Egypt weathers COVID-19 blow but debt risks loom large

2021 ◽  
Keyword(s):  
Emerging Markets ◽  
Growth Potential ◽  
Structural Reforms ◽  
Fiscal Consolidation ◽  
Medium Term ◽  
Content Type ◽  
Bond Index ◽  
Tourism Sector ◽  
The Imf

Significance The IMF praised Egypt’s “resilience” to the COVID-19 shock and encouraged Cairo to maintain its focus on fiscal consolidation while broadening structural reforms -- mainly to ease investors’ access to key opportunities in the economy -- that will help “unleash Egypt’s enormous growth potential in the medium term”. Impacts Egypt will need to go to the market again in 2021/22 through both conventional bonds and sukuk. The return of Russian tourists could generate USD3.5bn in revenues and is seen as critical to a recovery in the battered tourism sector. Egypt's inclusion in the FTSE Russell frontier index and JP Morgan’s emerging markets bond index could trigger large currency inflows.

Higher Chile growth faces domestic and external risks

2018 ◽  
Keyword(s):  
United States ◽  
Economic Growth ◽  
The United States ◽  
Medium Term ◽  
Content Type ◽  
Growing Economy ◽  
Fiscal Austerity ◽  
The Government ◽  
The Imf

Significance After four sluggish years, economic growth has been picking up steadily since mid-2017. However, as noted by Moody’s, medium-term prospects remain hampered by reliance on copper exports as, in the shorter term, has also been apparent in the context of the tariff war between the United States and China. Impacts According to the IMF, Chile will be the region’s fastest-growing economy this year, just ahead of Peru. The government will walk tightrope between a need for fiscal austerity and social demands. The tariff war will underscore the pressing need for diversification out of commodity exports.

Nigerian government's self-sufficiency goals will lag

2018 ◽  
Keyword(s):  
Small Scale ◽  
Structural Reforms ◽  
Farming Practices ◽  
Medium Term ◽  
Content Type ◽  
Core Inflation ◽  
Parboiled Rice ◽  
Self Sufficiency ◽  
Grey Market ◽  
The Government

Subject Nigerian self-sufficiency push. Significance The government has renewed efforts to prioritise food self-sufficiency and modernise farming practices. However, despite the impetus to drive sector growth and diversify away from oil, necessary wider structural reforms have stalled. Impacts Big-ticket programmes will attract most international focus despite the investment potential in Nigeria's mainly small-scale holdings. Growth in agricultural output will remain low in the medium term as inefficiencies persist and core inflation remains elevated. The government’s import ban may aid domestic production targets but will further encourage a flourishing ‘grey market’ (eg, parboiled rice).

Togo’s president will face mounting opposition

2018 ◽  
Keyword(s):  
Fiscal Consolidation ◽  
Political Climate ◽  
Term Limit ◽  
Content Type ◽  
Constitutional Reforms ◽  
The Imf

Subject Togolese constitutional crisis. Significance The main opposition coalition has rejected President Faure Gnassingbe's recent calls for dialogue to end a long-running political impasse over his continued tenure in office. Faure, in power since 2005 and currently in a controversial third term, has reluctantly agreed to constitutional reforms -- including the introduction of a two-round presidential vote and a two-term presidential limit. However, Faure wants the two-term limit to take effect in 2020, potentially giving him the chance to stay in power until 2030, while the opposition insists the limit must apply retrospectively. Impacts Military backing of the incumbent makes the prospect of a coup unlikely. The uncertain political climate and recurring protests could undermine a fiscal consolidation programme with the IMF. The Togolese diaspora will increase global attention on the crisis and pressure on international governments to intervene.

Angolan government will point to early reform progress

2019 ◽  
Keyword(s):  
Interest Rate ◽  
Agricultural Production ◽  
Value Added ◽  
Fiscal Consolidation ◽  
Content Type ◽  
Fuel Distribution ◽  
Oil Sector ◽  
Near Term ◽  
State Relations ◽  
The Imf

Significance The underperformance of the oil sector, coupled with a recent fuel distribution crisis, have combined to dampen growth forecasts for 2019. While President Joao Lourenco’s government has earned praise for recent fiscal consolidation efforts, economic frailties linger. Impacts The Angolan authorities will accelerate efforts to repay arrears to Portuguese companies amid improving state relations. A potential inflationary spike once value added taxation (VAT) is introduced may lessen the chance of an interest rate cut in the near term. Improving agricultural production will be a major diversification priority and agricultural spending has quadrupled in the revised budget. The IMF will maintain pressure on Luanda to reduce subsidies in sectors such as agriculture and fisheries.

Near-term IMF funds are ample, but more may be needed

2020 ◽  
Keyword(s):  
Emerging Markets ◽  
Economic Crisis ◽  
Low Income ◽  
Low Income Countries ◽  
First Responder ◽  
Content Type ◽  
Near Term ◽  
Second Wave ◽  
The Imf

Subject IMF funding dynamics. Significance The disruption caused by the COVID-19 pandemic is putting emerging markets (EMs) and low-income Countries (LICs) under economic and financial stresses. The IMF has long served as the world’s first responder to crises, and some 90 countries have already turned to it, raising fears of whether it has adequate resources to play a systemic role in helping to support these countries. Impacts A second wave of COVID-19 infections and deaths would prolong the economic crisis and could sharply raise demands for IMF resources. The organisation needs a quota increase but the fastest way to raise more resources for EMs is by increasing bilateral borrowing. For low-income countries, additional IMF funding is being mobilised.

