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Daily Analysis for Monday May 20

Posted on 21 May 2013 by Africa Business

This week begins with great anticipation for profitable trading opportunities. Banks in Europe and Canada will be closed on Monday, but traders could take advantage of the release of the Australian Monetary Policy Meeting Minutes. Later in the week, we are expecting inflation and retail sales data out the United Kingdom. These announcements will surely pave a clear direction for the British Pound. Meanwhile, home sales in the world’s largest economy will be put forth on Thursday. Whether the U.S. dollar is affected, that remains to be seen.


Friday’s inflation report was softer than consensus expectations. Headline CPI is increasing at its slowest since October 2009 when the economy was still experiencing the consequences of the recession. In this environment, inflation is clearly not the main radar the Bank of Canada is looking at for now, but growth is. Given our expectations of subpar growth for 2013, rate hikes in Canada are unlikely anytime soon. Look for the Loonie to continue weakening in the coming days.

Stop loss 1.0250

Take profit 1.0315


The yellow metal started the new week on the wrong foot, tumbling during Monday’s morning session as traders increased their bearish bets on this commodity. It has been falling since October 2012, with the sharpest market movement taking place just last month. We have recently reached the lowest point last seen on April 14th. Traders are advised to hold onto their short positions until further notice. We expect to reach $1,300 within days, possibly by Thursday of this week.

Stop loss $1,370

Take profit $1,300


The Bank of Israel surprised with a 25 basis point rate cut to 1.5% last week, an intra-meeting move. The next scheduled meeting is set for May 27th. We’ve been looking for more cuts, especially as the Shekel has strengthened in recent weeks. As it cut rates, the central bank noted that the shekel has been boosted by natural gas sales and global monetary easing. Furthermore, the Bank of Israel announced a plan to increase its holdings of foreign exchange in an effort to offset the money from gas sales. For now, the high probability of sequential rate cuts suggests this pair is likely to continue heading north. We’re currently aiming at 3.6370.

Stop Loss 3.6316

Take profit 3.6370

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IMF Concludes Article IV Mission to Cameroon

Posted on 15 May 2013 by Africa Business

YAOUNDE, Cameroon, May 15, 2013/African Press Organization (APO)/ An International Monetary Fund (IMF) mission, led by Mr. Mario de Zamaróczy, visited Cameroon during April 29–May 14, 2013 to conduct the 2013 Article IV Consultation. The mission met with Prime Minister Philémon Yang, Minister Secretary General at the Presidency Ferdinand Ngoh Ngoh, Minister of Finance Alamine Ousmane Mey, Minister of Economy, Planning, and Territorial Development Emmanuel Nganou Djoumessi, several other ministers, the Vice Governor and the National Director of the Bank of Central African States (BEAC), other senior officials, and representatives of the private sector, labor unions, civil society organizations, and development partners. The discussions focused on recent economic and financial developments, the 2013 budget, and the economic outlook for 2013 and beyond. At the end of the mission, Mr. de Zamaróczy issued the following statement:

“Recent macroeconomic developments were broadly in line with the projections made at the time of the previous mission in fall 2012. Growth reached 4.4 percent in 2012 (from 4.1 percent in 2011), thanks to a rebound in oil production. Inflation has been moderate, with a 2.4 percent consumer price increase in 2012. Credit to the economy remained subdued and rose by about 2.6 percent.

“Looking ahead, gross domestic product (GDP) growth is projected to accelerate to about 4.8 percent in 2013 and to rise to 5.5 percent a year in the medium term, fuelled by an expected rise in oil production and projected increases in public investment in infrastructure. However, growth would need to be sustained at a higher level for Cameroon to reach its objective of becoming an upper-middle income country by 2035.

“The discussions between the authorities and the mission focused on efforts to spur reforms and set Cameroon on a higher growth path, while mitigating risks to macroeconomic and financial sector stability. The mission recommended closely monitoring public investment in infrastructure to improve its effectiveness and governance. At the same time, the business climate needs to be improved to promote private sector involvement. The mission was encouraged by steps taken to set up the National Public Debt Committee to oversee the financing strategy of public investment plans.

“The mission recommended better allocation of public spending to help close the financing gap in 2013, and improved public finance management to preserve medium-term sustainability and rebuild fiscal space.

“The mission expressed its concern regarding fuel price subsidies. The mission believes that those subsidies are excessively costly and hard to justify, given that only a small share of these subsidies actually benefits the poor. Consequently, the mission encouraged the authorities to phase out these subsidies and replace them with better-targeted social transfer programs.

“The Cameroonian financial sector is saddled with some smaller-size banks that require prompt resolution. The mission encouraged the authorities to move swiftly in cooperation with the regional supervisor, the Commission Bancaire d’Afrique Centrale (COBAC), to protect depositors while minimizing the fiscal cost. The mission encouraged the authorities to accelerate reforms to improve the lending climate. The mission was heartened by the creation of a credit assessment database that will be available in June.

“The IMF’s Executive Board is expected to examine the report on the 2013 Article IV Consultation with Cameroon in June 2013. The mission would like to thank the authorities for their warm hospitality, excellent cooperation, and constructive dialogue.”



International Monetary Fund (IMF)

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IMF Executive Board Concludes 2013 Article IV Consultation with Seychelles

Posted on 15 May 2013 by Africa Business

VICTORIA, Mahé, May 15, 2013/African Press Organization (APO)/ On May 8, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Seychelles. 1


In the few years since the 2008 debt crisis, Seychelles has made remarkable strides, quickly restoring macroeconomic stability and creating room for private-sector activity. Macroeconomic developments in the tourism-based island economy have been favorable, despite the challenging global environment. Notably, growth held up as the tourism industry successfully attracted arrivals from non-traditional markets as European arrivals slumped, while a surge in foreign direct investment (FDI) supported construction in recent years. For the most part, inflation remained contained, and the external position improved markedly following liberalization of the exchange rate in 2008 and debt restructuring started in 2009.

In 2012, despite robust tourist arrivals, growth moderated to 2.9 percent as large investment projects were completed. Inflation spiked in July 2012 to 8.9 percent fueled by global as well as domestic developments, but has since abated as a result of successful monetary tightening. The external position continued to improve, albeit modestly. In particular, the current account deficit declined slightly, but remained high at around 22 percent of gross domestic product (GDP), but was fully financed by FDI and external borrowing, leading to a modest rise in reserves. Debt restructuring is nearly complete, with only one loan agreement awaiting signature.

Fiscal policy in 2012 continued to support debt sustainability. The primary surplus is projected to have risen to 6.2 percent of GDP, in part due to sizable windfall revenues which were partly saved. Buoyant revenue and grants paved the way for needed capital expenditure. Notwithstanding, public debt increased by over 3 percentage points of GDP due mostly to currency depreciation and the government assuming liabilities of Air Seychelles.

