The International Monetary Fund (IMF) has put the global debt at $180 trillion, warning highly indebted emerging-markets and low-income countries against what it termed pro-cyclical fiscal policies.
IMF Managing Director, Christine Lagarde, in a statement issued at the conclusion of the Group of 20 (G-20) Summit in Buenos Aires, called for collaborative action by G-20 leaders as global growth moderates and risks increased.
Ms Lagarde emphasised that global growth remained strong, but that it was moderating and becoming more uneven.
She said pressures on emerging markets had been rising and trade tensions have begun to have a negative impact, increasing downside risks.
“Another urgent issue is the excessive level of global debt – about $182 trillion by the IMF’s estimate.
“It is important, particularly for highly indebted emerging-market and low-income countries, to rebuild buffers and reverse pro-cyclical fiscal policies.
“Increasing debt transparency, such as on the volumes and terms of loans, by borrowers as well as lenders, is as important as supporting debt sustainability,’’ Lagarde said.
According to her, choosing the right policy is, therefore, critical for individual economies, the global economy, and for people everywhere.
“The choice is especially stark regarding trade.
“We estimate that if recently raised and threatened tariffs were to remain in place and announced tariffs were implemented, about three-quarters of one per cent of global GDP could be lost by 2020.
“If instead, trade restrictions in services were reduced by 15 per cent, global GDP could be higher by one-half of one per cent.
“The choice is clear: there is an urgent need to de-escalate trade tensions, reverse recent tariff increases, and modernise the rules-based multilateral trade system.’’
To meet the challenges facing the global economy, the IMF chief made several policy recommendations to the G-20 leaders.
“First, fix trade – this is priority number one to boost growth and jobs.
“Continue to normalise monetary policy in a well-communicated, gradual, data-driven manner and with due regard to potential spill-over effects.
“Address financial risks, using micro and macro-prudential tools to tackle problems related to the leveraged ending, deteriorating credit quality and high exposure to foreign currency or foreign-owned debt.
“Use exchange rate flexibility to mitigate external pressures, avoiding tariffs and other policies that could weaken market confidence.
“Finally, eliminate legal obstacles to the participation of women in the economy which is key to tackling high and persistent inequality and would add to the growth potential of all G-20 countries,’’ Lagarde said.
She said she was encouraged by the G-20’s continued commitment to strengthening the global financial safety net, with a strong and adequately financed IMF at its centre.
“It is important that the G-20 leaders have pledged to conclude the 15th General Review of Quotas by our Spring Meetings and no later than the Annual Meetings in 2019.’’ 
Source: NAN
Central African Republic landed a windfall on Tuesday, at least on paper, when Russian state bank VTB reported it had lent the country 12 billion dollars.
However, the bank then said it was a clerical error and there was no such loan.
The loan was mentioned in a quarterly VTB financial report published by the Russian Central Bank.
The report included a table listing the outstanding financial claims that VTB group had on dozens of countries as of October 1 this year.
In the table next to the Central African Republic was the sum of 801,933,814,000 roubles (12 billion dollars) — more than six times the country’s annual economic output.
When asked about the data by media, the bank said the loan to the former French colony did not, in reality, exist.
“VTB bank has no exposure of this size to any foreign country.
”Most likely, this is a case of an operational mistake in the system when the countries were being coded,” the lender said in a statement sent to Reuters.
VTB did not say who was responsible for the mistake or how such a large figure could have been published without being spotted.
CAR government spokesman Ange Maxime Kazagui, when asked about the Russian data, said: “I don’t have that information.
”But it doesn’t sound credible because $11 billion is beyond the debt capacity of CAR.”
“We are members of the IMF (International Monetary Fund). When a member of the IMF wants to take on debt, it has to discuss that with the IMF.”
There was no indication in the data published by the Russian central bank of who was the recipient of the loan, the purpose of the loan, or when it was issued and on what terms.
CAR is a nation of five million people emerging from sectarian conflict, with a gross domestic product of 1.95 billion dollars, according to the World Bank.
Muscling aside former colonial power France, Moscow has provided arms and contractors to the Central African Republic military, and a Russian national is security advisor to President Faustin-Archange Touadera.

The International Monetary Fund (IMF) has raised its growth projection for the Sub-Saharan Africa’s economy to 3.8 percent in 2019 from 2.8 percent in 2017, implying 0.1 percentage point increase compared with its April, 2018 projection.

The fund also upgraded Nigeria’s 2019 Gross Domestic Product (GDP) by 0.4 percentage point to 2.3 percent.

The IMF disclosed this in its World Economic Outlook (WEO) Update for July 2018 titled “Less Even Expansion, Rising Trade Tensions” released on Monday.

According to the release, the upgraded forecast “reflects improved prospects for Nigeria’s economy” and supported by the rise in commodity prices.

The global monetary authority said Nigeria’s growth is expected to rise from 0.8 percent in 2017 to 2.1 percent in 2018 and 2.3 percent in 2019 on the back of an improved outlook for oil prices.

But, it left its 2019 growth prediction for South Africa unchanged at 1.7 percent, South Africa is Africa’s most-industrialized economy and hasn’t grown at more than 2 percent a year since 2013.

Nigeria and South Africa’s economies account for about half of the Africa’s GDP.

In May, the National Bureau of Statistics (NBS) released the GDP report for the first quarter of 2018 indicating that Nigeria economy grew by 1.95 percent from 2.11 percent recorded in Q4 2017.

“Despite the weaker‑than-expected first quarter outturn in South Africa, the economy is expected to recover somewhat over the remainder of 2018 and into 2019 as confidence improvements associated with the new leadership are gradually reflected in strengthening private investment,” the fund said.

