<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-820x547.jpg" alt="" class="wp-image-423316" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A man walks past the International Monetary Fund (IMF) logo at its headquarters in Washington, U.S., May 10, 2018. REUTERS/Yuri Gripas/</figcaption></figure>



WASHINGTON, April 12 (Reuters)&nbsp;&#8211;&nbsp;Global creditors, debtor nations and international financial institutions on Wednesday agreed ways to jumpstart and streamline long-stalled debt restructuring efforts, including through improved data sharing and clearer timetables.



The World Bank, International Monetary Fund and India, current president of the Group of 20 (G20) major economies, issued a joint statement after the first full-fledged meeting of the new Global Sovereign Debt Roundtable, held during the spring meetings of the IMF and World Bank in Washington.



The statement, however, did not include mentions of any commitments by China, the world&#8217;s largest bilateral creditor, to speed the restructuring process.



Reuters&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AW1N34P03Y&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">reported&nbsp;</a>Beijing was poised to drop its demand that multilateral development banks share in debt restructuring losses, partly in exchange for the IMF and World Bank providing earlier access to their debt sustainability analyses for countries receiving debt treatments.



But the statement only included the institutions&#8217; part of that bargain, to share more information more quickly and for multilateral development banks (MDBs) to quantify &#8220;net positive flows&#8221; of concessional financing in restructuring cases.



IMF strategy chief Ceyla Pazarbasioglu said China and other participants had acknowledged that there are different ways of contributing to a restructuring, and &#8220;the best way for MDBs to contribute &#8230; is to provide fresh financing to countries, as much as possible in grant terms.&#8221;



&#8220;That was the key deliverable, and I think this consensus around the table will also allow and facilitate quicker agreement in terms of the individual debt cases,&#8221; she said in a video interview taped by the IMF.



The statement said participants &#8220;focused on the actions that can be taken now to accelerate debt restructuring processes and make them more efficient, including under the G20 Common Framework.&#8221;



The meeting came amid ongoing delays in finalizing debt treatment agreements for Zambia, Ghana and Ethiopia under the G20 Common Framework, although Pazarbasioglu on Wednesday said she hoped for &#8220;good news&#8221; on Zambia&#8217;s case next week.



U.S. officials and others blame the delays largely on foot-dragging by China, now the world&#8217;s largest bilateral creditor, and reluctance by private-sector creditors to join in.



Ghana, Zambia and Ethiopia are at various stages of the process, but debt experts say China&#8217;s recent agreement to provide specific financing assurances for Sri Lanka, a middle income country that was not eligible under the G20 framework, could be a positive sign for the other cases.



Zambia&#8217;s Treasury Secretary Felix Nkulukusa told a panel hosted by the Open Society Foundations that Chinese officials had told Zambia they would not insist that MDBs accept debt reductions, but wanted them to participate on a &#8220;fair basis.&#8221;



He said most of the outstanding issues with China had been resolved in Zambia&#8217;s specific case, making him hopeful a solution could be reached soon, but the roundtable should help resolve broader issues on debt relief facing other countries.



The statement said participants agreed on the need to urgently improve data-sharing on macroeconomic projections and debt sustainability assessments in debt relief cases, resolving a frustration frequently voiced by China about not being looped in early enough in the process.



It said the IMF and World Bank would rapidly issue staff guidance to ensure more timely data-sharing.



Participants also discussed the role of multilateral development banks (MDBs) in debt restructuring processes through their provision of &#8220;net positive flows&#8221; of concessional finance, and welcomed the implicit debt relief provided by the World Bank&#8217;s International Development Association arm through low interest or zero-interest loans and grants, the statement said.



They agreed meet to again in coming weeks on the comparability of treatment of creditors, and would work on principles for cut-off dates, suspending debt payments at the beginning of the process, how to treat arrears, and the perimeter of restructured debt, including domestic debt.



&#8220;This work will also help in clarifying potential timetables to accelerate debt restructurings,&#8221; the statement said.



Separately, Japanese Finance Minister Shunichi Suzuki said Japan, France and India will announce a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N36F34A&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">new platform</a>&nbsp;for creditors to coordinate restructuring of Sri Lanka&#8217;s debt, adding it would be &#8220;very nice&#8221; if China were to join the effort.



(Reporting by Andrea Shalal; additional reporting by David Lawder and Leika Kihara; Editing by Dan Burns,d Chris Reese and Simon Cameron-Moore)

FILE PHOTO: Man walks past the IMF logo at HQ in Washington

Sovereign debtors, creditors agree on steps to jumpstart debt restructurings

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="612" height="357" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1.jpg" alt="" class="wp-image-400669" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1.jpg 612w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1-300x175.jpg 300w" sizes="auto, (max-width: 612px) 100vw, 612px" /><figcaption class="wp-element-caption">World map with charts and graphs as symbols of global finance</figcaption></figure>



April 12 (Reuters)&nbsp;&#8211;&nbsp;Emerging market stocks fell on Wednesday, bogged down by losses in Hong Kong shares as geopolitical tensions dented risk sentiment, while currencies struggled for direction ahead of U.S. inflation data due later in the day.



The MSCI&#8217;s EM stocks index&nbsp;.MSCIEF&nbsp;fell 0.3%, driven lower by a more than 1% drop in Hong Kong shares&nbsp;.HSI&nbsp;at the close, as elevated tensions between China and Taiwan hit risk appetite.



China said that President Tsai Ing-wen was pushing Taiwan into &#8220;<a href="https://www.reutersconnect.com/all?search=all%3AL1N36F03O&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">stormy seas</a>&#8221; after Beijing held military exercises in response to Tsai&#8217;s recent meeting with U.S. House Speaker Kevin McCarthy in California.



Warren Buffett called geopolitical tensions &#8220;a consideration&#8221; in Berkshire Hathaway Inc&#8217;s&nbsp;BRKa.N&nbsp;decision to sell most of its stake in TSMC&nbsp;2330.TW&nbsp;just a few months after buying it,&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N36E186&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Nikkei reported</a>&nbsp;on Tuesday.



Shares of the Taiwanese chipmaker slipped 0.8%.



The MSCI&#8217;s index for emerging market currencies&nbsp;.MIEM00000CUS&nbsp;was flat ahead of a reading of U.S. inflation data due later in the day, a crucial metric in gauging where the Federal Reserve stands on monetary policy tightening.



&#8220;EM is not really in the driver&#8217;s seat here because it&#8217;s just all about the U.S. and how far the Fed goes and when it starts cutting (interest rates),&#8221; said Marek Drimal, lead CEEMEA strategist at Societe Generale in London.



Hungary&#8217;s Budapest SE index&nbsp;.BUX&nbsp;fell 0.5% after data showed Hungary&#8217;s headline inflation eased for a second straight month in March, but&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N36F17V&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">stubbornly held</a>&nbsp;above 25% and near more than two-decade highs, signalling elevated interest rates may stay higher for longer to help push price growth down.



Hungary&#8217;s forint&nbsp;EURHUF=&nbsp;was subdued against the euro, while other Central and Eastern European currencies edged higher.



<a href="https://www.reutersconnect.com/all?search=all%3AS8N35201R&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Data showed</a>&nbsp;the Czech unemployment rate fell to 3.7% of the workforce in March, below a Reuters poll forecast of 3.8%.



The Czech crown&nbsp;EURCZK=&nbsp;inched 0.1% up against the euro.



The Russian rouble&nbsp;RUBUTSTN=MCX<a href="https://www.reutersconnect.com/all?search=all%3AL1N36F0KY&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">weakened</a>&nbsp;to 82.08 against the dollar, hurt by the combination of falling exports and recovering imports, while failing to benefit from higher oil prices amid reduced foreign currency supply among exporting firms.



Investors would be looking out for Russia consumer price index (CPI) data later in the day.



Russia&#8217;s Central Bank Governor Elvira Nabiullina&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AR4N36302R&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">said</a>&nbsp;low inflation would help stabilise the rouble and spoke against seeking to manage the Russian currency&#8217;s exchange rate.



Later in the day, investors would be looking out for retail sales data out of Brazil.



(Reporting by Shashwat Chauhan in Bengaluru; Editing by Emelia Sithole-Matarise)

World map with charts and graphs as symbols of global finance

Currencies flat ahead of U.S. CPI, geopolitical tensions hit HK shares

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107004870-16427966702022-01-21t201709z_969185203_rc2w3s99wb9o_rtrmadp_0_argentina-imf-mexico-820x462.jpeg" alt="" class="wp-image-420118" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107004870-16427966702022-01-21t201709z_969185203_rc2w3s99wb9o_rtrmadp_0_argentina-imf-mexico-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107004870-16427966702022-01-21t201709z_969185203_rc2w3s99wb9o_rtrmadp_0_argentina-imf-mexico-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107004870-16427966702022-01-21t201709z_969185203_rc2w3s99wb9o_rtrmadp_0_argentina-imf-mexico-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107004870-16427966702022-01-21t201709z_969185203_rc2w3s99wb9o_rtrmadp_0_argentina-imf-mexico-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/107004870-16427966702022-01-21t201709z_969185203_rc2w3s99wb9o_rtrmadp_0_argentina-imf-mexico.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The new economic measures laid out by the U.K. government “will likely increase inequality”, according to a spokesperson from the International Monetary Fund.
Yuri Gripas | Reuters</figcaption></figure>



WASHINGTON, April 11 (Reuters)&nbsp;&#8211;&nbsp;The International Monetary Fund on Tuesday trimmed its 2023 global growth outlook slightly as higher interest rates cool activity but warned that a severe flare-up of financial system turmoil could slash output to near recessionary levels.