Monetary policy was tightened sharply in 2012 in response to rising inflation and an unhinging of the exchange rate, and has since been relaxed. Starting in late-2011, rising global food and fuel prices coupled with adjustments in administered prices pushed prices higher. This was reinforced by current account pressures resulting from lower exports of transportation services in the wake of the restructuring of Air Seychelles. The looming inflation-depreciation spiral was broken in mid-2012 by two small foreign exchange market interventions by the Central Bank of Seychelles and a tightening of monetary policy. By end-2012, inflation had fallen to 5.8 percent and the exchange rate had strengthened beyond its end-2011 level.

Broad-based structural reform over the past five years has worked to improve financial performance of the public sector and increase private sector participation in economic activity. Statistical capacity continues to be strengthened. Seychelles subscribes to the IMF’s General Data Dissemination Standard (GDDS) and is making progress at compiling higher frequency economic data which will support strengthened macroeconomic oversight and analysis.

Executive Board Assessment

Executive Directors commended the authorities for their strong policy implementation. Macroeconomic stability has been restored and growth has remained resilient. While the outlook is favorable, the economy is vulnerable to an uncertain global environment and domestic risks. Directors called for continued commitment to sound policies and structural reforms to preserve macroeconomic and financial stability, build policy buffers, and foster strong and inclusive growth.

Directors welcomed the steps to improve financial discipline at the central government level and the recent introduction of the VAT. They agreed that strengthening the oversight and financial position of parastatals, including through adequate price mechanisms, and further progress in public financial management will be key to ensuring fiscal sustainability. For the medium term, Directors supported the authorities’ fiscal policy stance which aims at targeting a primary fiscal surplus and reducing public debt to 50 percent of GDP. They welcomed that the debt restructuring is nearly complete and encouraged the authorities to exercise caution when contracting new external debt.

Directors called for continued efforts to improve the monetary framework in order to stabilize inflation expectations and policy interest rates. Absorbing excess liquidity over time will be important to strengthen the monetary anchor and monetary transmission mechanism. Directors considered that a further increase in international reserves, as market conditions permit, would provide a stronger buffer against shocks. Directors noted that the financial system is sound and welcomed the steps being taken to improve the functioning of the credit market.

Directors commended the efforts towards improving the business and investment climate, which is key to avoid a potential middle-income trap and to support broad-based growth. They encouraged the authorities to foster private sector-led growth by addressing infrastructure gaps, engendering lower cost and improved access to credit, correcting data weaknesses, and moving ahead with plans for greater workforce education and capacity building.


Seychelles: Selected Economic and Financial Indicators, 2010–14


2010    2011    2012    2013    2014

Actual    Actual    Est.    Proj.    Proj.


(Percentage change, unless otherwise indicated)

National income and prices


Nominal GDP (millions of Seychelles rupees)

11,746    13,119    14,145    15,292    16,461

Real GDP

5.6    5.0    2.9    3.3    3.9

CPI (annual average)

-2.4    2.6    7.1    4.5    3.4

CPI (end-of-period)

0.4    5.5    5.8    4.3    3.1

GDP deflator average

-3.6    6.4    4.8    4.6    3.6

(Percentage change, unless otherwise indicated)

Money and credit


Credit to the economy

21.4    6.2    2.5    13.0    …

Broad money

13.5    4.5    -2.3    0.1    …

Reserve money

34.7    -2.7    6.9    12.3    …

Velocity (GDP/broad money)

1.6    1.7    1.9    2.1    …

Money multiplier (broad money/reserve money)

4.2    4.5    4.1    3.6    …

(Percent of GDP)

Savings-Investment balance


External savings

23.0    22.7    21.7    23.2    18.4

Gross national savings

13.6    12.4    17.3    15.1    15.5

Of which: government savings

7.8    10.6    14.3    12.1    11.0

Gross investment

36.6    35.1    39.0    38.2    33.8

Of which: government investment

8.6    8.1    12.0    9.2    7.8

Government budget

Total revenue, excluding grants

34.1    35.8    37.6    36.4    35.6

Expenditure and net lending

32.5    35.7    40.2    38.5    36.0

Current expenditure

27.2    27.6    28.8    28.8    27.3

Capital expenditure and net lending

5.3    8.1    11.4    9.8    8.7

Overall balance, including grants

2.5    2.5    2.4    1.8    2.0

Primary balance

8.6    5.4    6.2    5.1    4.4

Total public debt

81.6    74.3    77.3    72.0    65.3


32.5    28.0    27.7    25.7    18.6


49.1    46.2    49.6    46.3    46.7

(Percent of GDP, unless otherwise indicated)

External sector


Current account balance including official transfers

-23.0    -22.7    -21.7    -23.2    -18.4

Total stock of arrears (millions of U.S. dollars)

30.3    9.0    2.7    …    …

Total public external debt outstanding (millions of U.S. dollars)

478    490    512    558    597

(percent of GDP)

49.1    46.2    49.6    46.3    46.7

Terms of trade (= – deterioration)

-6.7    -6.4    -0.4    0.6    1.2

Real effective exchange rate (average, percent change)

4.4    -7.4    …    …    …

Gross official reserves (end of year, millions of U.S. dollars)

254    277    305    317    326

Months of imports, c.i.f.

2.3    2.5    2.6    2.7    2.7

Exchange rate

Seychelles rupees per US$1 (end-of-period)

12.1    13.7    13.0    …    …

Seychelles rupees per US$1 (period average)

12.1    12.4    13.7    …    …


Sources: Central Bank of Seychelles; Ministry of Finance; and IMF staff estimates and projections.

1 Excludes debt issued in 2012 for monetary purposes (5.4 percent of GDP), as proceeds are kept in a blocked account with the Central Bank.

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. At the conclusion of the discussion, the Managing Director, as Chairman 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:



International Monetary Fund (IMF)

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Posted on 14 May 2013 by Africa Business

Will the Chinese purchase divested mining interests?

South Africa’s economic growth is lagging somewhat behind that of its peers in the developing world. IMF forecasts for 2013 indicate that emerging and developing economies will grow by 5,5% while SA’s GDP is expected to grow between 2,5% and 3%.

Global ranking

Country Name

GDP in Millions of US dollars (2011)


South Africa














One of the key reasons for slower growth is SA’s foreign trade structure and reliance on Europe. President Zuma used the opportunity at the World Economic Forum in Davos earlier this year to ensure foreign investors that South Africa is on the right track.

2012 will be remembered for the negative impact of labour unrest and resultant production stoppages in the mining sector. Mining reduced GDP by 0,5% in the first three quarters of the year. This excludes the biggest slump in the sector during the fourth quarter 2012.

Other significant features of the growth slowdown in 2012 were the slowdown in household consumption spending, poor growth in private fixed investment spending and a slump in real export growth.

South African’s inflation rate slowed to a five-month low in January 2013 after the statistics office adjusted the consumer price basket while food and fuel prices eased. In December, the inflation rate fell to 5,4% from 5,7% Statistics South Africa stated.

