logo
Ethiopia expects $3.4bln deal on IMF review within days

Ethiopia expects $3.4bln deal on IMF review within days

Zawya29-04-2025
Ethiopia expects to reach a preliminary agreement on the third review of its $3.4 billion loan programme with the International Monetary Fund early this week and sees formal debt talks with bondholders starting in summer, State Finance Minister Eyob Tekalign told Reuters.
The country, which struck a four-year, $3.4 billion programme IMF deal last July, is in the midst of a far-reaching reform push, including the floatation of its birr currency and a push to get its debt restructuring over the line.
Speaking on the sidelines of the IMF and World Bank Group spring meetings in Washington, Eyob said he had met IMF Managing Director Kristalina Georgieva as well as other staff to discuss progress on reforms.'They are very much pleased with how the programme is going,' said Eyob in an interview on Saturday. 'The results we've seen now were pleasant surprises, because we've over-achieved in many areas, whether it's in reserve accumulation, in inflationary trends or in export growth.'Eyob expected the Fund's executive board to sign off on the review in June - a step needed to trigger the next payout of the loan programme.
Read: Ethiopia's tough new rules for foreign banksMeanwhile, talks in Washington with some holders of Ethiopia's sole $1 billion international bond had also been productive, he said, adding formal talks aimed at hammering out details of a debt rework could start in the summer.'We cannot get into substantive discussions, because they are waiting to see the latest DSA macro tables from the fund,' he said, referring to the IMF's debt sustainability analysis.
Ethiopia in March reached a draft agreement with its official creditors on restructuring $8.4 billion of debt, but has been locked in a standoff with its bondholders.
Bondholders and Ethiopia are at odds over whether the country is facing a liquidity issue, meaning it might only need more time to pay, or a solvency issue, which could require more debt writedowns known as haircuts.
A draft deal with official creditors, which is expected to be finalised within months, gives the government more time to pay but stops short of an outright haircut in favour of focusing on payment extensions, lowering the debt service during the IMF programme and cutting interest levels.
Eyob said the country had to follow the principle of comparability of treatment with other creditors.'Haircut or not, I think this is sometimes an unnecessary debate,' he said. 'The whole exercise is to help the country sustainably finance its development - that's the whole idea behind the debt treatment.'Ethiopia opted to restructure its external debt under the G20's Common Framework in 2021, before it defaulted on its sole Eurobond in December 2023.
Eyob also said he was in talks with China's main trade policy banks - Export-Import Bank of China and the China Development Bank - over concessional financing for projects such as Addis Ababa's city rail and airport expansions.
He also held meetings with the US International Development Finance Corporation.'We understand that they see us as one of the priority countries, so we should be able to see more investment from the U.
S. side,' he said, adding discussions had focused around direct project financing as well as guarantees across a range of sectors, including energy.
© Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

International Monetary Fund (IMF) Executive Board Concludes 2025 Article IV Consultation with Equatorial Guinea and IMF Management Approves the First and Second Reviews Under the Staff Monitored Program for Equatorial Guinea
International Monetary Fund (IMF) Executive Board Concludes 2025 Article IV Consultation with Equatorial Guinea and IMF Management Approves the First and Second Reviews Under the Staff Monitored Program for Equatorial Guinea

Zawya

timean hour ago

  • Zawya

International Monetary Fund (IMF) Executive Board Concludes 2025 Article IV Consultation with Equatorial Guinea and IMF Management Approves the First and Second Reviews Under the Staff Monitored Program for Equatorial Guinea