The IMF said in its latest World Economic Outlook report that banking system contagion risks were contained by strong policy actions after the failures of two U.S. regional banks and the forced merger of Credit Suisse. But the turmoil added another layer of uncertainty on top of stubbornly high inflation and spillovers from Russia&#8217;s war in Ukraine.



&#8220;With the recent increase in financial market volatility, the fog around the world economic outlook has thickened,&#8221; the IMF said as it and the World Bank launch spring meetings this week in Washington.



&#8220;Uncertainty is high and the balance of risks has shifted firmly to the downside so long as the financial sector remains unsettled,&#8221; the Fund added.



The IMF is now forecasting global real GDP growth at 2.8% for 2023 and 3.0% for 2024, marking a sharp slowdown from 3.4% growth in 2022 due to tighter monetary policy.



Both the 2023 and 2024&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N36A0TS&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">forecasts</a>&nbsp;were marked down by 0.1 percentage point from estimates issued in January, partly due to weaker performances in some larger economies as well as expectations of further monetary tightening to battle persistent inflation.



The IMF&#8217;s U.S. outlook improved slightly, with growth in 2023 forecast at 1.6% versus 1.4% forecast in January as labor markets remain strong. But the Fund cut forecasts for some major economies including Germany, now forecast to contract 0.1% in 2023 and Japan, now forecast to grow 1.3% this year instead of 1.8% forecast in January.



The IMF raised its 2023 core inflation forecast to 5.1%, from a 4.5% prediction in January, saying it had yet to peak in many countries despite lower energy and food prices.



&#8220;Our advice is for monetary policy to remain focused on bringing down inflation,&#8221; IMF chief economist Pierre-Olivier Gourinchas told reporters.



In a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N36E00H&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Reuters interview</a>, Gourinchas said central banks should not halt their fight against inflation because of financial stability risks, which look &#8220;very much contained.&#8221;



BANKING TURMOIL SCENARIOS



While a major banking crisis was not in the IMF&#8217;s baseline, Gourinchas said a significant worsening of financial conditions &#8220;could result in a sharper and more elevated downturn.&#8221;



The report included two analyses showing financial turmoil causing moderate and severe impacts on global growth.



In a &#8220;plausible&#8221; scenario, stress on vulnerable banks &#8211; some like failed Silicon Valley Bank and Signature Bank burdened by unrealized losses due to monetary policy tightening and reliant on uninsured deposits &#8211; creates a situation where &#8220;funding conditions for all banks tighten, due to greater concern for bank solvency and potential exposures across the financial system,&#8221; the IMF said.



This &#8220;moderate tightening&#8221; of financial conditions could slice 0.3 percentage point off of global growth for 2023, cutting it to 2.5%.



The Fund also included a severe downside scenario with much broader impacts from bank balance sheet risks, leading to sharp cuts in lending in the U.S. and other advanced economies, a major pullback in household spending and a &#8220;risk-off&#8221; flight of investment funds to safe-haven dollar-denominated assets.



Emerging market economies would be hit hard by lower demand for exports, currency depreciation and a flare-up of inflation.



This scenario could slash 2023 growth by as much as 1.8 percentage points, reducing it to 1.0% &#8211; a level that implies near-zero GDP growth per capita. The negative impact could be about one-quarter of the recessionary impact of the 2008-2009 financial crisis.



Other downside risks highlighted by the IMF include persistently high inflation that requires more aggressive central bank rate hikes, escalation of Russia&#8217;s war in Ukraine, and setbacks in China&#8217;s recovery from COVID-19, including worsened difficulties in its real estate sector.



OIL PRICE RISK



The IMF forecasts do not include the impact of a recent oil output cut by OPEC+ countries that has caused oil prices to spike. It assumes an average 2023 global oil price of $73 per barrel &#8211; well below Monday&#8217;s $84 Brent&nbsp;CLc1&nbsp;crude futures price, but Gourinchas said it was unclear if this level could be sustained.



For every 10% rise in the price of oil, IMF models show a 0.1 percentage point reduction in growth and a 0.3 percentage point increase in inflation, Gourinchas added.



The IMF also now pegs global growth at 3% in 2028, its lowest five-year growth outlook since the WEO was first published in 1990, reflecting naturally slowing growth as some emerging economies mature, but also slower growth in workforce populations and fragmentation of the global economy along geopolitical lines, marked by U.S.-China tensions and Russia&#8217;s war in Ukraine.



(Reporting by David Lawder; Editing by Andrea Ricci)

107004870-16427966702022-01-21t201709z_969185203_rc2w3s99wb9o_rtrmadp_0_argentina-imf-mexico

IMF warns deeper financial turmoil would slam global growth

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-820x547.jpg" alt="" class="wp-image-373504" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-scaled.jpg 2048w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-1110x740.jpg 1110w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-696x464.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-1068x712.jpg 1068w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-1920x1280.jpg 1920w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/101416618-rand-600x400.jpg 600w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



April 11 (Reuters)&nbsp;&#8211;&nbsp;South Africa&#8217;s rand rose on Tuesday against a softer dollar, ahead of local manufacturing data due later in the day, while Turkey&#8217;s lira slipped after data showed its industrial output dropped when a devastating earthquake hit the country&#8217;s south.



The rand&nbsp;ZAR=&nbsp;gained 0.9% against the dollar after losing 1.7% in the previous session.



Investors awaited manufacturing output data for February that will give further clues about the health of the South African economy, which has been crippled by severe power cuts.



The dollar&nbsp;=USD&nbsp;slipped 0.3% following its best rally&nbsp;so far&nbsp;this month against major peers ahead of the March U.S. consumer price index (CPI) data due on Wednesday, a crucial data point in gauging where the Federal Reserve stands on monetary policy tightening.



&#8220;If it meets expectations at 0.4% month-over-month or even exceeds them, we think the Fed should be on track for one final hike unless they start to see concerning signs within the credit data that they are privy to,&#8221; said Simon Harvey, head of FX analysis at Monex Europe in London.



&#8220;In this outcome, where the market would have to base its expectations for the Fed on the available data and thus price a further hike, we expect EM currencies, especially those that have gained considerably since the reduction in U.S. yields like the South African rand (ZAR), will face renewed pressure.&#8221;



The MSCI&#8217;s index for emerging market currencies&nbsp;.MIEM00000CUS&nbsp;was flat by 0843 GMT.



China&#8217;s yuan&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N36E08G&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">briefly eased</a>&nbsp;to a one-week low and Chinese shares closed lower after data showed consumer inflation&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N36E02Z&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">hit</a>&nbsp;an 18-month low and factory-gate price declines sped up in March, suggesting persistent demand weakness and potential for further policy stimulus.



The Turkish lira&nbsp;TRY=&nbsp;slipped 0.2% after&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AAPN0UXHT7&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">official data</a>&nbsp;showed industrial production tumbled 6% month-on-month on a seasonal and calendar-adjusted basis in February, when a devastating earthquake hit the country&#8217;s south.



The MSCI&#8217;s EM stocks index&nbsp;.MSCIEF&nbsp;gained 0.4%.



South Korean stocks&nbsp;.KS11&nbsp;closed 1.4% higher after the Bank of Korea held its interest rates&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS6N34201B&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">steady</a>&nbsp;for a second consecutive meeting, in line with market expectations. The Korean won&nbsp;KRW=, however, slipped 0.1% against the dollar.



The Russian rouble&nbsp;RUBUTSTN=MCX<a href="https://www.reutersconnect.com/all?search=all%3AL1N36E0GJ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">slipped</a>&nbsp;against the dollar for the second straight day amid heightened demand for foreign currency, while Russian stocks&nbsp;.IMOEX&nbsp;surged to a near one-year high with the support of higher oil prices.



World Bank Group President David Malpass said on Monday that the lender has&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N36D0QC&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">revised</a>&nbsp;its 2023 global growth outlook slightly upward to 2% from a January forecast of 1.7%, but the slowdown from stronger 2022 growth will increase debt distress for developing countries.



The International Monetary Fund (IMF) will release its latest outlook for the global economy at 1300 GMT amid a gathering of policymakers at the IMF World Bank Spring meetings.



(Reporting by Shashwat Chauhan and Bansari Mayur Kamdar in Bengaluru; Editing by Shailesh Kuber)

101416618-rand

South Africa’s rand shines ahead of factory data as dollar dips

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="551" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/12/W3TRJMXBPRNATIXO27SFJRC77U-820x551.jpg" alt="" class="wp-image-422104" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/12/W3TRJMXBPRNATIXO27SFJRC77U-820x551.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/W3TRJMXBPRNATIXO27SFJRC77U-300x202.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/W3TRJMXBPRNATIXO27SFJRC77U-134x90.jpg 134w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/W3TRJMXBPRNATIXO27SFJRC77U-768x516.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/W3TRJMXBPRNATIXO27SFJRC77U-1536x1032.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/W3TRJMXBPRNATIXO27SFJRC77U.jpg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A participant stands near a logo of IMF at the International Monetary Fund &#8211; World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018. REUTERS/Johannes P. Christo</figcaption></figure>



LONDON, April 5 (Reuters)&nbsp;&#8211;&nbsp;The record number of developing nations at risk of a debt crisis will be high on the agenda next week when central bankers, finance ministers and political leaders convene for the World Bank Group and International Monetary Fund (IMF) spring meetings.