Government cut the price of fuel by 1,2% in January 2013, as a stronger rand in the previous month helped to curb import costs. Since then, the currency has plunged 4,8% against the dollar and fuel prices are on the rise, with prices increasing in March by a further 8%, adding to pressure on inflation.

South Africa’s strengths

· South Africa is the economic powerhouse of Africa, leading the continent in industrial output and mineral production, generating a large portion of the continent’s electricity.

· The economy of South Africa is the largest in Africa, accounting for 24% of the continent’s GDP in terms of PPP, and is ranked as an upper-middle income economy by the world bank.

· The country has abundant natural resources, well developed financial, legal and transport sectors, a stock exchange ranked amongst the top 20 in the world, as well as a modern infrastructure supporting efficient distribution of goods throughout the Southern African region.

South Africa’s weaknesses

· South Africa suffers from a relatively heavy regulation burden when compared to most developed countries.

· Increasing costs for corporates with rising wages.

· Poverty, inequalities sources of social risk mixed with high unemployment and shortage of qualified labour.


Output in the mining sector remained weak in December with total mining production down by 7,5% y-o-y after falling by a revised 3,8% (previously -4,5%) in November. On a monthly basis production rose by a seasonally adjusted 1,2% compared with 12,0% in November. Non-gold output was down by 5,0% y-o-y, while gold production slumped by 21,2% in December. For the fourth quarter, total mining production fell by a seasonally-adjusted and annualised 4,6% q-o-q as output of most minerals dropped.

For 2012 as a whole, mining volumes fell by 3,1% after contracting by 0,9% in 2011. Mineral sales were down by 15,6% y-o-y in November after falling 13,7% in October. On a monthly basis sales rose by a seasonally-adjusted 2,3% in November, but sales were down by a seasonally-adjusted 10,2% in the three months to November after declining by 6,8% in the same period to October. These figures indicate that the mining sector is still reeling from the devastating effects of widespread labour strikes in the third and early fourth quarters.

Prospects for the mining sector remain dim as the industry faces headwinds both on the global and domestic fronts. Globally, commodity prices are not likely to make significant gains as demand conditions remain relatively unfavourable. Locally, tough operating conditions persist. Rapidly rising production costs, mainly energy and labour costs, are likely to compel mining companies to scale back operations or even halt them in some cases.

This will have a negative impact on production, with any improvements coming mainly from a normalisation of output should strike activity ease. These numbers, together with other recent releases, suggest that GDP growth for the fourth quarter was around 2,0%, with overall growth of 2,5% for the year as a whole. Overall economic activity in the sector therefore remains generally sluggish while upside risks to inflation have increased due to the weaker rand.


Annual growth in retail sales slowed to 2,3% in December from 3,6% in the previous month. Over the month, sales rose by a seasonally-adjusted 1,0%, causing sales for the last quarter of 2012 to decline by 0,2% following 2,1% growth in the third quarter.

As a whole, 2012 retail sales rose by 4,3%, slightly down from 5,9% in 2011. Consumer spending is likely to moderate during 2013 as weak consumer confidence, heightened worries about job security and high debt, make consumers more cautious about spending on non-essential items. The overall economic outlook remains weak and fragile, while inflation may increase due to the weaker rand.


Annual growth in manufacturing production slowed to 2,0% in December 2012 from 3,7% in the previous month, versus the consensus forecast of 2,9%. The increase in output was recorded in seven of the ten major categories. Significant contributions came from petroleum, chemical products, rubber and plastic products. Over the month, total production fell by 2,2% on a seasonally adjusted basis following a 2,6% rise in November.

On a quarterly basis, however, production improved by 1,6% in the final quarter of 2012 following two quarters of weaker growth. Both local and international economic conditions are expected to improve only moderately during 2013. A weak Eurozone will continue to hurt the large export-orientated industries.

The recent recovery in infrastructure spending by the public sector will probably support the industries producing capital goods and other inputs for local projects. But the growth rate will be contained by slower capital expenditure by the private sector in response to the bleaker economic environment both locally and internationally.

Therefore, while a moderate recovery in manufacturing production will continue in 2013, no impressive upward momentum is expected. Overall economic activity remains generally sluggish while upside risks to inflation have increased due to a weaker rand.


A new economic plan, the National Development Plan (NDP), is likely to be adopted in 2013 promoting low taxation for businesses and imposing less stringent employment requirements. This a measure that the ANC is pursuing ahead of the 2014 national elections. The NDP will encourage partnerships between government and the private sector, creating opportunities in petrochemical industries, metal-working and refining, as well as development of power stations.

Construction companies are especially likely to benefit from government plans to invest $112-billion from 2013 in the expansion of infrastructure as part of the NDP. Some 18 strategic projects will be launched to expand transport, power and water, medical and educational infrastructure in some of the country’s least developed areas.

Energy companies will also benefit, following the lifting of a moratorium on licences for shale gas development. Meanwhile, there will be significant opportunities, especially for Chinese state-owned enterprises that have recently made high-profile visits to South Africa, to acquire divested assets in the platinum and gold mining sector as large mining houses withdraw from South Africa.

According to government reports, the South African government will have spent R860-billion on new infrastructure projects in South Africa between 2009 and March 2013. In the energy sector, Eskom had put in place 675 kilometers of electricity transmission lines in 2012, to connect fast-growing economic centers and also to bring power to rural areas. More than 200 000 new households were connected to the national electricity grid in 2012. Construction work is also taking place in five cities including Cape Town, Port Elizabeth, Rustenburg, Durban and Pretoria to integrate different modes of transport.

Business Climate

Due to South Africa’s well-developed and world-class business infrastructure, the country is ranked 35th out of 183 countries in the World Bank and International Finance Corporation’s Doing Business 2012 report, an annual survey that measures the time, cost and hassle for businesses to comply with legal and administrative requirements. South Africa was ranked above developed countries such as Spain (44) and Luxembourg (50), as well as major developing economies such as Mexico (53), China (91), Russia (120), India (132) and Brazil (126).

The report found South Africa ranked first for ease of obtaining credit. This was based on depth of information and a reliable legal system.

Foreign trade

SA’s trade deficit narrowed to R 2,7-billion in December from R7,9-billion in November on account of seasonal factors. The trade balance usually records a surplus in December due to a large decline in imports. Exports declined 9,8% over the month. The decrease was mainly driven by declines in the exports of base metals. Vehicles, aircraft and vessels (down R1,1-billion), machinery and electrical appliances (down R0,9-billion) and prepared foodstuffs, beverages and tobacco (down 0,8-billion). Imports dropped 15,8% m-o-m.

Declines in the imports of machinery and electrical appliances (down R3,3-billion), original equipment components; (R1,8-billion), products of the chemicals or allied industries (R1,5-billion) and base metals and articles thereof (R1,2-billion) were the main drivers of the drop.

