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Arabian Post
5 days ago
- Business
- Arabian Post
Ghana Parliament Greenlights $2.8 Billion Debt Relief Deal
Ghana's parliament has given approval to a $2.8 billion debt restructuring agreement with 25 creditor nations, including China, France, the United States, Germany and the United Kingdom. This authorisation is vital for unlocking further disbursements from a $3 billion IMF-backed bailout programme initiated in May 2023. Lawmakers, endorsing the restructuring unanimously, approved measures under a memorandum of understanding signed in January 2025 that reschedule debt payments falling due between 20 December 2022 and 31 December 2026. Repayment has been deferred until the 2039–2043 period, affording Ghana over 15 years of fiscal breathing space. Interest on the restructured debt will be set between 1% and 3%, significantly below prevailing market rates. This intervention, coordinated through the Official Creditor Committee, is poised to fortify Ghana's macroeconomic stability by easing immediate liquidity pressures and supporting long-term debt sustainability. ADVERTISEMENT Since defaulting on most of its external debt in December 2022, Ghana—Africa's second-largest cocoa producer—has worked to stabilise its economy amid high inflation, a depreciating currency and contractionary pressures. The IMF bailout has helped to arrest market downgrade momentum, including a ratings revision from Fitch. Finance Minister Cassiel Ato Forson described the deal as a turning point, enabling a reduction in debt-to-GDP to around 55% by 2026 and the debt-service-to-revenue ratio to fall below 18% by 2028. He noted the government plans to channel the fiscal space created into critical development sectors such as infrastructure, agriculture and energy. Despite official creditor backing, Ghana still faces negotiations with commercial creditors over approximately $2.7 billion in private loans. These discussions, guided by the 'comparability of treatment' principle and the most-favoured-creditor clause, aim to prevent preferential terms and ensure cohesion between official and commercial agreements. Analysts caution that failure to finalise terms with private lenders could delay full debt relief and weigh on investor confidence, even as official support strengthens. This parliamentary action is expected to unlock the next IMF tranche under the three-year programme, which will in turn support Ghana's ongoing fiscal consolidation and monetary stabilisation efforts. Reaction from the business community has been cautiously optimistic. Observers note that by deferring large debt repayments until the late 2030s and capping interest rates, Ghana can prioritise capital investments and social spending in the short to medium term. However, success will be contingent on continued IMF compliance, central bank tightening to curb inflation, and the outcome of upcoming commercial creditor talks. As Ghana progresses towards formalising these bilateral agreements, experts suggest that solidifying its economic reform agenda will be essential. Any reversal or lack of follow-through risks undermining the country's debt trajectory ahead of contested elections scheduled for 2026.
Business Recorder
24-06-2025
- Business
- Business Recorder
Towards a climate-informed NFC Award
EDITORIAL: Planning Minister Ahsan Iqbal's recent announcement that the federal government is contemplating a revision to the criteria for the National Finance Commission (NFC) Award to better reflect the country's ecological and environmental realities deserves careful consideration. It signals a growing recognition of the need for climate-aware fiscal frameworks that ensure more equitable resource distribution. Terming the current population-based formula — where 82 percent weightage is given to population and the rest to factors like poverty, revenue generation and inverse population density — as 'regressive', he indicated that the government will push for including climate adaptation and other social sector indicators as key criteria when the NFC convenes for a crucial meeting in August. This marks the latest signal of the Centre's intent to reduce the dominant role population plays in shaping the inter-provincial fiscal compact. In recent months, Finance Minister Muhammad Aurangzeb has also called for a 'fundamental rethink' of the population-heavy NFC formula. And given the trajectory of the economy since the 7th NFC Award came into effect in 2009, the case for revisiting the fiscal distribution framework looks increasingly compelling. By disproportionately prioritising population, the NFC formula has long overlooked structural inequities among the provinces in terms of development indicators, infrastructure and security needs. Worse still, it has created a perverse incentive for unchecked population growth, placing unsustainable pressure on economic, environmental and social resources, while also deepening the climate crisis. A runaway annual population growth rate of 2.55 percent rapidly depleting the country's already strained resources, and a worsening climate crisis battering the economy and upending millions of lives, in fact, together form the twin existential threats confronting us. Given this, it is encouraging that the government is not just reconsidering the NFC framework, it has also