A prolonged financial crisis: adjustments and prospects in Eurozone's southern markets

2014 ◽  
Vol 32 (1) ◽  
pp. 94-102 ◽  
Author(s):  
Sotiris Tsolacos
Keyword(s):  
Real Estate ◽  
Risk Premium ◽  
Real Estate Market ◽  
Growth Potential ◽  
Data Series ◽  
Structural Reforms ◽  
Investment Activity ◽  
Content Type ◽  
The Future ◽  
Business Confidence

Purpose – The economic slump in the southern member states of the Eurozone has brought real estate market activity to a standstill and has raised questions about the future of these markets. Will they rebound and will they command a higher risk premium? This paper aims to assess the outlook for these markets as the crisis continues and analyses the conditions that are a prerequisite to restore investment activity and a healthy occupier market. Design/methodology/approach – Within a portfolio allocation framework, the paper examines the conditions for the revival of investor interest in these markets and the uncertainties that should be resolved. Through the analysis of selected data, the paper assesses the emerging state of these markets. Findings – The economic slump in peripheral Eurozone economies gives way to a period of slow growth and ongoing structural reforms. The latter are necessary to restore confidence in the respective economies and investment markets. Sentiment indicators contain the first signs of a rebound in business confidence. With confidence returning and mitigated macroeconomic risks investors will seek value in the markets of the southern region on a selective basis. Price corrections and yield differentials with core markets could prove attractive. It is, however, argued that a risk premium will remain to reflect progress with structural reforms that will make the economies more competitive and less prone to a similar crisis in the future. It is only when such reforms will firmly be put in place that pricing in the southern Eurozone markets will reflect cyclical risks and diversification contributions. Practical implications – The article provides a structured approach to assess the outlook for peripheral markets. It identifies the key risks affecting investor confidence. The analysis proceeds to stress conditions that should be satisfied for a rebound in the investment market. Signals from selected data series are extracted to assess sentiment and adjustment in the market and assist in the assessment of real estate market prospects in these economies. Originality/value – The paper examines conditions for investing in the hard hit markets of the Eurozone. It illustrates the path for the recovery in these markets and the conditions for the rebound in investment volumes. It contributes to the analysis of the growth potential and risk of these markets for investment purposes.

Ghana euro-bond setback may force more austerity

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Economic Crisis ◽  
Management Plan ◽  
Debt Management ◽  
Medium Term ◽  
Content Type ◽  
The Government ◽  
Commercial Environment ◽  
The Imf

Subject Ghana's debt strategy. Significance The government on October 2 suspended its fourth euro-bond sale after low investor interest. The planned 1.5-billion-dollar issue was a key pillar in the medium-term debt management plan under the country's IMF programme. However, rising interest rates on dollar-denominated bonds and the lack of confidence in Ghana's economy has proved it to be a risky strategy. Impacts Preferences for political continuity may see the IMF offer the government more leniency on expenditure targets as 2016 elections approach. The opposition New Patriotic Party needs to do more to capitalise on the economic crisis if it hopes to unseat the government. Appetite for Ghana's recovery among donors could see more concessional borrowing if the commercial environment remains difficult.

Ties with Hamas could help Egypt in Sinai

2017 ◽  
Keyword(s):  
Border Crossing ◽  
Medium Term ◽  
Short Term ◽  
Humanitarian Crisis ◽  
Content Type ◽  
Tourism Sector

Significance The fact that the meeting was held in Egypt, rather than the usual meeting place of Qatar, signals a shift in Hamas-Cairo relations. Impacts In the short term, any expanded cooperation could see a conflagration in the Sinai as insurgents fear encirclement. In the medium term, genuine Egyptian-Hamas rapprochement should go some way towards containing the insurgency. A stable Sinai could help Egypt’s foundering tourism sector. An open Rafah border crossing could see reconstruction start in earnest in Gaza and head off a looming humanitarian crisis.

Angolan oil sector reform will require innovation

2018 ◽  
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
Oil Price ◽  
Structural Reforms ◽  
Medium Term ◽  
Short Term ◽  
Sector Reform ◽  
Content Type ◽  
Oil Sector ◽  
Oil Company

Subject Sonangol priorities. Significance Early structural reforms by new President Joao Lourenco and more positive economic projections for 2018 suggest a potential uptick in Angola’s fiscal fortunes. Since assuming power in September, Lourenco has overhauled the leadership of state-owned oil company Sonangol and dismissed several prominent officials associated with his predecessor Jose Eduardo dos Santos. Separately, Lourenco has moved to tackle the overvalued kwanza. While this will raise debt-servicing costs, this will be partly ameliorated by the recent oil price of over 60 dollars per barrel. Impacts Scrapping the dollar currency peg will help ease the foreign exchange crisis and end payment constraints in the aviation and oil sectors. A more realistic exchange rate will fuel inflation in the short term but will likely improve medium-term economic prospects. Urban support for the People's Movement for the Liberation of Angola (MPLA) could decline further if reforms remain elite-focused.

Czech vote may raise chances of new ANO-led government

2018 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Household Consumption ◽  
Capacity Constraints ◽  
Consumer Confidence ◽  
Structural Reforms ◽  
Medium Term ◽  
Short Term ◽  
Public And Private ◽  
Content Type

Significance Now that Zeman has successfully retaken the presidency with 152,000 more votes than his pro-Western rival Jiri Drahos after a campaign that was dominated by domestic issues, attention will focus once again on forming a majority government after the largest parliamentary party, ANO 2011, lost a vote of confidence on January 16. Impacts Consumer confidence may strengthen in the short term as the old ANO-CSSD government’s policies take effect, providing an economic boost. Robust household consumption and public- and private-backed investment may also contribute to stronger GDP this year. Although monetary policy is set to tighten, in response to signs of overheating, interest rates will remain at historic lows. The outlook for the economy in the short term is upbeat, with a strong outturn expected for the fourth quarter of 2017. Structural reforms will be required over the medium term to reduce the risk of capacity constraints, especially in industry.

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