The large trade deficit for 2012 is one of the major reasons for the deterioration in the 2012 current account deficit forecast to 6,2% of GDP from 3,3% in 2011. South Africa’s trade performance will remain weak in the coming months on the back of unfavourable global conditions and domestic supply disruptions. Weak global economic conditions will continue to influence exports and growth domestically.

Skills and education

The need to transform South Africa’s education system has become ever more urgent, especially given the service delivery issues that have plagued the system. While government continues to allocate a significant amount of its budget to education (approximately 20%), it has not been enough to transform the schooling system. Coface expects the government to continue to support this critical sector, but that an opportunistic private sector will take advantage of government inefficiencies.

South Africa’s education levels are quite low compared to other developed and developing nations. South Africa began restructuring its higher education system in 2003 to widen access to tertiary education and reset the priorities of the old apartheid-based system. Smaller universities and technikons (polytechnics) were incorporated into larger institutions to form comprehensive universities.


The total number of civil judgments recorded for debt in South Africa fell by 9,8% year on year in November 2012 to 35 268, according to data released by Statistics South Africa. The total number of civil judgments recorded for debt decreased by 15,2% in three months ended November 2012 compared with the three months ended November 2011.

The number of civil summonses issued for debt fell 23,9% year-on-year to 70 537. During November, the 35 268 civil judgments for debt amounted to R414,1-million, with the largest contributors being money lent, with R142,5-million. There was a 21,9% decrease in the total number of civil summonses issued for debt in the three months ended November last year compared with the same period in 2011. A 23,9% y-o-y decrease was recorded in November.

South Africa maintains respectable debt-to-GDP ratios, although these grew to 39% of GDP by end-2012, substantially higher than the 34% for emerging and developing economies as a whole. When Fitch downgraded SA earlier this year, it specifically mentioned concerns about SA’s rising debt-to-GDP ratio, given that the ratio is higher than the country’s peers.

South Africa is uniquely exposed to foreign investor sentiment through the deficit on the current account combined with liquid and deep fixed interest markets. SA’s widening deficit on the current account is a specific factor that concerns the rating agencies and is one of the metrics the agencies will use to assess SA’s sovereign risk in the near future. Further downgrades are the risk – potentially driven by foreign investor sentiment about political risks.

Political landscape

Persistent unemployment, inequality and the mixed results of BEE (Black Economic Empowerment) intended to favour access to economic power by the historically disadvantaged populations have led to disappointment and resentment.

Social unrest is increasing. Recent events weakened the ruling coalition which came under fire for its management of these events. Tensions could intensify in the run up to the 2014 presidential elections. South Africa has a well-developed legal system, but government inefficiency, a shortage of skilled labour, criminality and corruption are crippling the business environment. South Africa also has a high and growing youth unemployment, high levels of visible inequality and government corruption so we would keep an eye on the escalating service delivery protest trends.

Labour force

The unemployment rate fell to 24,9% in the fourth quarter of 2012 from 25,5% in the third quarter, mainly reflecting an increase in the number of discouraged work seekers. Over the quarter, a total of 68 000 jobs were lost while the number discouraged work seekers rose by 87 000. The formal non-agricultural sector lost 52 000 jobs over the quarter, while the informal sector, in contrast, employed 8 000 more people. The breakdown shows that the highest number of jobs were lost in the private households category (48 000), followed by the trade and transport sectors, which shed 41 000 and 18 000 jobs respectively.

The agricultural sector led employment creation over the quarter, adding 24 000 jobs. Both local and international economic conditions are expected to improve only moderately during 2013.

Weak confidence and high wage settlement will make firms more cautious to expand capacity and employ more people this year. Government is likely to be the main driver of employment as it rolls out its infrastructure and job creation plans. The unemployment rate will therefore remain high in the short term.

Although the reduction in the unemployment rate is good news, it mainly reflects the large number of discouraged work seekers. Overall economic activity remains generally sluggish while upside risks to inflation have increased due to a weaker rand. Coface believes that this will persuade the Monetary Policy Committee to keep policy neutral over an extended period, with interest rates remaining unchanged for most of 2013. A reversal in policy easing is likely only late in the year or even in 2014.


Issued by:                                                                              Sha-Izwe/CharlesSmithAssoc

ON BEHALF OF:                                                   Coface

FURTHER INFORMATION:                                  Charles Smith

Tel:          (011) 781-6190



Media Contact:

Michele FERREIRA /
TEL. : +27 (11) 208 2551  F.: +27 (11) 208 2651   M.: +27 (83) 326 2268



T. +27 (11) 208 2500 –

About Coface

The Coface Group, a worldwide leader in credit insurance, offers companies around the globe solutions to protect them against the risk of financial default of their clients, both on the domestic market and for export. In 2012, the Group posted a consolidated turnover of €1.6 billion. 4,400 staff in 66 countries provide a local service worldwide. Each quarter, Coface publishes its assessments of country risk for 158 countries, based on its unique knowledge of companies’ payment behaviour and on the expertise of its 350 underwriters located close to clients and their debtors. In France, Coface manages export public guarantees on behalf of the French state.

Coface is a subsidiary of Natixis. corporate, investment management and specialized financial services arm of Groupe BPCE.. In South Africa, Coface provides credit protection to clients. Coface South Africa is rated AA+ by Global Ratings.

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IMF Mission Concludes the 2013 Article IV Mission to the Republic of Congo

Posted on 14 May 2013 by Africa Business

BRAZZAVILLE, Republic of the Congo, May 14, 2013/African Press Organization (APO)/ An International Monetary Fund (IMF) mission led by Mr. Mbuyamu Matungulu visited Brazzaville during April 29–May 13, 2013, to conduct discussions for the 2013 Article IV consultations. The mission met with the Honorable Obami Itou, President of the Senate; the Honorable Koumba, Speaker of Parliament; State and Finance Minister Ondongo, Special Presidential Advisor Gokana, National Director of the BEAC Ondaye Ebauh, and other senior officials. It held discussions with development partners and representatives of the private sector, including members of the banking profession.

At the end of the mission, Mr. Matungulu issued the following statement:

“In 2012, real GDP growth rebounded to about 4 percent despite a marked decline in oil production. Activity in the non-oil sectors was robust, driven by a surge in public spending in response to the ammunitions depot explosion of March 2012. The brisk increase in spending put pressures on prices, bringing end-year inflation to 7.5 percent as domestic supply response was limited. Reflecting the high import content of increased government outlays, the external current account turned negative in 2012. Credit growth remained robust. The basic non-oil primary budget deficit increased considerably, stemming from the expansion of government spending. However, the deficit was smaller than projected, with domestically-funded investment outlays somewhat lower than anticipated.