Nigeria’s economy is recovering after it plunged into recession in 2016 after a drop in the prices of crude oil in the international market, owing to its over dependence on the oil, the country’s main source of foreign exchange earnings.


India had the second highest debt, after Brazil, in the Emerging Market and Middle-Income Economies category. But the figure is projected to steadily go down here on, from 68.9 per cent this year to 61.4 per cent by 2023.
IMF says global debt hit a record $164 trillion in 2016; India praised for 'right policies'. The world is drowning in debt like never before. According to the IMF, global debt, public and private alike, hit a record $164 trillion in 2016 - almost 225 per cent of the world's economic output - up 8 per cent from 2015. Debt-to-GDP ratios in the advanced economies are at levels not seen since World War II, while the same for emerging market and middle-income countries have hit levels last seen during the 1980s debt crisis. To ram home the bad news, "the world is now 12 per cent of GDP deeper in debt than the previous peak in 2009", as the latest Fiscal Monitor report put it.
According to Vitor Gaspar, Director, IMF Fiscal Affairs Department, which prepared the report, most of the global debt is in advanced economies, at 105 per cent of GDP on average. But in the past decade, emerging market economies have been responsible for most of the increase. Debt-to-GDP ratios for the latter in 2017 reached almost 50 per cent and are expected to continue on an upward trend. "One-fifth of emerging market and middle-income economies had debt above 70 per cent of GDP in 2017, similar to levels in the early 2000s in the aftermath of the Asian financial crisis. Among low-income developing countries, 20 per cent now boast debt above 60 per cent of GDP, compared with almost none in 2012," said the report.
"Underpinning debt dynamics for all countries are large primary deficits, which reached record levels in the case of emerging market and developing economies," it added. Here's why high government debt and deficits are cause for concern:
It can make countries vulnerable to a sudden tightening of global financing conditions, which could disrupt market access and put economic activity in jeopardy. Past experience shows that countries can be subject to large unexpected shocks to public debt-to-GDP levels, which would exacerbate rollover risk. Furthermore, IMF has previously established that fiscal risks can be highly correlated with each other, with a distinct bunching of contingent liability realizations during crisis periods.
It can hinder a government's ability to implement a strong fiscal policy response to support the economy in the event of a downturn. Historical experience shows that a weak fiscal position increases the depth and duration of recession-such as in the aftermath of a financial crisis.
Arguably, high debt can also result in lower growth because it can crowd out private investment and create uncertainty about higher future distortionary taxation.
India praised for 'right policies'
Against this backdrop consider that as per IMF data, India's general government debt (as a percentage of GDP) has been pegged at 70.2 per cent for 2017, up 2 per cent since 2012. In fact, it boasted the second highest debt, after Brazil, in the Emerging Market and Middle-Income Economies category. But the figure is projected to steadily go down here on, from 68.9 per cent this year to 61.4 per cent by 2023. "The debt level is relatively high, but the authorities are planning to bring it down over the medium term with the right policies," said Abdel Senhadji, Deputy Director, IMF Fiscal Affairs Department, at a press conference, adding that India is planning to continue with the consolidation in the current fiscal year and over the medium term. According to the IMF, India's debt ratio projection for 2023, along with a fiscal deficit target of 3 per cent by 2019-20, "are appropriate".
China slammed
In contrast, China's government debt to GDP ratio stood much lower at 47.8 per cent in 2017. However, the IMF report holds the country responsible for a whopping 43 per cent of the global debt increase since 2007, calling it "a driving force". The main concern "has to do with the level and pace of accumulation of overall debt, private and public. So, the control over the debt level - in particular, the rhythm of debt accumulation - is a major challenge for the Chinese economy," said Gasper. According to IMF data, China's general government debt (as a percentage of GDP) is expected to balloon from 47.8 per cent in 2017 to 65.5 per cent by 2023.
Dismal outlook for the US
The projections for the US are similarly dismal. "In the US, the revised tax code and the two-year budget agreement provide additional fiscal stimulus to the economy. These measures will give rise to overall deficit above $1 trillion over the next three years, and that corresponds to more than 5 per cent of the US GDP," said Gasper, adding, "Debt is projected to increase from 108 per cent in 2017 to 117 per cent of GDP in 2023. If tax cuts with sunset provisions are not allowed to lapse, public debt would climb even higher."
Thankfully, the outlook for the world at large is a lot more positive - the IMF forecasts indicate that debt-to-GDP ratios would come down over the next three to five years in most countries. This, of course, hinges on them delivering fully on their policy commitments. So the report calls out for immediate decisive action on the part of nations to strengthen fiscal buffers and advance policies/reforms to reduce vulnerabilities, taking full advantage of the recent broad-based pickup in economic activity. "Countries are advised to avoid procyclical fiscal policies that exacerbate economic fluctuations and ratchet up public debt," said Gasper.
Incidentally, the report also gives a thumbs up to Aadhaar, the constitutional validity of which is currently being debated in the Supreme Court. "Digitalization can improve financial management and ultimately the efficiency of public spending... Biometric technology to identify and authenticate individuals can help reduce leakages and improve coverage of social programs. With more than 1.2 billion registered citizens in India's biometric identification system, Aadhaar, the country stands out as a leader in this area," it said. Significantly, the IMF also underscored that digitization is no panacea, and the report made clear that "governments must address multiple political, social, and institutional weakness and manage digital risks".
Source -BusinessToday

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.


- Reuters

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.


- Reuters

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

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