South Africa’s Ramaphosa will tout reform impetus

2018 ◽  
Keyword(s):  
Property Rights ◽  
Service Delivery ◽  
Good News ◽  
Policy Statement ◽  
Government Reform ◽  
Medium Term ◽  
Content Type ◽  
Rating Agencies ◽  
Finance Minister ◽  
Budget Policy

Significance A week previously, new Finance Minister Tito Mboweni’s Medium-Term Budget Policy Statement (MTBPS) showed a worrying deterioration in deficit and debt ratios. However, President Cyril Ramaphosa’s administration has received good news in the form of 20 billion dollars in new investment pledges following the government's Investment Conference. Impacts Maintaining the expenditure ceiling pleases the market but could undermine service delivery and infrastructure spending. Recent poor polling numbers for the ANC could see growing internal pushback against government reform proposals. Lingering uncertainty over property rights due to government expropriation proposals will remain a concern to rating agencies and investors.

Ramaphosa’s union struggles could determine rebound

2019 ◽  
Keyword(s):  
Public Debt ◽  
Policy Statement ◽  
Debt Ratio ◽  
Medium Term ◽  
Content Type ◽  
The Public ◽  
Spectrum Auction ◽  
Finance Minister ◽  
Budget Policy ◽  
Spending Cuts

Significance This followed two days after Finance Minister Tito Mboweni’s Medium Term Budget Policy Statement (MTBPS), which offered an honest assessment of the steep deterioration in the state’s fiscal metrics but did not set out a concrete plan to arrest this. Pretoria risks a potential downgrade to ‘junk’ status after February’s main budget -- unless Mboweni can effect the deep, 150-billion-rand (10-billion-dollars) worth of proposed spending cuts and tax measures needed to stabilise the public debt ratio over the next three years. Impacts Moody’s outlook decision will hinder the government’s efforts to boost confidence in the economy at its Investment Conference this week. Eskom’s woes, and government inaction on its debt, will weigh on investment and wider confidence in the government’s reform efforts. Pretoria's unexpected announcement of a prospective spectrum auction will go some way to signal that long-promised reforms are on track.

Kenya development outlook shifts to the private sector

2018 ◽  
Keyword(s):  
Private Sector ◽  
Policy Statement ◽  
Convergence Criteria ◽  
East African ◽  
Content Type ◽  
Development Agenda ◽  
Budget Policy ◽  
The Government ◽  
Export Revenue ◽  
Big Four

Subject Kenya budgetary and fiscal outlook. Significance In February, the government released its 2018 medium-term budget policy statement (BPS), which fleshed out the strategies for achieving President Uhuru Kenyatta’s ‘Big Four’ policy priorities -- his major legacy-setting development agenda for his final term in office. The BPS signals a shift from the administration’s previous heavy focus on public sector-led development to greater private sector involvement, as well as an emphasis on providing basic social goods. This stance could also support plans to reduce the fiscal deficit to 3% of GDP by 2022. However, prospects for success will depend on whether the government delivers on promises to review stifling caps on commercial lending rates. Impacts Better fiscal metrics among East African peers may push Nairobi to speed progress towards the bloc’s macroeconomic convergence criteria. The apparent truce between Kenyatta and opposition leader Raila Odinga could help cement resurgent business sentiment. The government will be the proximate beneficiary of interest rate cuts as it struggles with a debt-service ratio of 54% of export revenue.

Syriza must wrest some new deal from Greece's lenders

2015 ◽  
Keyword(s):  
New Deal ◽  
Economic Policies ◽  
Medium Term ◽  
Ruling Elite ◽  
Content Type ◽  
Finance Minister ◽  
Eu Membership ◽  
Area Growth ◽  
Will Force ◽  
Open Question

Subject Syriza's first days in office. Significance The Syriza party won the election on the back of voters' rejection of economic policies imposed from abroad. The divergence between the interests of the Greek ruling elite and the general population determined the outcome. It is still an open question whether over the short-to-medium term, Greece's creditors will force Syriza leader Alexis Tsipras to temper his pre-election promises. Finance Minister Yanis Varoufakis's statements during his visit to London seem to indicate moderation. Impacts A closer political alliance with Russia might be used as bargaining chip in the medium term. Syriza's win will embolden leftist movements around Europe. In addition to direct losses incurred mostly by EU institutional investors, 'Grexit' would dampen euro-area growth rates. Perceived reversibility of EU membership would increase investors' risk estimations for other debt-stricken member states.

India will struggle to revive growth quickly

2020 ◽  
Keyword(s):  
Credit Rating ◽  
Prime Minister ◽  
Fiscal Year ◽  
Gdp Growth ◽  
Credit Rating Agencies ◽  
Fiscal Deficit ◽  
Content Type ◽  
Rating Agencies ◽  
Goods And Services ◽  
Finance Minister

Subject Outlook for India's economy following the 2020/21 budget. Significance Prime Minister Narendra Modi’s government estimates that GDP growth for fiscal year 2019/20 (April-March) will be 5.0%, the lowest full-year rate in eleven years. Finance Minister Nirmala Sitharaman earlier this month presented a budget for 2020/21 and said growth would pick up to 6.0-6.5% in that year. Impacts Further widening of the fiscal deficit could prompt credit rating agencies to downgrade India’s outlook. Some states may try to reclaim powers of taxation that they surrendered when the Modi government introduced the Goods and Services Tax. Modi will double down on efforts to promote the ‘Make in India’ initiative, which is designed to increase domestic manufacturing.

