Global Courant
Nigeria: Yesterday, the World Bank published its semi-annual Development Update for Nigeria entitled ‘Seizing the Opportunity’.
The Bank noted that the abolition of the gasoline subsidy and foreign exchange management reforms are crucial measures to start the restoration of fiscal space and the restoration of macroeconomic stability, and that the opportunity should be seized used to take further necessary steps in policy reform. Eliminating the gasoline subsidy is expected to generate approximately NGN 2 trillion (0.9% of GDP) in fiscal savings by 2023, and more than NGN 11 trillion by the end of 2025, while FX window harmonization is expected to efficiency of the FX market will improve and private investment.
Eliminating the gasoline subsidy is expected to temporarily raise inflation to 25% in 2023 from 18.8% in 2022, before contributing to disinflation in the medium term. The report also notes that compensatory transfers to vulnerable households will be essential to protect them from the negative impact of higher gasoline prices. In terms of the Bank of Nigeria’s broader economic assessment, GDP is expected to grow at 3.3% in 2023, the same as in 2022, then rising to 3.7% in 2024 and 4.1% in 2025, supported due to increases in the manufacturing and services sectors and slow recovery in the oil sector.
The budget deficit is expected to remain large, at around 5.1% of GDP in 2023, before falling to 4.0% in 2024 and 3.9% in 2025. Meanwhile, the debt ratio is expected to rise from 40% in 2022 to 46% in 2023, before falling slightly to 45% in 2025. Without reforms, the debt ratio could have risen to 49% in 2025, according to the World Bank.
Zambia: Yesterday, following comments from the finance minister on the deal reached to restructure USD 6.3 billion of bilateral debt, Fitch Ratings issued a statement yesterday saying that an agreement with private creditors is still needed before it becomes Zambia’s prolonged foreign currency default can upgrade its Rating (IDR) from the current level of Restricted Default (RD).
The Agency said it believes Zambia can achieve favorable terms as agreed with official creditors through haircuts, maturity extensions and reduced interest rates. However, Fitch noted that it is not clear whether the reclassification of the $1.75 billion debt insured by China’s Sinosure as other commercial debt will complicate discussions with private creditors. It believes that the delay between the issuing of financing guarantees by the official creditors’ committee in July 2022 and the final agreement was largely due to issues raised by China.
Ghana: Reuters reported yesterday that the government had reached an agreement with banks to restructure USD 1.4 billion of locally issued USD bonds and cocoa notes as authorities aim to complete the second phase of the Domestic Debt Exchange Program (DDEP). rounds ahead of the second IMF review. According to the report, the second phase of the DDEP requires the government to restructure a $11.2 billion debt consisting of domestic dollar bonds, cocoa bills, pension funds and debt to the central bank in order to qualify for the next $3 billion trance. . IMF loan. Details about the agreement are not yet available.
The government of Ghana is said to have reached an agreement
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