“Real GDP growth is expected to strengthen to 5.8 percent in 2013 despite a further decline of oil production, underpinned by continuing strong activity in construction and public works, telecommunications, as well as a timid start of iron ore production. Inflation eased to a monthly average of -0.1 percent in January-February 2013, and is projected to remain subdued during the remainder of the year as pressures from the 2012 ammunitions explosions fallout gradually recede. While the current account is expected to improve, the country remains vulnerable to adverse changes in external conditions, particularly on terms of trade. Compared to the initial budget, the mission’s current fiscal projections for 2013 reflect a shortfall in oil revenue equivalent to 4.8 percent of non-oil GDP, a reduction in government spending, as well as much higher-than-anticipated payments on arrears to social sectors. While the basic non-oil primary budget deficit should be contained below the projected level, the build-up of government deposits with the central bank would likely be much lower than targeted under the 2013 budget. The mission urged stronger treasury management and discussed quarterly fiscal targets for the remainder of the year to minimize slippages.

“The authorities’ medium-term development agenda seeks to foster private sector development, facilitate economic diversification, and secure growth inclusiveness. It appropriately emphasizes preservation of macroeconomic stability, improvements in governance and transparency and in business conditions, as well as a scaling up of investment to begin closing large infrastructure and skills gaps, while seeking further gains in budget consolidation. The mission encouraged the authorities to expedite reforms to improve the quality of spending; and welcomed World Bank involvement in the efforts to improve the management of the public investment program and enhance the productivity of the development budget. It underscored accelerated implementation of World Bank-supported reforms to improve the business environment, including in financial sector; and to roll out envisaged social protection systems. Regarding the management of oil resources, the mission reiterated calls for early adoption by Parliament of the draft law on budget transparency and accountability, following the achievement last February of compliant status under the Extractive Industries Transparency Initiative (EITI). As Congo moves ahead with the establishment of Special Economic Zones, the staff team urged caution. In particular, the mission encouraged the authorities to refrain from extending special fiscal incentives, and to focus instead on revamping infrastructure, including the inadequate electricity network, and advancing administrative facilitation. The staff team favored implementation of economy-wide reforms that improve the business environment for all so as to prevent abuses. It confirmed Congo’s low risk of debt distress but noted the need for continuing prudent borrowing policies to maintain long-term debt sustainability in the post-HIPC era.

“The mission discussed a medium- and long-term fiscal framework aimed at protecting spending from oil revenue volatility and ensuring budget and debt sustainability while supporting growth and guarding against the risks in the face of declining oil reserves. The framework makes provisions for scaled up investment and a buildup of net wealth that would sustain expenditures when oil resources are depleted. Under the agreed framework, nearly 65 percent of projected total oil revenue for 2013–2019 would be spent (two thirds of which on capital goods), and 35 percent saved; and the basic non-oil primary budget deficit would be limited to 36.1 percent of non-oil GDP by 2015.

“The authorities concurred with the need to improve coordination of economic policy management through development of appropriate reform-monitoring mechanisms. In this context, staff welcomed the government’s support to the ongoing review of the Economic and Monetary Community of Central African States (CEMAC)’s reserves pooling framework. Finally, the mission reminded the authorities of Congo’s legal obligations under Article VIII, Section 5, including the obligation to provide data to Fund staff on official holdings of foreign exchange.

“The mission wishes to express gratitude to the authorities for their hospitality. Upon its return to Washington D.C., the team will prepare a staff report to be discussed by the IMF’s Executive Board.”



International Monetary Fund (IMF)

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Posted on 13 May 2013 by Amat JENG

The International Monetary Fund (IMF) says Gambia’s newly introduced Tax collection system — the Value Added Tax (VAT)- is killing the country’s ailing economy and businesses. “The outlook for the economy is generally favorable for 2013, but there are risks. Real GDP growth is expected to accelerate, if the recovery in crop production is sustained.

Also, by accessing new markets, the potential for growth in tourism looks good. Inflation, however, has picked up, partly due to side effects from the introduction of the value-added tax (VAT) at the beginning of the year. For example, although the VAT is applied to firms with a turnover of at least one million dalasis, we understand that many smaller businesses also raised their prices opportunistically. During the first quarter of 2013, government spending once again exceeded planned allocations, contributing to an uptick in Treasury-bill yields. Correspondingly high bank lending rates are discouraging private sector borrowing,” a report issued by an IMF delegation who just concluded discussions with the Gambian authorities on the first review of the ECF arrangement.

The IMF delegation led by David Dunn is also not impressed by Gambia’s recent economic performance. Inflation is on the rise while government spending is jumping the roof.

“The Gambian economy is still recovering from the severe drought of 2011. Real gross domestic product (GDP) grew by an estimated 4 percent in 2012, led by a partial rebound in crop production and strength in the tourism sector. Inflation remained under control, ending the year at just under 5 percent, despite the depreciation of the Gambian dalasi during the second half of the year. A substantial overrun in government spending late in the year resulted in higher-than-budgeted domestic borrowing (3½ percent of GDP),” Mr. Dunn said.

Mr. Amadou Colley, Governor of Gambia’s Central Bank earlier this week tried to mislead the press and the nation by depicting a wrong picture of the economy. Colley failed to share the IMF team’s fact finding mission’s report. He instead furnished the press with a different picture of the realities on the ground. His sources are questionable—given the fact that this administration’s reputation of trying to monopolize the truth is evident on their modus operandi.

CBG's governor Amadou Kolley

“The Gambia Bureau of Statistics (GBoS), the Gambia economy is estimated to have grown by 6.3 percent in 2012 following a contraction of 4.6 percent in 2011; agriculture valued-added increased by 7.5 percent, industry (6.6 percent) and services (5.8 percent). Money supply grew by 8.8 percent in the year to end-March 2013, lower than the 14.9 percent in 2012. Both narrow money and quasi money grew by 16.3 percent and 2.7 percent compared to 7.8 percent and 9.3 percent respectively a year earlier,” Mr. Colley claimed.

“While reserve money grew by 3.4 percent, lower than the 8.7 percent in March 2012 and the target of 4.8 percent, he said the provisional data on government fiscal operations in the first quarter of 2013 indicate that revenue and grants amounted to D1.5 billion (4.6 percent of GDP) compared to D1.9 billion (5.9 percent of GDP) in the same period in 2012. “Domestic revenue totaled D1.4 billion (4.2 percent of GDP), higher than the D1.2 billion (3.7 percent of GDP) recorded in the corresponding period of 2012.”

Mr. Colley admitted that Gambia’s inflation is going out of hand. As such, Colley said, prices for basic commodities, utilities, and energy are going up.

“While consumer food inflation rose from 4.8 percent in March 2012 to 6.4 percent in March 2013 driven mainly by price developments in bread cereals, the consumer non-food inflation also rose to 4.1 percent in March 2013 from 2.7 percent in March 2012 partly reflecting the increase in the cost of energy. Core inflation, which includes the prices to utilities, energy and volatile food items, increased to 5.3 percent from 4.0 percent a year earlier,” Mr. Colley told the local press here.

