 2020.
The IMF, however, is not as bullish, saying on Wednesday it expects Nigeria's economy to grow by 0.8 percent this year, with threats to growth remaining elevated.
"I think that risks are to the downside rather than the upside, but 2.2 percent isn't outside the range of the possible now that oil prices and oil output are recovering," said John Ashbourne, Africa economist at Capital Economics.
The OPEC member expects oil production to hit 2.3 million barrels per day and a price of $45 per barrel. It said oil production reached 1.9 million barrels between January and June 2017, including condensates. Nigeria has promised OPEC to cap its crude oil output at 1.8 million bpd, although it does not include condensates in this total.
The country's economy contracted 0.5 percent in the first quarter, its smallest fall in five quarters of decline.
The government projects the naira's exchange rate to the dollar, which has traded at around 305 on the official market since 2016, to remain stable while inflation will decline but remain in double-digits at 12.42 percent next year. Nigeria has at least six exchange rates which it has used to mask pressure on the naira after a drop in oil price caused foreign investors to flee, triggering a currency crisis.
The central bank has been working to converge the rates through dollar interventions but that is burning out reserves.
"Should there be any harmonisation in FX rates – as encouraged by the multilateral agencies – then an FX assumption of 305 is likely to prove unrealistic," said Razia Khan, chief economist Africa at Standard Chartered Bank. Nigeria suffered significant revenue shortfalls in the first half of 2017, with interest payments remaining as high as 40 percent at end of June.
The country estimates record spending of 7.94 trillion naira ($21.75 bln) next year, up 6.7 percent from the sum budgeted for 2017 with deficit rising to 2.45 percent as a percentage of GDP. "In order to sustain spending of anything close to 7.94 trillion naira, Nigeria will need to do a great deal more to boost non-oil revenue mobilisation," said Khan.
Africa’s economy is this year expected to grow by 2.6 but that will not be enough to keep up with the continent’s growing population, the International Monetary Fund said in a report released Tuesday.
The region’s growth slowed sharply in 2016, averaging 1.4 percent, the lowest in two decades as about two-thirds of the countries in the region which account for 83 percent of the region’s GDP, slowed down. Sub-Saharan population growth averaged 2.7 percent, according to a 2015 World Bank estimate.
In its latest Regional Economic Outlook report the IMF said growth in the region will barely deliver any per capita gains and urged African governments to implement strong and urgent policy reforms to boost growth.
Countries like Senegal and Kenya are expected to continue to experience growth rates higher than 6 percent while Zimbabwe is forecast to grow at 2 percent. In a previous outlook published last October the IMF had forecast a contraction of 2,5 percent in Zimbabwe’s economy.
The IMF warned that “economic and social vulnerabilities are expected to increase further in Zimbabwe, despite some rebound in agricultural production.” “Recent improvements in commodity prices, while providing welcome breathing space, will not be sufficient to address the existing imbalances in resource-intensive countries…….Some other commodity exporters, such as Ghana, Zambia, and Zimbabwe, are also grappling with larger fiscal deficits in a context of already high debt levels and concerns about growth,” reads the report.
“The delay in implementing critical adjustment policies is leading to higher public debt, creating uncertainty, holding back investment, and risks generating even deeper difficulties in the future.”
The report also noted the growing importance of the informal sector as a safety net providing employment and income. “The informal economy is an important component of most economies in the region, contributing between 25 and 65 percent of GDP and between 30 and 90 percent of total nonagricultural employment”.
“International experience suggests that the informal economy in sub-Saharan Africa is likely to remain large for many years to come, presenting both opportunities and challenges for policymakers”.
- The Source