Saudi Arabia may widen its tax net

2020 ◽  
Keyword(s):  
Saudi Arabia ◽  
Public Sector ◽  
Income Tax ◽  
Value Added ◽  
Medium Term ◽  
Content Type ◽  
Finance Minister ◽  
Oil Revenue ◽  
Oil Exports ◽  
Cash Benefits

Significance The finance ministry has sought to boost non-oil revenue by increasing the value-added tax (VAT) rate and other measures. The finance minister has also floated the possibility of introducing income tax in the medium term. Impacts Spending on public sector salaries could remain consistently higher than revenue from oil exports. Raising the income tax option, although controversial at home, might provide some reassurance to external creditors. The withdrawal of cash benefits compensating for the 2018 fiscal measures will hit household budgets hard.

Peru's economic growth will be sub-par in 2015

2015 ◽  
Keyword(s):  
Growth Rates ◽  
Presidential Elections ◽  
High Growth ◽  
Good News ◽  
Medium Term ◽  
Content Type ◽  
Reserve Requirements ◽  
Mining Projects ◽  
The Government ◽  
External Sector

Subject Obstacles to a rapid return to high growth rates. Significance Peru's central bank took steps in the first quarter to boost the economy by relaxing reserve requirements -- growth having fallen below 2.4% in 2014, from 5.8% the previous year. Slowing domestic demand paralleled the declining dynamism of the external sector. The government predicts a recovery in 2015, but much will depend on whether proposed mining projects come on stream. Impacts Depressed growth rates will provide a negative backdrop to next year's presidential elections. Foreign exchange reserves are still plentiful, and Peru can afford to see these fall in the short-to-medium term. Investors may become increasingly wary of the 'good news' pitch projected by the Ministry of Economy and Finance.

Budget will not offset South Africa junk rating risk

2016 ◽  
Keyword(s):  
South Africa ◽  
Industrial Development ◽  
Credit Rating ◽  
Content Type ◽  
Rating Agencies ◽  
Finance Minister ◽  
Downward Pressure ◽  
Containment Measures ◽  
Capital Outflows ◽  
Investment Grade

Subject Fiscal outlook for South Africa. Significance The IMF today welcomed Finance Minister Pravin Gordhan's budget -- which was the most critical in the post-apartheid period, given the threat by rating agencies that South Africa could lose its investment grade credit rating unless it stabilises its finances. The spending plan features moderate tax increases and several cost containment measures, but these could prove insufficient. Impacts The Industrial Development Corporation's initiative to boost employment-intensive sectors will probably fail due to strict labour laws. The Land Bank's special new loan facility will help farmers hurt by the regional drought, enabling them to resume production. A 'junk' sovereign credit rating would drive significant capital outflows, placing downward pressure on the rand.

Argentina may not meet budget promises

2016 ◽  
Keyword(s):  
Foreign Trade ◽  
Provincial Government ◽  
Medium Term ◽  
Content Type ◽  
Finance Minister ◽  
Inflation Rates ◽  
Bond Issues

Significance Finance Minister Alfonso Prat-Gay described it as "based on the truth", but it relies on several optimistic assumptions, in particular on growth and inflation rates. Government efforts to attract investment to boost growth have been favourably received thus far but will likely take time to bear fruit. Impacts Both foreign and domestic investors will be tempted to hold off on long-term plans until after the 2017 elections. The unpredictable speed of any recovery in Brazil will also be key to meeting growth and foreign trade targets. Rising federal and provincial government new bond issues risk storing up fresh debt concerns in the medium term.

Policy in China still puts growth before deleveraging

2018 ◽  
Keyword(s):  
Central Banks ◽  
Foreign Banks ◽  
Chinese Government ◽  
Gdp Growth ◽  
Medium Term ◽  
Content Type ◽  
Rating Agencies ◽  
Debt Burden ◽  
Producer Prices ◽  
Business In China

Subject Growth and deleveraging in China. Significance China will have to sacrifice a portion of its growth if it wants to reduce its dangerous debt burden. Reducing credit growth will almost inevitably lead to an even higher reduction in GDP growth. This is a price the Chinese government is not yet prepared to pay, but it could be forced to act in the medium term if it wants to avoid a financial crisis. Impacts Investors, traders, central banks and governments should prepare for continued GDP growth, but a rising risk of a sharp slowdown. Rating agencies should remain sceptical regarding the government’s campaign against leverage and risk. Foreign banks wanting to increase their business in China must interpret government statements cautiously. Producer prices have risen since late 2016 after a spell of deflation, boosting profits; this will continue, helping them pay their debts.

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