Ballooning inflation, escalating borrowing costs and a strong dollar have made repaying loans and raising money significantly more expensive for dozens of developing nations, pushing several into default last year.



Below is a look at countries that face a debt crunch or have already defaulted on international loans.



<h2 class="wp-block-heading" id="h-egypt">EGYPT</h2>



Egypt&#8217;s tourism-dependent economy was hammered by the one-two punch of COVID-19 and soaring food and energy prices, leaving it short of dollars and struggling to pay rising debts.



Cairo secured a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N36400A&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">new $3 billion</a>&nbsp;IMF package in December by&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35U01P&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">committing</a>&nbsp;to a flexible currency, a greater role for the private sector and a range of monetary and fiscal reforms.



Import and currency restrictions have&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N34V2LN&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">weighed on economic activity</a>, and a foreign currency shortage continues despite&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N33Q2H4&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">three sizable devaluations</a>&nbsp;since March 2022 that halved the value of the pound. Inflation stands now at a more than&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AAPN0U1SPC&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">five-year high above 30%.</a>



<h2 class="wp-block-heading">EL SALVADOR</h2>



El Salvador&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N348241&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">cleared a $600 million bond payment</a>&nbsp;hurdle in January. The Central American country has roughly $6.4 billion in outstanding Eurobonds. While the next payment is not due until 2025, concerns about El Salvador&#8217;s high debt service costs and its financing plans and fiscal policies have pressed its bonds into deeply distressed territory.



The country&#8217;s move to make bitcoin legal tender in September 2021 effectively closed the doors to IMF financing. However, the risks over El Salvador&#8217;s embrace of bitcoin&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS0N32702B&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">&#8220;have not materialized&#8221;,</a>&nbsp;the IMF acknowledged.



<h2 class="wp-block-heading">GHANA</h2>



Ghana is in its worst economic crisis in a generation, spending over 40% of government revenues on debt payments last year. In January, it became the fourth country to seek a rework&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N33V1LU&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">under the Common Framework</a>.



The West African country secured a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N3331YY&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">$3 billion agreement</a>&nbsp;with the IMF in December, though it&nbsp;still needs to get financing assurances from bilateral lenders to clinch the final sign-off.&nbsp;The cocoa, gold and oil producer has already reached a deal to&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N34U07Z&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">write down domestic debt</a>&nbsp;and last week&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N3602X0&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">kicked off formal debt talks</a>&nbsp;with international bondholders.



<h2 class="wp-block-heading">LEBANON</h2>



Lebanon&#8217;s financial system began unravelling in 2019 after decades of mismanagement and corruption, and in early 2020 it&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AKBN20U0DH&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">defaulted</a>. Lebanon has had neither a head of state nor a fully empowered cabinet since Oct. 31.



It reached&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AC6N2UG007&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">a provisional $3 billion IMF agreement</a>&nbsp;in April 2022, but the fund recently warned Lebanon was&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS8N35L09D&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">&#8220;in a very dangerous situation</a>&#8221; due to delays on a range of reforms, including banking and exchange rate overhauls. Beirut devalued the official exchange rate for the first time in 25 years in February. Last month its central bank said it would begin&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS8N30Y07U&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">selling unlimited amounts of U.S. dollars</a>&nbsp;to halt spiralling devaluation.



<h2 class="wp-block-heading">MALAWI</h2>



Malawi is grappling with foreign exchange shortages and a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AJ8N34N001&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">budget deficit</a>&nbsp;of some 1.32 trillion kwacha ($1.30 billion), or 8.7% of GDP.



The donor-dependent southern African nation is trying to&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N32I4K6&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">restructure its debt</a>&nbsp;in order to secure more funding from the IMF, which&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N32H2HO&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">approved emergency funds</a>&nbsp;in November.



<h2 class="wp-block-heading">PAKISTAN</h2>



Months of political and economic turmoil, worsened by crippling floods last year and&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N36400A&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">record inflation</a>, put Pakistan in the danger zone.



China&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AFWN35B3PT&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">agreed</a>&nbsp;to refinance $1.8 billion already credited to Pakistan&#8217;s central bank, and last month&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AI8N35L01Z&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">rolled over a $2 billion loan</a>&nbsp;that had matured earlier in March, providing relief during Pakistan&#8217;s acute balance of payments crisis.



But talks with the IMF for a delayed $1.1 billion loan tranche, part of $6.5 billion bailout agreed in 2019,&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AI8N34V007&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">have dragged on</a>&nbsp;and foreign exchange reserves have fallen to less than four weeks of imports.



<h2 class="wp-block-heading">TUNISIA</h2>



The tourism-dependant North African economy is in the throes of a punishing crisis that led to a shortage of basic food items.



A $1.9 billion IMF loan has been stalled for months as Tunisia&#8217;s president has&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N35E1Y3&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">shown little sign of&nbsp;</a>action on key reforms. Most debt is internal but foreign loan repayments are due later this year. Credit ratings agencies have said Tunisia may default.



<h2 class="wp-block-heading">SRI LANKA</h2>



Sri Lanka&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XA0CL&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">defaulted</a>&nbsp;on its international debt last year after economic mismanagement, exacerbated by the COVID-19 pandemic,&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL4N35T0O9&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">sparked a political crisis</a>&nbsp;and left it without dollars for even essential imports.



The IMF signing a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AFWN35S0R2&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">$3 billion bailout package</a>&nbsp;last month could help the South Asian island country secure additional support of nearly $4 billion from the World Bank, Asian Development Bank and other lenders.



Government officials aim to complete debt restructuring talks by September. Sri Lanka is also reworking part of its domestic debt and aims to finalise it by May.



<h2 class="wp-block-heading">UKRAINE</h2>



Ukraine just received the first $2.7 billion tranche under a four-year, $15.6 billion IMF loan program. This is part of a bigger $115 billion global package of support.



The country&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2Z11FQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">suspended</a>&nbsp;all debt payments last year in the wake of Russia&#8217;s invasion, and will need to restructure its borrowings if and when the situation stabilises.



The IMF estimates Ukraine&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N31D1PG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">needs $3-$4 billion</a>&nbsp;a month to keep the country running. Rebuilding Ukraine&#8217;s economy is now expected to cost $411 billion, a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35U01P&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">recent report</a>&nbsp;by the World Bank and others found.



<h2 class="wp-block-heading">ZAMBIA</h2>



The first African country to default during the COVID-19 era in 2020, Zambia is seen as a litmus test for the G20&#8217;s Common Framework initiative set up during the pandemic to streamline debt restructurings. But talks have been remarkably slow, and external debt&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N3612HH&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">crept up to $18.6 billion</a>.



Western officials have&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N3481MB&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">blamed China</a>, its largest bilateral lender, for the hold-up, something that&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N34T1BI&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">China disputes</a>. There have been broad&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N30M0GR&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">disagreements</a>&nbsp;about how much debt the country can afford going forward.



Zambia&#8217;s currency, the kwacha&nbsp;ZMW=, has fallen more than 10% against the U.S. dollar this year, which the central bank has said is adding to inflation. It blamed the drop&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N34V2LN&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">partly</a>&nbsp;on debt restructuring delays.



(Reporting by Marc Jones, Rachel Savage, Karin Strohecker and Libby George, editing by Mark Heinrich)

W3TRJMXBPRNATIXO27SFJRC77U

The developing countries facing a debt crisis

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="533" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/5BJKLQNY65JNLJAAC37N24TIIM-820x533.jpg" alt="" class="wp-image-418142" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/5BJKLQNY65JNLJAAC37N24TIIM-820x533.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/5BJKLQNY65JNLJAAC37N24TIIM-300x195.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/5BJKLQNY65JNLJAAC37N24TIIM-138x90.jpg 138w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/5BJKLQNY65JNLJAAC37N24TIIM-768x499.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/5BJKLQNY65JNLJAAC37N24TIIM-1536x999.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/5BJKLQNY65JNLJAAC37N24TIIM-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: Bank notes of different currencies, including Euro, U.S. Dollar, Turkish Lira or Brazilian Reais, are photographed in Frankfurt, Germany, in this illustration picture taken May 7, 2017. REUTERS/Kai Pfaffenbach/Illustration</figcaption></figure>



BENGALURU, April 5 (Reuters)&nbsp;&#8211;&nbsp;Most emerging market currencies are forecast to drift higher over the coming year as investors fret less about financial stability and snap up riskier assets, according to a Reuters poll of analysts who largely upgraded forecasts from last month.



While most of the currencies are seen gaining over the next 12 months, the March 31-April 4 poll of 60 foreign exchange analysts predicted volatility in the near term, and that only South Korea&#8217;s won and the Thai baht would recoup 2022 losses.



Emerging market (EM) assets have benefited from their exposure to commodities, which have held strong against a weaker U.S. dollar after the Federal Reserve signalled last month it was close to pausing an historically aggressive tightening cycle.