But IMF’S David Dunn is not optimistic about the country’s Gross Domestic Product (GDP). The country’s past crop failure is impacting negatively on the economy. He said VAT is killing the private sector. Businesses are being overtaxed.

IMF’S David Dunn

“The outlook for the economy is generally favorable for 2013, but there are risks. Real GDP growth is expected to accelerate, if the recovery in crop production is sustained. Also, by accessing new markets, the potential for growth in tourism looks good. Inflation, however, has picked up, partly due to side effects from the introduction of the value-added tax (VAT) at the beginning of the year. For example, although the VAT is applied to firms with a turnover of at least one million dalasis, we understand that many smaller businesses also raised their prices opportunistically. During the first quarter of 2013, government spending once again exceeded planned allocations, contributing to an uptick in Treasury-bill yields,” Mr. Dunn stated.

While Central Bank Governor Amadou Colley is bragging about the so called performance of the banking sector, Mr. Dunn had a complete different view about Gambia’s banking industry.

“Correspondingly high bank lending rates are discouraging private sector borrowing,” Dunn said.

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MTN Uganda adjusts Mobile Money Tariffs

Posted on 09 May 2013 by Africa Business

MTN Uganda has adjusted its Mobile Money tariffs slightly for the first time since the largely successful product was first launched four years ago.

MTN Uganda launched their Mobile Money service in early 2009 and has in the last four years made significant changes to how Ugandans are transacting in the New World, through paying for goods and services as well as sending and receiving money from and to anywhere in the country as well as Internationally.

“MTN strives to constantly improve our service delivery to our customers. Our New tariffs are guided by our understanding that we need to constantly improve and sustain the robustness and availability of our MTN Mobile Money services across the country.” said Ernst Fonternel, MTN Uganda Chief Marketing Officer.

Fonternel explained that the increase in tariffs is meant to enable the telecom company to improve service delivery to their customers, in line with the current market and economic dynamics in Uganda.

“While the cumulative inflation since early 2009 to date is well in excess of 50%, MTN has never adjusted its tariffs to cater for inflationary and/or other economic pressures. We are adjusting our tariffs slightly, relative to the benefits associated with Mobile Money to ensure we have a sustainable business model for the future.” Fonternel said.

The new rates which took effect 8th May 2013 will affect sending money to both registered and non-registered Mobile Money users, withdrawing Money from an MTN Mobile Money agent, paying bills using the MTN Mobile Money Pay Bill service, paying bills using the MTN Mobile Money Goods & Services menu and Sending Bulk Mobile Money payments.

“The increase in tariffs will facilitate an increase in our Agent Network commissions to ensure that our agents get better rewards on high value transactions and as an incentive to hold adequate float to ensure that customers have the best distribution network available. The change in tariffs ensures that we can continue to invest into our platform bringing new innovative and relevant services to Uganda while expanding our extensive distribution network.” Fonternel added.

Fonternel explained that despite the changes, some tariffs will not be affected. “You can still buy airtime and buy Mobile Money (Deposit) free of charge. Also Registering for Mobile Money, checking your account balance and changing your PIN number are still free of charge.”

Transaction limits have stayed the same, with minimum account balance at 0/- and the minimum transaction limit at 500/-. The maximum account balance remains 5,000,000/- and the maximum daily transaction limit remains 4,000,000/-.

Since the product was first launched four years ago, MTN Mobile Money has grown significantly with monthly transactions now in excess of 27 million with a Mobile Money Base of more than 4 million customers.

It has also grown from a basic service enabling sending and receiving money, and buying airtime, to a convenient service that enables a lot more, such as paying school fees, trade and commerce, bill payments, and a host of other payments. Today, you can literally do anything with mobile money from the comfort of your office or home.

At a recent GSM Mobile Money adoption survey, MTN Mobile Money was declared the second fastest growing mobile money service in the world.

This year and going forward, MTN plans to increase the person to business and business to person services on the platform to enable more commerce to be done over the service.

The complete list of new tariffs is readily available at any MTN shop or service center as well as on

For any further inquiries or assistance call the MTN Mobile Money helpline on 122, the General MTN Helpline on 123, or visit a nearby MTN Service Centre or MTN Mobile Money agent.

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Multi-faceted consumer car market bucks economic trend, says Standard Bank South Africa

Posted on 06 May 2013 by Africa Business

The South African new car market is bucking the economic trend with sales increasing by 4.1% to 163 092 units during the first three months of 2013 when compared to the same period last year. This is despite tough economic conditions, with the South African Reserve Bank expecting GDP to grow by only 2.7% during 2013.

Sydney Soundy, head of Vehicle and Asset Finance at Standard Bank South Africa, says that the prosperity within the market is notable when compared to other sectors, which were feeling the brunt of reduced consumer spending and the cost pressure caused by higher inflation and fuel prices, among other factors.

“Consumers seem to be taking advantage of the low interest rate environment and clearly still have an appetite for secured credit,” Mr Soundy says.

Vehicle sales continue to be driven by passenger vehicles and individual purchases. As at February 2013 total vehicle instalment debtors and leases were made up largely by individuals, who made up 72% of the instalment and leases book.

Looking at the South African buyer reveals several interesting facts.

“The majority of people applying for vehicle finance are between the ages of 18 and 45, constituting 62.4% of the market. These consumers display the highest level of awareness about technical changes to vehicles taking place in the industry, the brand offerings available, the legislation and the financial offerings available to buyers,” Mr Soundy says.

He notes that manufacturers have reacted to this knowledgeable sector of the market by ensuring that their offerings are competitively priced and offer the features demanded. One of the results is a diversified market in which about 70 brands of passenger vehicle are available, offering customers a choice of around 2 500 variants.

“About 65% of consumers are purchasing cars that cost less than R200 000. Toyota, Hyundai and Volkswagen are some of the manufacturers that have met the need for buying economical vehicles, capturing 50% of the new car market in this segment,” he said. Smaller engine vehicles (<1.7 litres) have seen the biggest sales growth in recent times, growing by just under 12% in 2012 from 2011, compared to growth of 9% and 1% for medium (1.8 to 3 litres) and large (>3 litres) engine vehicles respectively.

Consumers have been addressing the monthly affordability of repayments for their vehicles of choice in different ways, including through financing vehicles over a longer period, using the Residual Value option on their finance deals, and varying the extent of deposits offered.

The advent of the National Credit Act has also seen finance contracts taken over longer terms, with the average contract for new vehicles now being just over 60 months. “The average settlement period for new vehicles however, is just over 40 months,” Mr Soundy says.

Applications with a residual value request have increased, with the overall percentage of applications received with residual values at around 13% in the first quarter of 2013, from just over 11% in 2012. Consumers are seeing the benefit of this finance option, in which the monthly installments are reduced due to a residual value.