The Executive Board of the International Monetary Fund (IMF) concluded today the 2025 Article IV consultation with Equatorial Guinea. IMF Management approved in June the combined first and second reviews under the Staff Monitored Program (SMP) and a 12 month SMP extension. Equatorial Guinea registered a mild economic recovery in 2024, but the economy is projected to grow weakly and a drain on regional reserves is expected to continue in the medium term as hydrocarbon production declines. The banking sector is showing clear signs of improvement. Performance under the program has been strong, with significant reforms implemented and a substantial fiscal adjustment that met the SMP conditionality. However, contrary to longstanding commitments, the authorities decided not to publish asset declarations of public officials. The program extension will provide the authorities with an opportunity to complete an alternative governance reform measure aimed at strengthening transparency in the extractive sector. The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Equatorial Guinea.[1] IMF Management approved the completion of the first and second reviews and a 12-month extension of the Staff Monitored Program (SMP) for Equatorial Guinea on June 25, 2025. The authorities have consented to the publication of the Staff Report prepared for this consultation.[2] Equatorial Guinea registered a mild economic recovery in 2024, growing by 0.9 percent following a strong contraction in 2023. However, non-hydrocarbon GDP growth slowed in 2024 to 1.3 percent, and the economy is expected to grow only modestly in the medium term as hydrocarbon production declines. Inflationary pressures have persisted, with inflation increasing from 2.5 percent in 2023 to 3.4 percent in 2024. The banking sector showed clear signs of improvement in 2024 but remains undercapitalized. The average capital adequacy ratio of the system is marginally below the regulatory minimum, but substantially higher than at the end of 2022. The authorities' substantial fiscal adjustment in 2024 improved the non-hydrocarbon primary balance from -22.3 percent of non-hydrocarbon GDP in 2023 to -17.0 percent in 2024. Public debt decreased from 39.1 percent to 36.4 percent of GDP. Equatorial Guinea's contribution to foreign reserves at the regional central bank remained negative in 2024, following a reserve loss in 2023. The authorities planned further fiscal adjustment will aim to keep public debt below 50 percent of GDP despite the projected decline in hydrocarbon revenues and restore external balance in the medium term. The authorities have implemented substantial reforms over the past year in the context of the SMP. The significant fiscal adjustment in 2024 helped initiate stabilization of the public debt dynamics and restoration of external balance. They enacted a new tax law that broadens the tax base, prepared a plan to phase out fuel subsidies, began making payments under a new arrears clearance strategy and reformed the customs administration. The authorities took concrete steps toward restoring the health of the financial sector. In an effort to improve governance and transparency, they also developed an AML/CFT strategy and published contracts in the extractive sector and an audit of spending following the accidental explosions in Bata in 2021. The authorities' policies have allowed them to meet almost all of the SMP's quantitative conditionality as well as complete actions related to most of their structural reform program commitments in the areas of governance, financial sector development and structural fiscal policy. The authorities missed two structural benchmarks following their decision not to publish the asset declarations of public officials. The 12-month SMP extension will afford the authorities the opportunity to complete an alternative governance reform measure – the publication of an extractive industry transparency report in line with EITI standards – while continuing to implement their broader reform agenda. Executive Board Assessment[3] Executive Directors agreed with the thrust of the staff appraisal. Directors welcomed the authorities' progress on their reform agenda under the Staff‑Monitored Program, noting its 12‑month extension. They stressed, however, that the macroeconomic environment remains challenging, particularly because of the continued decline in hydrocarbon production that is placing sustained pressure on fiscal and external balances. Directors urged steadfast reform implementation going forward, particularly to address long‑standing and serious governance challenges, which would help economic diversification and lay the foundation for private sector‑led, sustainable, and inclusive growth. Directors welcomed the authorities' decision to anchor public debt to preserve debt sustainability and