&#8220;With the global economy showing more resilience and the Fed slowing its pace of tightening, we believe EM currencies can outperform relative to G10 peer currencies this year,&#8221; wrote Nick Bennenbroek, international economist at Wells Fargo.



&#8220;Attractive real yields should result in market participants accumulating exposure to developing currencies, while our assumption for contained banking sector stresses should lead to improved risk appetite.&#8221;



While most EM currencies are up against the greenback so far this year, the South Korean won, Russian rouble, South African rand and Turkish lira are down.



For emerging markets more broadly, much still depends on the global path for interest rates, largely led by the Fed in the near term.



&#8220;Unless the Fed sounds overly dovish, this implies a bias for USD upside versus EMFX,&#8221; noted Mitul Kotecha, head of emerging markets strategy at TD Securities.



The Chinese yuan&nbsp;CNY=, Indian rupee&nbsp;INR=, Indonesian rupiah&nbsp;IDR=, Singapore dollar&nbsp;SGD=, and Vietnamese dong&nbsp;VND=&nbsp;are expected to gain 0.5-3% in a year, while the Philippine peso is forecast to weaken about 1%.



Russia&#8217;s rouble&nbsp;RUB=&nbsp;is set for a 3% gain to 77.0 per dollar in the next six months, supported mainly by higher oil prices.



The South African rand&nbsp;ZAR=, down about 5% so far this year, is expected to gain about 2% to 17.5/$ in the next 12 months.



Turkey&#8217;s lira&nbsp;TRY=, the worst performing EM currency last year with a 29% drop, is set to fall about another 15% to 22.5 per dollar in a year. Turkish presidential and parliamentary elections scheduled for May 14 are adding to uncertainty.



(For other stories from the April Reuters foreign exchange poll:&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL4N3671BO&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>)



Reuters Poll &#8211; Emerging market foreign exchange forecasts<a href="https://tmsnrt.rs/40GvD4H" target="_blank" rel="noreferrer noopener">https://tmsnrt.rs/40GvD4H</a>



(Reporting by Vivek Mishra; Polling by Veronica Khongwir and Devayani Sathyan; Editing by Ross Finley and Mark Potter)

Bank notes of different currencies are photographed in Frankfurt, Germany, in this illustration picture

Emerging market currencies to gain as U.S. Fed nears endgame

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/JLZA53TZGJMZBGIYNXJCDTTBVM-820x461.jpg" alt="" class="wp-image-424063" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/JLZA53TZGJMZBGIYNXJCDTTBVM-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/JLZA53TZGJMZBGIYNXJCDTTBVM-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/JLZA53TZGJMZBGIYNXJCDTTBVM-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/JLZA53TZGJMZBGIYNXJCDTTBVM-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/JLZA53TZGJMZBGIYNXJCDTTBVM-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/JLZA53TZGJMZBGIYNXJCDTTBVM-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A Rwandair plane is seen at the Kanombe, Kigali International Airport in Kigali, Rwanda January 12, 2020. REUTERS/Clement Uwiringiyimana</figcaption></figure>



Global carriers warned on Monday that concerns over blocked airline funds in Africa and elsewhere could lead to interruptions in air services if there is no progress in talks to unfreeze money owed.



About $1.6 billion of funds are being withheld&nbsp;in various Africa countries due to&nbsp;currency shortages or other problems, the International Air Transport Association said in a briefing on&nbsp;the launch of an initiative to boost&nbsp;African aviation.



&#8220;The people who suffer as a result of these blocked funds are consumers in these markets, because you cannot expect airlines to continue to provide services if in effect they&#8217;re not being paid,&#8221; IATA Director General Willie Walsh said.



The issue of airline funds&#8217; being blocked in some countries where carriers operate has been rising as demand for hard currency outpaces supply, with IATA stepping up efforts to whittle down a deficit that grew 25% in the last six months of 2022 alone.



According to the Geneva-based body, which represents most of the world&#8217;s major airlines, Nigeria tops the list of countries holding back funds, with Algeria and Ghana also involved.



A total of $2.4 billion is being blocked worldwide.



Nigeria faces severe shortages of foreign currency, meaning airlines cannot easily convert local currency to repatriate revenues earned from ticket sales by foreign airlines.



Aviation Minister Hadi Sirika has said he can only continue to urge the central bank to make dollars available to airlines.



A spokesperson for the Central Bank of Nigeria did not immediately respond to a request for comment on Monday.



About half the $1.6 billion frozen in Africa is tied up in Nigeria, RwandAir Chief Executive Yvonne Makolo told the IATA briefing.



Makolo, designated as the next chairperson and first female leader of the board of the influential IATA, also called for faster progress towards setting up a common aviation market in Africa.



Efforts to liberalise flying, echoing Europe&#8217;s single aviation market, have been under discussion since a landmark treaty known as the Yamoussoukro Declaration in 1988, which was updated 11 years later.



Supporters say liberalising frequencies, fares and capacity would lift barriers that in the past have increased costs.



But despite a fresh initiative by the African Union to create a single African air transport market (SAATM) in 2018, backed by more than 30 states, implementation has been slow.



Analysts say some carriers fear they would be exposed in a market already pinched by competition from the Gulf and Turkey.



Makolo said freeing up the movement of goods and people by air would support the flagship African Continental Free Trade Area (AfCFTA), which the World Bank estimates could lift tens of millions out of poverty by 2035.



&#8220;It&#8217;s an exciting opportunity for the continent, which we really need to take advantage of as quickly as possible,&#8221; she said.



Africa&#8217;s aviation market is recovering faster from the pandemic than the overall industry but is expected to remain in loss, due in part to higher costs and weak infrastructure.



Traffic is expected to double by 2035, IATA said.



(Additional reporting by MacDonald Dzirutwe; Editing by David Goodman and Leslie Adler)

FILE PHOTO: A Rwandair plane is seen at the Kanombe, Kigali International Airport in Kigali

Airlines warn blocked funds dispute could hamper Africa growth

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/blog-2099x600-fm-ch-2-kim-haughton-imf-photos-52661303026-edffa4d55c-o-820x234.jpg" alt="" class="wp-image-424057" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/blog-2099x600-fm-ch-2-kim-haughton-imf-photos-52661303026-edffa4d55c-o-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/blog-2099x600-fm-ch-2-kim-haughton-imf-photos-52661303026-edffa4d55c-o-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/blog-2099x600-fm-ch-2-kim-haughton-imf-photos-52661303026-edffa4d55c-o-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/blog-2099x600-fm-ch-2-kim-haughton-imf-photos-52661303026-edffa4d55c-o-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/blog-2099x600-fm-ch-2-kim-haughton-imf-photos-52661303026-edffa4d55c-o-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/blog-2099x600-fm-ch-2-kim-haughton-imf-photos-52661303026-edffa4d55c-o-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: Kim Haughton/IMF Photos</figcaption></figure>



Smart fiscal policy can help restore price stability and lessen the impact of the cost-of-living crisis.



High inflation can impose serious and lasting costs on the economy and people. But the distributive effects of inflation—the way it transfers money from some individuals to others—are complex.



To respond effectively to the sharpest upsurge in inflation in three decades and to address the damage done to households, policymakers should have a better understanding of how inflation affects various segments of society in different places.



In our&nbsp;<a href="https://www.imf.org/en/Publications/FM/Issues/2023/04/03/fiscal-monitor-april-2023?cid=bl-com-spring2023flagships-FMOEA2023001">April 2023 Fiscal Monitor</a>, we study the effects of (unexpected) inflation on people’s well-being from mid-2021 to mid-2022—a period when food and energy prices rose earlier and faster than other prices. The chapter offers several lessons for policymakers on the impact of inflation on households’ budgets and how fiscal policy can help curb inflation while supporting the vulnerable.



Impact on public finances



Analyzing how inflation affects public finances, our main finding is that&nbsp;unexpected&nbsp;inflation—such as in the recent episode—erodes the real value of government debt at the expense of bondholders. For countries with debt exceeding 50 percent of GDP, each percentage point of unexpected (“surprise”) increase in inflation reduces public debt by 0.6 percentage points of GDP, with the effect lasting for several years.<img decoding="async" alt="" src="https://www.imf.org/-/media/Images/IMF/Blog/Articles/Blog-Charts/2023/March/figure-1-v5.ashx">



As inflation becomes persistent and better anticipated, however, it stops contributing to declining debt ratios.



Likewise, deficit-to-GDP ratios initially decline as spending fails to keep pace with the rise in the monetary value of the economy’s output. But such effects fade even quicker.