In the first quarter of this year, Standard Bank South Africa has seen an increase in the number of vehicle finance applications; however the percentage of applications with deposits have declined, with more consumers seeking to finance vehicles without a deposit.

Mr. Soundy also notes that although the traditional installment sale agreement remains very popular, consideration for alternative financing options, such as rental and leasing options, is gaining traction.

“Astute consumers are well aware that a vehicle cannot be deemed an asset. They are shifting the risk of vehicle ownership and residual values, and the responsibility of disposing the vehicle at the end of the contract, to the financier.”

Looking ahead, Mr Soundy notes that certain factors this year may work against growth in new vehicles sales. These include the Rand exchange rate which could put pressure on vehicle prices, continuing high levels of consumer household debt, and the high level of households with impaired credit records. Increases in food prices, energy prices (both fuel and electricity), and transport costs, including toll fees, will also impact on consumers’ disposable income. Inflation will be under pressure to remain below the target of 6% in 2013, impacted largely by the depreciation of the Rand and higher fuel prices.

“The Rand is likely to remain sensitive to both domestic and global developments. This could have a negative knock-on effect on vehicle prices,” he says. “However, the effect of the exchange rate has not yet reflected in car sales. Last year, vehicle prices rose by only 2.2% year-on-year.”

Mr Soundy believes that the continuing current low interest rate environment and the competitive nature of the South African motor industry will provide potential boost for growth in the market.

He says that Standard Bank South Africa’s financing activities will continue to be based on responsible lending that takes into account cash flow optimisation for both personal and commercial customers.

“Regardless of the economic situation, we will continue to assist customers by developing and providing financial services that make the acquisition of vehicles, whether for private or corporate use, as easy as possible.”


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Posted on 27 April 2013 by Amat JENG

For the African Development Bank (AfDB), transforming Africa’s economies entails diversifying and expanding the sources of economic growth and opportunity in a manner that promotes greater productivity for sustained and inclusive economic development.

“A major policy challenge for Africa today is how to broaden access to economic opportunities for its expanding population, including the most vulnerable groups,” the Bank says in its 2012 Annual Report, which will be presented to the institution’s Governors at the Marrakech meetings.

“Africa requires structural transformation to propel it towards inclusive growth,” the report says, citing high unemployment and underemployment especially among young people and women, as one of the main problems facing the continent today.

AfDB's headquarters in Abidjan, Cote D'ivoire

Structural transformation will not materialize unless there is a concomitant investment in skills development in areas that have kept the continent behind other developing regions. In this regard, Africa needs to harness its natural resources to build skills for its youthful population in order to leapfrog development and secure a place in the global value chain. Developing skills will unleash the dynamism of Africa’s untapped entrepreneurship potential, creating opportunities for increased job and wealth creation. An enlightened population is also important in Africa’s global engagement in trade and commerce.

“The key message is that Africa should accelerate its structural transformation by boosting the potential of its youthful population, investing in science and technology and innovation, speeding up its rate of economic integration, greening the economy and supporting private sector enterprise,” the report emphasized.

The report identifies leadership, degree of economic integration at the national, regional and global levels, as well as inclusive growth as the key factors that can influence transformation. Regional political events, weather, and price shocks must also be taken into consideration.

Mr. Donald Kaberuka

According to the report, Africa’s transformation can be realized by leveraging the huge potentials in some of the following areas:

– Infrastructure – Africa’s infrastructure financing needs — about USD 390 billion in the medium term, mostly for power and energy — are in the USD trillions in the longer term.

– Natural resources – It is estimated that Africa’s natural resource extractive industries will contribute over USD 30 billion per annum in government revenues in the next 20 years.

– Revenues from natural resources could finance a substantial part of Africa’s infrastructure development. Some countries have already issued Eurobonds for infrastructure, on the basis of natural-resource revenues.

– Demographics – Young people comprise the bulk of Africa’s one billion population. To convert this “youth bulge” into a “demographic dividend” will require investing in skills and the creation of job opportunities on a large and unprecedented scale.

– Promoting agriculture – the agriculture sector employs the vast majority of Africa’s population, and provides direct inputs to the agro-processing value chain, supplies food to urban areas, and is a source of household savings for investment.

– The Private Sector – As Africa’s economies expand, the private sector, which accounts for 90 per cent of informal employment, will become even more important, especially in industry.

– Urbanization –- Africa’s cities, with 40 per cent of the population in 2010 — projected to be 50 per cent in a generation, and 65 per cent by 2060 — are increasingly becoming the drivers of consumer demand and hence economic growth.

– Governance/Investment climate – improved governance and better macroeconomic policies – lower debt, low inflation and stable exchange rates are essential in fostering economic competitiveness.

– Technological innovation – Investment in technology, and particularly ICT, have greatly improved public access to information, spurring a knowledge economy and innovative approaches to micro-finance and the mobilization of rural producers, e.g. Kenya’s M-PESA, Kenya’s innovative mobile banking.

The strategies to unlock Africa’s potential reside in elimination of the causes of national and regional conflict to bring peace; visionary leadership and strong and effective government institutions, while empowering women and youth; strengthening human capital development through education and training, especially in science and technology, and improvements in basic services; fostering diversification, especially in agriculture and rural areas, including sustainable greening of the economy and promotion of manufacturing; and promoting intra-Africa trade through increased domestic and regional investment, and forging strong trade links with emerging partners.

The Bank will continue to support and monitor the transformation efforts of the Regional Member Countries. Accordingly, the Bank has adopted a 10-year strategy whose overarching goal is to promote socially inclusive and environmentally sustainable economic growth. The core operational priorities of this strategy include infrastructure development; regional integration; private sector development; governance and accountability; as well as skills and technology development.

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IMF Executive Board Concludes 2012 Article IV Consultation with Cape Verde

Posted on 24 April 2013 by Africa Business

PRAIA, Cape Verde, April 24, 2013/African Press Organization (APO)/ On March 8, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Cape Verde.1


After recovering in 2010, Cape Verde’s growth slowed in 2011 and 2012, reflecting the difficult external environment and weak domestic demand. Growth is estimated at 4.3 percent in 2012, with foreign direct investment (FDI) having fallen significantly and confidence indicators across several sectors waning. However, tourism has remained resilient and remittances have held up well. The overall balance of payments is expected to move into surplus in 2012, aided by a significant narrowing of the current account deficit owing to strong tourism receipts and weaker imports. Accordingly, reserves are estimated to have stabilized at an estimated 3.8 months of current year imports (staff estimate 3.3 months of prospective imports). This outturn was aided by an adjustment of fiscal policy in 2012, particularly capital spending, in support of the monetary policy tightening that began in late 2011. Average inflation was well contained in 2012 at 2½ percent. Fiscal deficits have increased over recent years as the authorities have ramped up public investment on infrastructure, partly as a countercyclical policy response to the global crisis. Debt service indicators remain sustainable, although public debt levels have continued to increase, reaching elevated levels.