restore external balance. They emphasized that this will require a gradual and sustained fiscal adjustment in the face of declining hydrocarbon revenues. Directors welcomed the commitment to achieving the 2025 budget and stressed the need for continued efforts to mobilize domestic non‑hydrocarbon revenues and strengthen fiscal institutions. Improving public financial management remains essential. Directors called for ambitious social spending reform to improve social outcomes and boost human capital development. They stressed the importance of approving the social protection law to enable the building of comprehensive social safety nets. Directors commended the progress made toward restoring the health of the financial sector—including the completion of the audit of the systemic public bank and the creation of an arrears clearance strategy—but noted that vulnerabilities remain. Directors highlighted the importance of obtaining approval from the regional banking supervisor for the arrears clearance plan, further strengthening private banks' balance sheets, and implementing the financial inclusion strategy. Directors urged the authorities to redouble their efforts to substantially improve transparency and governance. They regretted the authorities' decision to step back from the long‑standing commitment to publish asset declarations of public officials, and many Directors urged the authorities to reconsider this option. Directors considered that the publication of an annual report on financial flows in the extractive sector could help demonstrate the authorities' commitment to address their governance deficit. They recommended further governance reforms to address issues highlighted in the 2019 governance diagnostic, including implementing the AML/CFT strategy. A predictable and transparent business environment with reliable and efficient application of laws is needed to create a level playing field that would attract domestic and foreign investment. It is expected that the next Article IV consultation with Equatorial Guinea will be held on the standard 12‑month cycle. Table 1. Equatorial Guinea: Selected Economic and Financial Indicators, 2024–26 Estimates Projections 2024 2025 2026 (Annual percentage change, unless otherwise specified) Production, prices, and money Real GDP 0.9 -1.6 0.5 Hydrocarbon GDP1 0.4 -6.4 -2.6 Non-hydrocarbon GDP 1.3 2.3 2.8 GDP deflator 2.5 3.0 1.0 Consumer prices (annual average) 3.4 2.9 2.9 Consumer prices (end of period) 3.4 2.9 3.5 Monetary and exchange rate Broad money 2.6 2.7 2.9 Nominal effective exchange rate (- = depreciation) … … … External sector Exports, f.o.b. -7.1 1.6 -8.7 Hydrocarbon exports -8.4 1.7 -10.2 Non-hydrocarbon exports 2.6 1.8 1.0 Imports, f.o.b. -8.9 2.2 -1.9 Government finance Revenue -14.3 0.7 -5.0 Expenditure -0.7 4.9 -1.3 (Percent of GDP, unless otherwise specified) Government finance Revenue 17.9 17.8 16.7 Hydrocarbon revenue 14.5 14.3 13.0 Non-hydrocarbon revenue 3.4 3.5 3.7 Expenditure 18.5 19.1 18.6 Overall fiscal balance (Commitment basis) -0.6 -1.3 -1.9 Overall fiscal balance (Cash basis) -1.0 -2.0 -2.6 Non-hydrocarbon primary balance2 -11.7 -12.6 -12.3 Non-hydrocarbon primary balance (as percent of non-hydrocarbon GDP) -17.0 -17.4 -16.4 Change in domestic arrears -0.3 -0.7 -0.7 External sector Current account balance (including official transfers; - = deficit) -3.2 -3.3 -4.5 Imputed Foreign Reserves (net), US$billion 0.4 0.4 0.2 Debt Total public debt 36.4 37.0 38.4 Domestic debt 28.7 28.0 27.9 External debt 7.8 9.0 10.5 External debt service-to-exports ratio (percent) 6.2 5.7 6.2 External debt service/government revenue (percent) 7.9 7.4 7.7 Memorandum items Oil price (U.S. dollars a barrel)3 79.9 67.7 63.3 Nominal GDP (billions of CFA francs) 7,740 7,846 7,959 Nominal GDP (millions of US dollars) 12,769 12,881 13,138 Hydrocarbon GDP (billions of CFA francs) 2,401 2,193 1,971 Non-hydrocarbon GDP (billions of CFA francs) 5,340 5,653 5,987 Government deposits (in percent of GDP) 17.7 17.5 17.2 Oil volume (crude and condensado, millions of barrels) 29.1 26.8 25.1 Gas volume4 (millions of bbls oil equivalent) 51.8 49.2 49.5 Total Hydrocarbon Volume (in millions of barrels of oil equivalent) 81.0 76.0 74.7 Exchange rate (average; CFA francs/U.S. dollar) 606.2 … … Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections. 1 Including oil, LNG, LPG, butane, propane, and methanol. 2 Excluding hydrocarbon revenues, hydrocarbon expenditures, and interest earned and paid. 3 The reference price for crude oil is the Brent. 4 Includes LNG, propane, butane and methanol. [1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. [2] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the page. [3] At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: Distributed by APO Group on behalf of International Monetary Fund (IMF).