Impact on households



Based on public surveys of thousands of households in six economies (Colombia, Finland, France, Kenya, Mexico, and Senegal), we find that inflation from mid-2021 to mid-2022 impacted people through three main channels: their consumption patterns; their income from wages, pensions, or transfers; and their assets and liabilities. The below chart displays the estimated effects of these channels to a developing economy (Kenya) and to an advanced economy (France), prior to any new government intervention in support of households. <img decoding="async" alt="" src="https://www.imf.org/-/media/Images/IMF/Blog/Articles/Blog-Charts/2023/March/figure-2-v5.ashx">



Although the impact varies across countries (and across income groups), the surveys reveal that:



<ul class="wp-block-list">
<li>The faster rise in food prices compared to other prices hurt poor families disproportionately because food represents a higher share of their total consumption. This effect was most pronounced in low-income countries. </li>



<li>Inflation eroded real incomes in commodity-importing countries, as wages across all income groups did not keep pace with prices. </li>



<li>As inflation eroded the monetary value of assets and liabilities, families with negative net worth benefitted at the expense of creditors, particularly in countries with developed financial and credit markets. </li>



<li>Redistributive wealth effects of inflation were also influenced by the age of the head of household: young families, which tend to be net borrowers, experienced gains through the wealth channels, whereas old households saw their wealth eroded.</li>
</ul>



Curbing inflation while protecting the vulnerable



Fiscal policy can support monetary policy in dealing with inflation because it also affects aggregate demand. Our statistical evidence suggests that fiscal policy’s impact on inflation has changed over the decades. For advanced economies we find that, since 1985, reducing public expenditure by 1 percentage point of GDP lowers inflation by half a percentage point.



In addition, fiscal policy can also help protect the vulnerable.



<figure class="wp-block-image"><img decoding="async" src="https://www.imf.org/-/media/Images/IMF/Blog/Articles/Blog-Charts/2023/March/figure-3-v5.ashx" alt=""/></figure>



The economic model used in the chapter incorporates inequality in incomes, consumption, and asset holdings. It shows that when central banks act alone—without the support of fiscal policy—they need to hike interest rates substantially to fight inflation. Fiscal tightening makes it possible to increase interest rates by less to contain inflation.



But to safeguard the poor—who benefit more from public services—tax hikes or cuts in lower-priority spending must be combined with larger transfers. This strategy results, by design, in no drop in consumption for the poor, but also in a lower decline in overall consumption.

blog-2099×600-fm-ch-2-kim-haughton-imf-photos-52661303026-edffa4d55c-o

Fiscal Policy Can Help Tame Inflation and Protect the Most Vulnerable

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208617-1678823740632-gettyimages-1473547817-dsc01618_m78y5jun-820x461.jpeg" alt="" class="wp-image-424008" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208617-1678823740632-gettyimages-1473547817-dsc01618_m78y5jun-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208617-1678823740632-gettyimages-1473547817-dsc01618_m78y5jun-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208617-1678823740632-gettyimages-1473547817-dsc01618_m78y5jun-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208617-1678823740632-gettyimages-1473547817-dsc01618_m78y5jun-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208617-1678823740632-gettyimages-1473547817-dsc01618_m78y5jun-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208617-1678823740632-gettyimages-1473547817-dsc01618_m78y5jun.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



An inflation gauge the Federal Reserve follows closely rose slightly less than anticipated in February, providing some hope that interest rate hikes are helping ease price increases.



The personal consumption expenditures price index excluding food and energy increased 0.3% for the month, the Commerce Department reported Friday. That was below the 0.4% Dow Jones estimate and lower than the 0.5% January increase.



On a 12-month basis, core PCE increased 4.6%, a slight deceleration from the level in January.



Including food and energy, headline PCE increased 0.3% monthly and 5% annually, compared to 0.6% and 5.3% in January.



The softer than expected data came with monthly energy prices decreasing 0.4% while food prices rose 0.2%. Goods prices rose 0.2% while services increased 0.3%.



In other data from the report, personal income increased 0.3%, slightly above the 0.2% estimate. Consumer spending increased 0.2%, compared to the 0.3% estimate.



Stocks opened higher following the report while longer-duration Treasury yields declined.



“The inflation trend looks promising for investors. Inflation will likely be below 4% by the end of the year, giving the Federal Reserve some leeway to cut rates by the end of the year if the economy falls into recession,” said Jeffrey Roach, chief economist at LPL Financial.



Market pricing Friday morning following the inflation report indicated an even split between the Fed raising its benchmark rate another quarter percentage point or holding steady in May.



The Fed’s own unofficial projections released last week pointed to perhaps one more increase this year and no reductions. However, traders expect cuts this year, with end-year pricing for the federal funds rate at 4.25%-4.5%, half a point below the current target range.



While inflation has ebbed in some areas, it has remained pernicious in others. Shelter costs in particular have risen sharply. Fed officials, though, are looking through that increase and expect rents to decelerate through the year.



Still, inflation is likely to remain well above the Fed’s 2% target into 2024, and officials have said they remain focused on bringing down prices despite the current bank turmoil.



Data released Thursday suggests that the problems in banking also may be at least under control. Borrowing through two emergency Fed lending programs decreased slightly last week, indicating that there has been no frantic liquidity dash for banks that may be undercapitalized.

107208617-1678823740632-gettyimages-1473547817-dsc01618_m78y5jun

Key Fed inflation gauge rose 0.3% in February, less than expected

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="600" height="400" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/asian-stock-market.jpg" alt="" class="wp-image-405859" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/asian-stock-market.jpg 600w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/asian-stock-market-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/asian-stock-market-120x80.jpg 120w" sizes="auto, (max-width: 600px) 100vw, 600px" /></figure>



March 31 (Reuters)&nbsp;&#8211;&nbsp;Emerging market stocks rose for a fourth straight session on Friday and were on track for their second quarterly gain in a row, as fears of a banking crisis gradually faded away and focus shifted to key inflation data from the U.S. and eurozone.



The MSCI&#8217;s index for EM stocks&nbsp;.MSCIEF&nbsp;was last up 0.5%, eying a quarterly rise of nearly 4%, which was smaller than the 9% gain made in the last three months of 2022 as fears of higher interest rates and slowdown worries tempered optimism around developing world assets that was at play in the final months of last year.



Currencies were also set for a second consecutive quarterly rise, with the MSCI&#8217;s EMFX index&nbsp;.MIEM00000CUS&nbsp;up almost 2% in the first three months of the year.



Developing world currencies, including the Mexican peso&nbsp;MXN=, South Africa&#8217;s rand&nbsp;ZAR=&nbsp;and the Czech crown&nbsp;EURCZK=, were among the top performers for the quarter, given their high yielding nature.



Mark Haefelem, chief investment officer at UBS Global Wealth Management, recommends long positions on the emerging market carry basket, noting that the basket, which includes the peso, rand and crown, &#8220;allows investors to benefit from the improved outlook for emerging markets and their high nominal interest rate carry.&#8221;



A carry trade is a trading strategy that involves borrowing at a low interest rate and investing in an asset that provides a higher rate of return.



Focus later in the day will shift to the dollar as data is expected to show U.S. consumer prices, excluding volatile food and fuel prices, remained unchanged in February from a month ago.



<a href="https://www.reutersconnect.com/all?search=all%3AL1N3630NY&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Inflation</a>&nbsp;in the euro zone dropped by the most on record in March but growth in core prices accelerated, data showed, likely strengthening the case for more interest rate hikes by the European Central Bank.



The rand firmed against the dollar, extending gains after the South African Reserve Bank&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AJ8N33B01S&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">raised</a>&nbsp;its main interest rate by a higher-than-forecast 50 basis points to 7.75% on Thursday in a surprise move.



The <a href="https://www.reutersconnect.com/all?search=all%3AL1N3630M2&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Russian rouble</a> RUBUTSTN=MCX was steady against the dollar, but pulled back from a more than 11-month low against the euro RURRUBTN=MCX.



The Mexican peso&nbsp;MXN=&nbsp;eyed gains for another day after the country&#8217;s central bank hiked the benchmark&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N3622P4&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">interest rate</a>&nbsp;by 25 basis points to 11.25% on Thursday, but took a more dovish tone on the future of rate moves.



Separately, EM local&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N3623FC&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">currency debt</a>.JGEGDCM&nbsp;looked set for quarterly returns of 4.8%, outstripping U.S. 10-year Treasuries. Top of the pack are Colombia, Hungary and Chile, with gains of nearly 10% or higher, and they are seen broadly done with their interest rate hiking cycles.



For GRAPHIC on emerging market FX performance in 2023, see&nbsp;<a href="http://tmsnrt.rs/2egbfVh" target="_blank" rel="noreferrer noopener">http://tmsnrt.rs/2egbfVh</a>



For GRAPHIC on MSCI emerging index performance in 2023, see&nbsp;<a href="https://tmsnrt.rs/2OusNdX" target="_blank" rel="noreferrer noopener">https://tmsnrt.rs/2OusNdX</a>



For TOP NEWS across emerging markets <a href="https://www.reutersconnect.com/all?search=all%3ARR:5877&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Subhranshu Sahu)

asian stock market

Stocks, currencies eye second straight quarterly gain

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="517" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106944604-16321717072021-09-20t205319z_656748898_rc2wtp9oerrm_rtrmadp_0_worldbank-ethics-report-820x517.jpeg" alt="" class="wp-image-416545" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106944604-16321717072021-09-20t205319z_656748898_rc2wtp9oerrm_rtrmadp_0_worldbank-ethics-report-820x517.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106944604-16321717072021-09-20t205319z_656748898_rc2wtp9oerrm_rtrmadp_0_worldbank-ethics-report-300x189.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106944604-16321717072021-09-20t205319z_656748898_rc2wtp9oerrm_rtrmadp_0_worldbank-ethics-report-143x90.jpeg 143w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106944604-16321717072021-09-20t205319z_656748898_rc2wtp9oerrm_rtrmadp_0_worldbank-ethics-report-768x484.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106944604-16321717072021-09-20t205319z_656748898_rc2wtp9oerrm_rtrmadp_0_worldbank-ethics-report-1536x969.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106944604-16321717072021-09-20t205319z_656748898_rc2wtp9oerrm_rtrmadp_0_worldbank-ethics-report-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A participant stands near a logo of World Bank at the International Monetary Fund &#8211; World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018.
Johannes Christo | Reuters</figcaption></figure>



WASHINGTON, March 30 (Reuters)&nbsp;&#8211;&nbsp;The World Bank on Thursday submitted a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AW1N34P03O&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">long-awaited reform plan</a>&nbsp;that would boost annual lending to middle-income countries to fight climate change and other global crises by about $5 billion annually while protecting the bank&#8217;s top-tier credit rating.