Cape Verde is likely to face a more difficult external environment in 2013, especially with near zero growth forecast in the euro area. Growth is expected to slow to 4.1 percent. Competition in tourism is intensifying as North African markets recover. The growth of private remittances is slowing, driven by economic stagnation in euro area countries. The prospects for higher private capital flows, including FDI, are dimmed by weaknesses in Europe. Likewise, concessional assistance flows are also under stress with the fiscal adjustment underway in Europe.

On the structural front, government’s reforms focus on rebuilding the tax administration and reforming tax policy, improving oversight over the financial system, strengthening monetary operations, and enhancing the governance of state owned enterprises to reduce fiscal risks and improve their service delivery to help boost competitiveness of the economy.

Executive Board Assessment

Executive Directors commended the authorities’ strong track record of prudent macroeconomic management, which has increased the economy’s resilience to shocks, supported economic growth, and advanced progress toward the Millennium Development Goals. They stressed that the difficult external outlook and fiscal and external vulnerabilities call for continued efforts to strengthen macroeconomic buffers, and to foster inclusive growth while preserving external sustainability.

Directors commended the authorities’ efforts to upgrade the infrastructure, using concessional assistance, but noted that the rising public debt could pose risks to debt sustainability. They therefore welcomed the authorities’ intention to undertake medium-term fiscal consolidation beginning in 2013, and advised that it be implemented in a growth-friendly manner. Directors looked forward to the planned reform of tax policy and tax administration to reverse the recent decline in tax revenue relative to GDP. They encouraged restraint on capital spending and more focus on improving the quality of public investment. They also pressed for rationalization of current spending and reforms to improve the operational efficiency and financial position of loss-making state-owned enterprises.

Directors agreed that the current tight monetary stance is appropriate, given the need to further increase reserves to a more comfortable level. They encouraged measures to strengthen the monetary transmission mechanism, including more active liquidity management, better liquidity forecasting, and reforms to increase the efficiency of the interbank market and develop the government securities market.

Directors noted staff’s assessment that the real effective exchange rate is broadly aligned with economic fundamentals. While higher reserve coverage would support the peg, Directors also called for steadfast pursuit of structural reforms to improve the business environment and boost productivity and competiveness. They welcomed in this regard the Third Growth and Poverty Reduction Strategy, which provides a sound basis for higher and more inclusive growth.

Directors welcomed the recent measures taken to safeguard financial stability, including the drafting of new banking legislation, improvements to the regulatory and supervisory framework, and the establishment of a Financial Stability Committee. In light of rising non-performing loan ratios, they encouraged the authorities to continue to strengthen supervisory capacity and to accelerate implementation of the FSAP recommendations.


Cape Verde: Selected Economic and Financial Indicators, 2011–16


2011    2012    2013    2014    2015    2016


Est.    Projections


National accounts and prices

Real GDP

5.0    4.3    4.1    4.5    4.7    5.0

Real GDP per capita

3.6    2.9    2.7    3.1    3.3    3.6

GDP deflator

3.9    3.5    3.5    3.1    3.1    3.0

Consumer price index (annual average)

4.5    2.5    4.0    3.3    2.8    2.5

Consumer price index (end of period)

3.6    4.1    3.5    3.1    2.5    2.5

External sector

Exports of goods and services

17.3    10.7    9.0    7.6    7.9    7.3

Of which: tourism

26.5    10.6    6.5    9.2    9.1    9.0

Imports of goods and services

17.9    0.1    10.4    0.5    0.1    2.3

Money and credit 1

Net foreign assets

-4.2    0.9    1.4    0.3    2.1    1.1

Net domestic assets

6.5    3.8    5.1    5.5    5.3    6.1

Net claims on the central government

3.0    1.2    0.8    0.5    0.2    0.2

Credit to the economy

6.3    1.7    4.3    5.8    5.8    6.9

Broad money (M2)

2.2    4.6    6.5    5.8    7.5    7.1

Reserve money (M0)

-1.3    4.3    1.6    1.4    1.8    1.7

Savings and investment

Domestic savings

20.5    21.8    21.9    23.2    24.6    25.9


2.8    0.1    2.3    -3.1    -2.2    1.4


17.7    21.7    19.6    26.3    26.8    24.5

National investment

36.5    32.9    35.2    34.5    33.0    32.0


9.9    7.6    9.9    8.4    5.8    4.0


26.6    25.3    25.3    26.1    27.2    28.0

Savings-investment balance

-16.0    -11.1    -13.2    -11.4    -8.3    -6.1


-7.1    -7.5    -7.5    -11.5    -8.0    -2.5


-8.9    -3.6    -5.7    0.2    -0.3    -3.5

External sector

External current account (excluding official transfers)

-19.6    -13.5    -15.2    -11.4    -8.3    -6.1

External current account (including official transfers)

-16.0    -11.1    -13.2    -11.4    -8.3    -6.1

Overall balance of payments

-2.3    1.5    1.1    0.3    1.9    1.3

Gross international reserves (months of prospective imports of goods and services)

3.2    3.3    3.3    3.4    3.6    3.8

Gross international reserves (months of current year imports of goods and services)

3.2    3.8    3.3    3.4    3.7    3.9

Government finance


25.0    21.8    24.9    25.6    25.5    24.3

Tax and nontax revenue

22.2    19.4    22.1    21.9    22.4    22.4


2.8    2.4    2.8    3.6    3.1    1.9


32.3    29.3    32.5    31.5    27.6    24.1

Overall balance (excl. grants)

-10.1    -9.9    -10.4    -9.6    -5.2    -1.7

Overall balance (incl. grants)

-7.3    -7.5    -7.6    -5.8    -2.2    0.2

External financing

9.4    9.1    11.8    8.2    5.3    1.0

Domestic financing (incl. onlending)

-0.7    -1.6    -4.2    -2.4    -3.1    -1.2

Errors and omissions

-1.4    0.0    0.0    0.0    0.0    0.0

Public debt stock and service

Total nominal government debt

77.3    81.0    88.6    92.2    92.1    85.6

External government debt

56.1    59.8    67.4    71.4    72.0    68.2

Domestic government debt

21.2    21.2    21.2    20.8    20.0    17.4

External debt service (percent of exports of goods and services)

4.2    4.6    4.6    4.8    4.6    4.3

Memorandum items:

Nominal GDP (billions of Cape Verde escudos)

150.8    162.8    175.4    189.1    204.2    220.8

Gross international reserves (€ millions, end of period)

263.3    300.0    302.7    308.3    342.6    369.5


Sources: Cape Verdean authorities; and IMF staff estimates and projections.

1 Adjusted for data inconsistency in December 2011.

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. At the conclusion of the discussion, the Managing Director, as Chairman 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:



International Monetary Fund (IMF)

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