directed a sizeable share of the upcoming fiscal year's budget towards climate-resilient development. However, the budget document is marred by policy contradictions and a lack of clarity on how it intends to prioritise climate-related goals. A notable feature of the budget is the rollout of the IMF-backed Climate Budget Tagging tool, aimed at identifying and categorising Public Sector Development Programme expenditures according to their relevance to climate objectives. Under this framework, projects are categorised under either adaptation, mitigation, or supporting activities. To this end, the government has allocated Rs85.43 billion for adaptation — measures aimed at preparing for climate change impacts, like floods — Rs603 billion for mitigation, which focuses on reducing emissions, and Rs28.33 billion for supporting functions, including research and institutional development. While the largest share of the funding has gone to mitigation, the finance minister has repeatedly stressed that our most pressing challenge remains adaptation – an entirely valid assertion, given that this category encompasses a wide range of critical initiatives like flood protection, water resource management and climate-resilient agriculture. Yet, the funds set aside for adaptation remain disproportionately small. There seems to be little focus on developing new drought-resistant crop varieties, retrofitting aging infrastructure to protect against extreme weather, or establishing robust early warning systems. Furthermore, contradictions within the mitigation framework are also evident: a 2.5 percent carbon levy has been imposed on the fossil fuel industry, but any benefit accrued here will just be undermined by the simultaneous duties introduced on solar imports. Crucially, funding for the climate change ministry has been slashed from Rs3.5 billion to Rs2.7 billion, hindering climate research and capacity building. Given this, policymakers must recognise that a climate-informed revision of the NFC Award, while welcome, must be matched by greater coherence in the national climate agenda. The budget reflects troubling contradictions and lack of clear direction, particularly in its neglect of urgently needed adaptation efforts. Unless these gaps are addressed, any shift in fiscal thinking will struggle to deliver meaningful results. Copyright Business Recorder, 2025
See - Sada Elbalad
22-06-2025
- Business
- See - Sada Elbalad
Euro Surges Against Egyptian Pound to Over 30-Piaster Jump
Taarek Refaat The euro witnessed a notable surge against the Egyptian pound on Sunday, marking a significant start to the banking first day of the week in Egypt. The exchange rate climbed by more than 30 piasters compared to Saturday's rates, reflecting growing foreign exchange pressures amid ongoing economic reforms and global uncertainty. According to official data from Egyptian banks, the euro traded at EGP 58.09 for purchase and EGP 58.21 for sale at the Central Bank of Egypt (CBE). At Egypt's two largest state-owned banks—National Bank of Egypt and Banque Misr—the euro climbed even higher, recording EGP 58.33 to buy and EGP 58.71 to sell. Sunday's rate spike marks one of the strongest weekly openings for the euro in Egypt this year, following a series of steady gains throughout June. Compared to early June—when the euro hovered around EGP 56.4–56.6—the current exchange rate reflects a total increase of nearly 2 Egyptian pounds in just over two weeks. 'The sharp appreciation of the euro against the pound highlights renewed pressure on Egypt's foreign exchange market,' said a senior currency trader at a private Cairo bank, speaking on condition of anonymity. 'It may be due to a mix of reduced hard currency inflows, seasonal demand, and adjustments linked to the government's ongoing economic reform agenda.' Egypt continues to navigate a complex economic landscape as it implements IMF-backed reforms. These include a more flexible exchange rate regime, subsidy cuts, and efforts to attract foreign direct investment. While these policies are aimed at stabilizing long-term economic fundamentals, they have also resulted in short-term volatility in the local currency. The euro's strength may also be tied to regional and global factors. Analysts point to tighter European Central Bank policy, geopolitical tensions, and shifting investor sentiment in emerging markets as contributing forces behind capital outflows from Egypt and similar economies. For Egyptian households and businesses, the rise in euro prices adds further pressure to an economy already grappling with inflation and rising import costs. Imported goods priced in euros—ranging from pharmaceuticals to industrial equipment—are likely to become more expensive if the trend continues. Tourists traveling to Europe this summer will also feel the pinch, as the cost of exchanging pounds for euros rises sharply. Meanwhile, Egyptian exporters and those receiving remittances in euros may find some relief in the stronger European currency. Euro bills read more CBE: Deposits in Local Currency Hit EGP 5.25 Trillion Morocco Plans to Spend $1 Billion to Mitigate Drought Effect Gov't Approves Final Version of State Ownership Policy Document Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister Qatar Agrees to Supply Germany with LNG for 15 Years Business Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves Business Suez Canal Records $704 Million, Historically Highest Monthly Revenue Business Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday Business Wheat delivery season commences on April 15 News China Launches Largest Ever Aircraft Carrier Sports Former Al Zamalek Player Ibrahim Shika Passes away after Long Battle with Cancer Lifestyle Get to Know 2025 Eid Al Adha Prayer Times in Egypt Business Fear & Greed Index Plummets to Lowest Level Ever Recorded amid Global Trade War Arts & Culture Zahi Hawass: Claims of Columns Beneath the Pyramid of Khafre Are Lies News Flights suspended at Port Sudan Airport after Drone Attacks Videos & Features Video: Trending Lifestyle TikToker Valeria Márquez Shot Dead during Live Stream News Shell Unveils Cost-Cutting, LNG Growth Plan Technology 50-Year Soviet Spacecraft 'Kosmos 482' Crashes into Indian Ocean Videos & Features Tragedy Overshadows MC Alger Championship Celebration: One Fan Dead, 11 Injured After Stadium Fall
Business Recorder
16-06-2025
- Business
- Business Recorder
Crisis-hit Sri Lanka vows reforms as growth slows
COLOMBO: Sri Lanka's president on Monday vowed to press ahead with unpopular reforms, including the closure of loss-making state institutions, as official data showed economic expansion slowing down. President Anura Kumara Dissanayake said maintaining the country's 1.5 million-strong public service was unsustainable and that there would be cutbacks. Addressing an IMF-backed review of the country's economic recovery from the unprecedented meltdown of 2022, the leftist president said he has identified several state institutions to be shut down. 'We have already decided that certain state institutions should be closed,' Dissanayake said, without naming them. 'These institutions were established in response to the socio-economic needs of a bygone era, which are no longer relevant.' Sri Lanka to discuss with IMF about measures to attract foreign investment, president says He added that the government would retain its hold on the energy and financial sectors, which he considered 'sensitive to the economy.' Dissanayake's remarks came as the census department said the country's economy expanded by 4.8 percent in the first quarter of this year, down from 5.4 percent in the previous quarter and 5.3 percent a year ago. The island's worst economic performance was in 2022, when GDP shrank by 7.3 percent after the country ran out of foreign exchange to finance even the most essential imports such as food and fuel. After two consecutive declines in GDP in 2022 and 2023, Sri Lanka's economy recorded positive growth of 5.0 percent in 2024, indicating the country was emerging from its worst crisis. Months of shortages led to street protests that eventually forced then-president Gotabaya Rajapaksa to step down in July 2022. His successor, Ranil Wickremesinghe, secured a $2.9 billion, four-year bailout loan from the IMF. However, Wickremesinghe lost the September elections to Dissanayake, who has done a U-turn on his election pledges to renegotiate the terms of the bailout and has maintained austerity. Dissanayake said he was committed to reforms in line with the International Monetary Fund's prescriptions and hoped it would be the island's last bailout. The current IMF bailout is its 17th. 'By the year 2028, we aspire to build a stable economy with sufficient growth to service our debt independently,' he said. Dissanayake has signed off on a controversial debt restructuring his predecessor had agreed with both bilateral and private creditors.
Kuwait Times
13-06-2025
- Business
- Kuwait Times
Sri Lanka raises electricity price in line with IMF bailout
COLOMBO: A train arrives at a station in Colombo.- AFP COLOMBO: Cash-strapped Sri Lanka on Wednesday announced a 15 percent increase in the electricity price to shore up revenues for the state-run utility, in line with conditions imposed by an IMF bailout. The Public Utilities Commission said it allowed the Ceylon Electricity Board (CEB) to charge the higher rates from Thursday, six months after a controversial reduction that pushed the utility into the red. The government had forced a 20 percent price cut on the CEB in January, despite fears that it would cause the government-owned company to lose money and undermine the national budget. Ensuring cost-recovery and doing away with subsidies is in line with the conditions set by the International Monetary Fund, which granted a four-year, $2.9 billion loan to help salvage Sri Lanka's economy. The country had declared bankruptcy after defaulting on its $46 billion foreign debt in April 2022, having run out of foreign exchange to finance even the most essential imports, such as food, fuel and medicines. Months of protests over shortages led to the toppling of then-president Gotabaya Rajapaksa in July 2022. His successor, Ranil Wickremesinghe, secured the IMF bailout and proceeded to cut subsidies and raise taxes. Wickremesinghe lost the September election, but his successor, Anura Kumara Dissanayake, is pushing ahead with the IMF-backed reforms. Inflation, which peaked at nearly 70 percent in September 2022, has dropped sharply, and the country has been experiencing deflation since September. The IMF says Sri Lanka is slowly emerging from its worst meltdown and that the economy has turned around, although risks remain.- AFP