The bank said the&nbsp;<a href="https://www.devcommittee.org/sites/dc/files/download/Documents/2023-03/Final_DC2023-0002%20evolution%20paper.pdf" target="_blank" rel="noreferrer noopener">&#8220;evolution road map&#8221;</a>&nbsp;would be discussed with its Development Committee steering body on April 12, during the spring meetings of the World Bank and International Monetary Fund, but discussions would continue on further measures to boost lending, including to the world&#8217;s poorest countries.



&#8220;The World Bank Group (WBG) must evolve in response to the unprecedented confluence of global crises that has upended development progress and threatens people and the planet,&#8221; the document said. It said action was urgently needed to meet poverty reduction goals and respond to accelerating global challenges such as climate change, pandemic risk and conflict.



The paper, which includes changes since a draft reviewed in January, lays out short-term actions and some points to be considered after the April meetings, the bank said.



The World Bank estimates that governments in developing countries and the private sector would need to spend $2.4 trillion a year on average through 2030 to address climate change, conflict and pandemics, or about 6% of the total economic output of developing countries.



The United States, which is the bank&#8217;s largest shareholder and has been pressing the World Bank to take bolder action, had no immediate comment on the road map.



U.S. Treasury Secretary Janet Yellen on Wednesday said the U.S. nominee to succeed World Bank President David Malpass would be charged with accelerating progress on the reforms.



Malpass, who announced in February that he would leave his post by June 30, flagged the proposed boost in the financing capacity of the bank&#8217;s middle-income lending arm, the International Bank for Reconstruction and Development (IBRD), in a speech in Niamey, Niger, earlier on Thursday.



He said the World Bank had doubled its financing for global public goods during his presidency, reaching $100 billion from 2020-2022, and underscored his concerns about &#8220;unsustainable levels&#8221; of public debt in many developing countries.



More than half of the world’s poorest countries were in or at high risk of debt distress, and their problems were mounting given higher interest rates and inflation that were leading to capital shortages, Malpass said.



As a result, governments needed to &#8220;plan for continued financial stress,&#8221; Malpass said, calling for further efforts by developing countries to remove wasteful subsidies, improve public procurement and broaden their tax base.



Malpass told Reuters last month the bank could change&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N34W2C9&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">its internal lending guidelines</a>&nbsp;to free up $4 billion in lending capacity for the IBRD each year &#8211; or $40 billion over 10 years, a sum that falls far short of recommendations made by an independent panel to the Group of 20 major economies last year.



The IBRD in December also raised its sustainable annual lending limit by $2 billion, beginning in fiscal 2024. Its lending ceiling for fiscal 2022 was $37.5 billion.



(Reporting by Andrea Shalal and David Lawder in Washington; Editing by William Maclean and Matthew Lewis)

106944604-16321717072021-09-20t205319z_656748898_rc2wtp9oerrm_rtrmadp_0_worldbank-ethics-report

World Bank’s long-awaited reform plan would boost lending by $5 billion a year

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="612" height="357" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1.jpg" alt="" class="wp-image-400669" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1.jpg 612w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1-300x175.jpg 300w" sizes="auto, (max-width: 612px) 100vw, 612px" /><figcaption class="wp-element-caption">World map with charts and graphs as symbols of global finance</figcaption></figure>



March 29 (Reuters)&nbsp;&#8211;&nbsp;Emerging market stocks rose on Wednesday after Alibaba&#8217;s shares lifted the Hong Kong bourse, with the internet giant&#8217;s revamp plan spurring hopes that clampdowns on China&#8217;s tech sector may be ending, while currencies softened against a steadying dollar.



The Hang Seng index&nbsp;.HSI&nbsp;rose nearly 2%, with shares of Alibaba Group Holding&nbsp;9988.HK&nbsp;jumping about 15% after it said on Tuesday it was planning to split into six units and explore fund raisings or listings for most of them.



The decision was cheered by markets and perceived as a light at the end of the tunnel for many investors who had seen a wave of China&#8217;s regulatory crackdowns as a major cloud hanging over Beijing&#8217;s private sector.



&#8220;Alibaba&#8217;s planned super-split into six separate divisions has lifted China&#8217;s tech sector, helping a wave of positivity to wash over markets,&#8221; said Susannah Streeter, head of money and markets at Hargreaves Lansdown.



&#8220;The expectation is that other big Chinese tech giants could make similar moves, helping to potentially unlock more value, and aligning with authorities&#8217; demands for greater competition as it ramps up its anti-trust drive.&#8221;



The MSCI&#8217;s index for emerging market stocks&nbsp;.MSCIEF&nbsp;rose 0.7% for the second straight day, while its currencies counterpart&nbsp;.MIEM00000CUS&nbsp;dipped about 0.1% against a steadying dollar.



South Africa&#8217;s rand&nbsp;ZAR=&nbsp;was flat, as investors awaited the South African Reserve Bank&#8217;s (SARB) interest rate decision on Thursday, with markets expecting a 25-basis-point increase.



Israel&#8217;s shekel&nbsp;ILS=&nbsp;lost 0.6% after a more than 1% jump the previous session in a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35Z1N4&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">relief rally</a>&nbsp;sparked by Prime Minister Benjamin Netanyahu decision to pause his plan to overhaul Israel&#8217;s judiciary, which had sparked big protests.



Hungary&#8217;s forint&nbsp;EURHUF=&nbsp;extended its gains for a second day against the euro, after its central bank remained hawkish and shot down bets of easing its monetary cycle anytime soon.



<a href="https://www.reutersconnect.com/all?search=all%3AL1N3610F0&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Polish</a>&nbsp;central banker Joanna Tyrowicz said monetary policy should remain restrictive until net inflation and wages converge to levels consistent with the inflation target. The zloty&nbsp;EURPLN=&nbsp;dipped 0.2% against the euro.



Peru&#8217;s sol&nbsp;PEN=&nbsp;will be in focus later in the day after prosecutors said they were&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N3610A7&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">investigating</a>&nbsp;President Dina Boluarte and former president Pedro Castillo for allegedly laundering money as part of a criminal organization. Peru dollar bonds holding steady.



For GRAPHIC on emerging market FX performance in 2023, see&nbsp;<a href="http://tmsnrt.rs/2egbfVh" target="_blank" rel="noreferrer noopener">http://tmsnrt.rs/2egbfVh</a>



For GRAPHIC on MSCI emerging index performance in 2023, see&nbsp;<a href="https://tmsnrt.rs/2OusNdX" target="_blank" rel="noreferrer noopener">https://tmsnrt.rs/2OusNdX</a>



For TOP NEWS across emerging markets <a href="https://www.reutersconnect.com/all?search=all%3ARR:5877&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Robert Birsel)

Stocks up on Alibaba optimism, currencies subdued by dollar

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="612" height="350" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1040865674-612x612-1.jpg" alt="" class="wp-image-400879" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1040865674-612x612-1.jpg 612w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1040865674-612x612-1-300x172.jpg 300w" sizes="auto, (max-width: 612px) 100vw, 612px" /><figcaption class="wp-element-caption">Stock market report. 3d illustration</figcaption></figure>



March 27 (Reuters)&nbsp;&#8211;&nbsp;Emerging market stocks and currencies dipped on Monday in a dull start to the final week of the first quarter as fears about a global banking crunch persisted, with South Africa&#8217;s rand down ahead of a central bank decision later this week.



EM stocks carried declines over from Friday when Germany&#8217;s biggest lender Deutsche Bank&nbsp;DBKGn.DE&nbsp;shares plunged alongside a sharp jump in the cost of insuring its bonds against the risk of default.



The MSCI&#8217;s index for EM equities&nbsp;.MSCIEF&nbsp;fell 0.9%, down for the second straight day and on track for a small 1% gain in the first quarter.



The broader upbeat picture for developing economy assets that saw them come into favour in the final months of last year and the start of 2023 has fizzled out amid concerns over growth and interest rates and the banking sector.



&#8220;At this stage, the only predictive certainty is a further tightening of lending conditions, and not just in the U.S.,&#8221; said Vincent Chaigneau, head of research at Generali Investments.



Shares in China&nbsp;.SSEC&nbsp;and Hong Kong&nbsp;.HSI&nbsp;fell after data showed the&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35Z01X&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">slump</a>&nbsp;in Chinese industrial firms&#8217; profits deepened in the first two months of 2023, and amid geopolitical tensions.