India-UK trade deal signals Modi's priorities as New Delhi eyes EU, US pacts
India-UK trade deal signals Modi's priorities as New Delhi eyes EU, US pacts

Dubai Eye

time4 hours ago

  • Dubai Eye

India-UK trade deal signals Modi's priorities as New Delhi eyes EU, US pacts

India's trade deal with Britain is a sign of New Delhi's new gradual shift to opening up its markets while shielding crucial sectors from competition and could be its template for future agreements, government officials and analysts said on Friday. Signed on Thursday and hailed by Prime Minister Narendra Modi as "a blueprint for our shared prosperity", the deal with the UK represents India's biggest ever strategic partnership with an advanced economy. It comes at a time rising global trade tensions and at a pivotal moment for India's historically protectionist trade strategy, as the Asian giant looks to strike similar deals with partners including the EU, US and New Zealand. Under the pact, India notably agreed to cut tariffs on imported British vehicles, opening up competition for a domestic industry that makes up nearly 7 per cent of the Indian economy. "This is a policy shift, especially as India has long used high tariffs to protect domestic manufacturers," Ajay Srivastava, founder of Global Trade Research Initiative and a former Indian trade negotiator, told Reuters. The easing of its protectionist stance also applies to government procurement and pharmaceuticals and will likely be replicated in deals with Brussels and Washington, he added. But it remains a cautious shift. Under the UK deal, auto imports will be capped under a quota system to shield local manufacturers, and tariff reductions will be gradual. India has committed to reducing auto tariffs from over 100 per cent to 10 per cent over 15 years, within an annual import quota starting at 10,000 units and rising to 19,000 in year five. Tariff reductions on whisky and other goods will also be phased over several years to allow domestic industries to adjust. RED LINES India has stuck to its red lines in the deal, making no concessions on agricultural items such as apples and walnuts or dairy products including cheese and whey. "There is no question of opening up the agriculture or dairy sector in any trade negotiation - be it with the EU, Australia, or even the US," a senior Indian official said. The calibrated strategy aims to leverage trade for economic growth, the official said, but the government will continue to shield millions of Indians dependent upon subsistence farming and low-margin work. Indian farmers are eyeing broadened access to the UK's $37.5 billion agriculture market under the deal. And Indian exporters will benefit from zero tariffs on goods including textiles, footwear, gems, furniture, auto parts, machinery, and chemicals. "With zero tariffs, India's garment exports to the UK could double in three years," said N. Thirukkumaran, general secretary of the Tiruppur Exporters Association. "This also paves the way for the EU agreement, which could bring even bigger gains," he added. But the strategy could face a major test in negotiations with US President Donald Trump's administration, which has used the threat of steep tariffs to pressure trading partners into making concessions. Trade Minister Piyush Goyal told Reuters on Thursday that India is also hopeful of reaching a trade agreement with Washington that includes "special and preferred treatment". But the US is pushing for greater access to India's agricultural and dairy markets.

Wall St opens steady as investors prepare for August 1 deadline
Wall St opens steady as investors prepare for August 1 deadline

Al Etihad

time6 hours ago

  • Al Etihad

Wall St opens steady as investors prepare for August 1 deadline

25 July 2025 17:46 (Reuters) Wall Street's main indexes opened steady on Friday following record closes for the S&P 500 and the Nasdaq in the previous session, while investors looked for signs of progress in trade talks as they braced for the August 1 tariff deadline. The Dow Jones Industrial Average rose 63.4 points, or 0.14%, at the open to 44757.28. The S&P 500 rose 6.7 points, or 0.10%, at the open to 6370.01​, while the Nasdaq Composite rose 2.0 points, or 0.01%, to 21059.941 at the opening bell.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store