Russian President Vladimir Putin&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35X0EO&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">said</a>&nbsp;on Saturday the country would station tactical nuclear weapons in Belarus.



&#8220;Over the weekend we learnt that Putin plans to deploy tactical nuclear weapons in Belarus, despite Xi Jinping earlier making it &#8216;very clear&#8217; to Putin that he should not,&#8221; Chaigneau said.



The rouble&nbsp;RUBUTSTN=MCX&nbsp;strengthened, while most other EM currencies weakened against the safe-haven dollar, helped by rising oil prices and this week&#8217;s month-end tax payment, which usually sees exporters convert foreign exchange revenue to pay local liabilities.



South Africa&#8217;s rand&nbsp;ZAR=&nbsp;fell 0.7%. The South African Reserve Bank (SARB) will announce its rate decision on Thursday, with markets expecting a 25-basis-point hike.



Other EM central banks are also scheduled to decide on lending rates this week, with&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35V2YK&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Colombia&#8217;s</a>&nbsp;central bank seen raising the interest rate to 13%, while The&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N35V4RO&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">National Bank of Hungary</a>&nbsp;(NBH) is widely expected to keep its base rate steady at 13% on Tuesday.



The&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL4N35W1N7&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Bank of Thailand</a>&nbsp;is set to implement its fifth consecutive 25-basis-point interest rate hike on Wednesday.



Brazil&#8217;s President Luiz Inacio Lula da Silva cancelled a&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35X0BR&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">trip</a>&nbsp;to China due to medical reasons, and the March 27-31 visit will be rescheduled for a later date.



Focus will now fall on an eagerly awaited fiscal framework in Brazil, which was initially promised by Finance Minister Fernando Haddad for March, but was postponed by Lula until after the planned China trip.



For GRAPHIC on emerging market FX performance in 2023, see&nbsp;<a href="http://tmsnrt.rs/2egbfVh" target="_blank" rel="noreferrer noopener">http://tmsnrt.rs/2egbfVh</a>



For GRAPHIC on MSCI emerging index performance in 2023, see&nbsp;<a href="https://tmsnrt.rs/2OusNdX" target="_blank" rel="noreferrer noopener">https://tmsnrt.rs/2OusNdX</a>



For TOP NEWS across emerging markets&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3ARR:5877&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



For CENTRAL EUROPE market report, see&nbsp;CEE/



For TURKISH market report, see&nbsp;.IS



For RUSSIAN market report, see&nbsp;RU/RUB



(Reporting by Shreyashi Sanyal in Bengaluru; editing by Jason Neely)

Stock market report. 3d illustration

Stocks, currencies pressured by banking crunch

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GHANJGPKIVPX5AW5LQSQOEVJ7I-820x547.jpg" alt="" class="wp-image-423855" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GHANJGPKIVPX5AW5LQSQOEVJ7I-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GHANJGPKIVPX5AW5LQSQOEVJ7I-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GHANJGPKIVPX5AW5LQSQOEVJ7I-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GHANJGPKIVPX5AW5LQSQOEVJ7I-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GHANJGPKIVPX5AW5LQSQOEVJ7I-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GHANJGPKIVPX5AW5LQSQOEVJ7I-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: U.S. Vice President Kamala Harris listens during a roundtable discussion at the NAACP National Convention in Atlantic City, New Jersey, U.S., July 18, 2022. REUTERS/Hannah Beier</figcaption></figure>



WASHINGTON, March 24 (Reuters)&nbsp;&#8211;&nbsp;Vice President Kamala Harris starts a weeklong trip to Africa this weekend as the United States seeks to pitch itself as a better partner than China, which has invested heavily in the continent over several decades.



Harris will discuss China&#8217;s engagement in technology and economic issues in Africa that concern the United States, as well as China&#8217;s involvement in debt restructuring, senior U.S. officials said.



One of the three countries Harris will visit is Zambia, which was the first African country to default on its sovereign debt during the COVID-19 pandemic, and is&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AJ8N34G00A&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">working</a>&nbsp;with its creditors, including China, to reach an agreement.



&#8220;We&#8217;re not asking our partners in Africa to choose,&#8221; said a senior official, describing the competition with China, although he added that the U.S. has &#8220;real concerns about some of China&#8217;s behavior in Africa&#8221; and its &#8220;opaque&#8221; business dealings.



Harris will be in Ghana from March 26-29, then in Tanzania from March 29-31. Her final stop is Zambia, on March 31 and April 1. She will meet with the three countries&#8217; presidents and plans to announce public- and private-sector investments.



The official, who spoke on condition of anonymity because of the sensitivity of the matter, said Harris would discuss the best ways for the international community to address debt challenges faced by Ghana and Zambia.



The White House hosted an Africa Leaders Summit in December, and President Joe Biden is expected to travel to Africa this year.



Harris has a personal connection to Zambia. Her maternal grandfather worked in the country, and she visited him there as a girl.



&#8220;The Vice President is very much looking forward to returning to Lusaka, which is a part of her family&#8217;s story and a source of pride,&#8221; one of the officials said.



Harris will also meet with young leaders and business representatives and discuss topics such as climate change and food insecurity.



(Reporting by Nandita Bose and Steve Holland in Washington. Editing by Gerry Doyle)

FILE PHOTO: U.S. VP Harris attends the NAACP convention in Atlantic City

US Vice President Harris to address China’s influence and debt distress in Africa visit

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="612" height="408" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1076949610-612x612-1.jpg" alt="" class="wp-image-400697" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1076949610-612x612-1.jpg 612w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1076949610-612x612-1-300x200.jpg 300w" sizes="auto, (max-width: 612px) 100vw, 612px" /><figcaption class="wp-element-caption">Double exposure of coin stack with city background and world map, financial graph, world map and global network business concept idea, element by NASA.</figcaption></figure>



March 20 (Reuters)&nbsp;&#8211;&nbsp;Emerging market stocks fell on Monday, with Hong Kong shares hitting three-month lows as UBS&#8217;s bailout of Credit Suisse did little to stem fears of banking sector contagion, while South Africa&#8217;s rand dipped ahead of anti-government protests.



The MSCI&#8217;s index for emerging market stocks&nbsp;.MSCIEF&nbsp;fell 1%, with Hong Kong&#8217;s Hang Seng index&nbsp;.HSI&nbsp;ending 2.7% lower. Bank of East Asia&nbsp;0023.HK&nbsp;shares dropped more than 4% to a 10-week low, while Standard Chartered&#8217;s Hong-Kong listing&nbsp;2888.HK&nbsp;tumbled more than 7%, the worst performance in a year.



UBS said over the weekend it would buy fellow Swiss bank&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35S02R&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Credit Suisse</a>&nbsp;for 3 billion francs ($3.2 billion). Shares in Credit Suisse&nbsp;CSGN.S&nbsp;plunged more than 60% in European trading while UBS&nbsp;UBSG.S&nbsp;was down 9% at 0950 GMT.



&#8220;It is not yet known exactly where more pain will emerge in the banking sector, but investors fear the problems are not yet over,&#8221; said Susannah Streeter, head of money and markets at Hargreaves Lansdown.



&#8220;But as risk aversion grips the sector, the worry is that overall banks will become more cautious in their lending &#8230; worries are rattling investors about what repercussions a potential lending squeeze will have on the global economy.&#8221;



The Federal Reserve, European Central Bank and Bank of Japan vowed to make it even easier&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35R0IU&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">to buy dollars</a>, upping the frequency of supply operations.



China&#8217;s stocks&nbsp;.CSI300&nbsp;also ended lower, while Turkish stocks&nbsp;.XU100&nbsp;fell 0.8%.



Currencies in the developing world were largely muted, with the MSCI&#8217;s EMFX index&nbsp;.MIEM00000CUS&nbsp;down 0.2%, ahead of a key Federal Reserve interest rate decision during the week.



The Fed is now expected to keep its key lending rate unchanged at the end of its two-day policy meeting on Wednesday, in a stark contrast to last week&#8217;s bets of a 25 basis-point hike.



South Africa&#8217;s rand&nbsp;ZAR=&nbsp;fell 0.6% against the dollar, ahead of planned&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N35S16S&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">protests</a>&nbsp;by the Marxist Economic Freedom Fighters (EFF) party, for crippling power cuts and to demand the resignation of President Cyril Ramaphosa.



Stocks in the country, however, rose&nbsp;.JTOPI&nbsp;1% amid higher gold prices.



For GRAPHIC on emerging market FX performance in 2023, see&nbsp;<a href="http://tmsnrt.rs/2egbfVh" target="_blank" rel="noreferrer noopener">http://tmsnrt.rs/2egbfVh</a>



For GRAPHIC on MSCI emerging index performance in 2023, see&nbsp;<a href="https://tmsnrt.rs/2OusNdX" target="_blank" rel="noreferrer noopener">https://tmsnrt.rs/2OusNdX</a>



For TOP NEWS across emerging markets&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3ARR:5877&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



For CENTRAL EUROPE market report, see&nbsp;CEE/



For TURKISH market report, see&nbsp;.IS



For RUSSIAN market report, see&nbsp;RU/RUB



(Reporting by Susan Mathew in Bengaluru; Editing by Jacqueline Wong)

istockphoto-1076949610-612×612-1

Stocks slide as bank fears linger, South African rand down before protests

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="612" height="357" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1.jpg" alt="" class="wp-image-400669" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1.jpg 612w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1-300x175.jpg 300w" sizes="auto, (max-width: 612px) 100vw, 612px" /><figcaption class="wp-element-caption">World map with charts and graphs as symbols of global finance</figcaption></figure>



March 16 (Reuters)&nbsp;&#8211;&nbsp;South Africa&#8217;s rand bounced on Thursday as the dollar eased and some calm was restored in markets after an emergency lifeline for embattled lender Credit Suisse by Swiss authorities, ahead of a key European Central Bank (ECB) meeting later in the day.



South Africa&#8217;s rand&nbsp;ZAR=&nbsp;firmed 0.7%, after falling 1.6% as a slump in the shares of Credit Suisse coming just days after the sudden collapse of Silicon Valley Bank in the United States intensified fears of a global banking crisis.



But&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35O01H&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Credit Suisse</a>&nbsp;said it would borrow up to $54 billion from the Swiss central bank to shore up liquidity, which helped bring back some confidence in global financial markets.



The broader emerging markets&nbsp;currencies&nbsp;index&nbsp;.MIEM00000CUS&nbsp;was flat, with Asian&nbsp;units&nbsp;trading mixed as market sentiment overall remained fragile.



&#8220;Expecting another nervous day in FX markets,&#8221; said Francesco Pesole, FX strategist at ING.



&#8220;The question now is whether investors will be happier that CS has access to liquidity or will continue to focus on the CS business model and the trend in capital levels.&#8221;



The Russian rouble&nbsp;RUBUTSTN=MCX&nbsp;fell towards its weakest mark against the dollar in almost 11 months, dragged down by sharply lower oil prices.



Wild swings in commodity prices have also affected developing world assets.



Emerging market stocks&nbsp;.MSCEIF&nbsp;dipped around 0.7%, as heavyweights Hong Kong&nbsp;.HSI&nbsp;and China&nbsp;.CSI300&nbsp;failed to join the broader rally in markets.



All eyes were on the&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N35O13Z&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">ECB meeting</a>&nbsp;later in the day for the first big test of how policymakers will respond to growing fears about banks. The ECB is seen raising rates by another hefty 50 basis points.



Most central and eastern European currencies were mixed, with Hungary&#8217;s forint&nbsp;EURHUF=&nbsp;reversing early gains to trade slightly lower against the euro, while the Czech crown&nbsp;EURCZK=&nbsp;edged higher.



Polish&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS8N35008J&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">central banker</a>&nbsp;Ludwik Kotecki said conditions will not be right for cutting interest rates until the end of 2025. The zloty&nbsp;EURPLN=&nbsp;was flat.



The&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N35O2EO&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Ugandan</a>&nbsp;shilling&nbsp;UGX=&nbsp;dipped slightly on the back of continuing elevated demand for hard currency from players in the interbank market, traders said.



Spreads on the JPMorgan EMBI Global Diversified index&nbsp;.JPMEGDR&nbsp;widened further to mark a fresh four-month high standing at 499 bps.



For GRAPHIC on emerging market FX performance in 2023, see&nbsp;<a href="http://tmsnrt.rs/2egbfVh" target="_blank" rel="noreferrer noopener">http://tmsnrt.rs/2egbfVh</a>



For GRAPHIC on MSCI emerging index performance in 2023, see&nbsp;<a href="https://tmsnrt.rs/2OusNdX" target="_blank" rel="noreferrer noopener">https://tmsnrt.rs/2OusNdX</a>



For TOP NEWS across emerging markets&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3ARR:5877&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



For CENTRAL EUROPE market report, see&nbsp;CEE/



For TURKISH market report, see&nbsp;.IS



For RUSSIAN market report, see&nbsp;RU/RUB



(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shailesh Kuber)

South African rand rises against soft dollar, CEE FX eyed ahead of ECB decision

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="612" height="357" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1.jpg" alt="" class="wp-image-400669" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1.jpg 612w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1030878162-612x612-1-300x175.jpg 300w" sizes="auto, (max-width: 612px) 100vw, 612px" /><figcaption class="wp-element-caption">World map with charts and graphs as symbols of global finance</figcaption></figure>



NEW YORK, March 9 (Reuters)&nbsp;&#8211;&nbsp;Emerging markets are facing their demons as traders mull whether U.S. Federal Reserve interest rates will rise as high as 6%, a level that could kick weaker countries when they&#8217;re down, while diverging global growth paths and China&#8217;s reopening might cushion some of the blow for the bigger ones.



Expectations for where the Fed&#8217;s terminal rate would peak have been rising at breakneck speed: Markets are pricing in a 5.5%-5.75%&nbsp;range&nbsp;for September, while the CME&nbsp;<a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" target="_blank" rel="noreferrer noopener">FedWatch tool</a>shows a near 50% chance&nbsp;for the band to hit 6% that month.



The scale and pace of the move makes for uncomfortable reading for investors in developing stocks, bonds and currencies that have often buckled under rising global rates.



&#8220;The current repricing risk in the Fed&#8217;s terminal fed funds rate to perhaps 6% in a short period of time is in the context of (the) response to inflation running stubbornly well-above target in a weakening global GDP growth environment,&#8221; Satyam Panday, chief emerging markets economist at S&amp;P Global Ratings told Reuters.



&#8220;This mix is generally a net negative for emerging markets.&#8221;



Expectations for further Fed hikes had been for 25 basis point&nbsp;increments,&nbsp;but Fed Chair Jerome Powell on Tuesday brought&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N35F184&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">a faster pace back to the table</a>. Few expect a smooth ride&nbsp;for the remainder of the week,&nbsp;with the monthly U.S. jobs report for February providing markets with more evidence to chew over.



&#8220;Fed tightening towards 6% would firmly test historical &#8216;pain thresholds&#8217; for emerging market assets,&#8221; said UBS strategist Manik Narain in a note, predicting India&#8217;s rupee, China&#8217;s yuan and the Philippine and Chilean pesos could weaken as much as 5% if the Fed ramped up rates to 6%.



A recent Barclays analysis showed a 50 basis point Fed rate hike would increase&nbsp;interest rate&nbsp;volatility, which &#8220;would be more destabilizing initially, as it typically comes with EM FX underperformance, which could trigger a further leg up in EM rates.&#8221;



Analysts at JPMorgan expect the dollar to weaken once the terminal rate stabilizes, but a&nbsp;50-basis point&nbsp;Fed hike &#8220;would be a regime-shift in favor of outsized USD-strength.&#8221;



<h2 class="wp-block-heading" id="h-frontier-pain">FRONTIER PAIN</h2>



&#8220;Frontier markets is where you&#8217;ll likely see the brunt of the hit&#8221; of sharply rising rates, said Sahil Mahtani, multi-asset strategist at investment firm Ninety One.



The number of smaller, riskier emerging markets where investors demand a premium of 10 percentage points or more over safe-haven U.S. Treasuries has remained broadly steady at around 30&nbsp;countries,&nbsp;with a recent rally bringing no relief, analysts at Tellimer found. These countries, which&nbsp;include Kenya, Egypt and Pakistan,&nbsp;are essentially locked out of capital markets.



But local&nbsp;fixed-income&nbsp;markets in bigger developing economies are also set to feel the pinch. A 6% Fed rate environment alongside still-hot inflation does&nbsp;make short-term rates in&nbsp;Chile and India as well as Poland, the Czech Republic and Hungary most vulnerable, UBS found.



Flows to EMs soared in January&nbsp;but slowed to a crawl in February, signaling a warning to investors.&nbsp;Citi data showed on Monday that outflows resumed last week, with real money leaving Latin America and emerging Europe, the Middle East and Africa while&nbsp;hot money, or speculative capital,&nbsp;left Asia and Latam.



Investors, especially on the equities side, could see China&#8217;s reopening somewhat offsetting a looming downturn in the&nbsp;United States&nbsp;and some of Fed rates&#8217; historic weight on emerging markets.



Emerging stocks&nbsp;.MSCIEF&nbsp;are up just 2% this year after a combined 26% drop in the previous two and broadly lag developed peers. Chinese equities could provide a safe haven in a 6% fed funds rate scenario, UBS said.



The emerging market universe being more Asia-centric than in previous sharp increases of global rates means that investors can&#8217;t &#8220;look at the textbook of history&#8221; according to Nuno Fernandes, a New York-based portfolio manager for GW&amp;K’s Emerging Wealth Equity Strategy.



China accounts for nearly a third in the EM equity benchmark&nbsp;.MSCIEF&nbsp;and near 5% in the&nbsp;fixed-income&nbsp;hard-currency index&nbsp;.JPMEGD, which is supportive of the asset class.



&#8220;Investors are conditioned to think that EM tail risk emerges in the context of aggressive U.S. rate hiking cycles,&#8221; said Ninety One&#8217;s Mahtani. &#8220;I think it&#8217;s dangerous to say this time is different, but it feels like it&#8217;s not that mechanical this time.&#8221;



(Reporting by Rodrigo Campos; additional reporting by Amruta Khandekar; editing by Karin Strohecker and Diane Craft)

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Economy

Sovereign debtors, creditors agree on steps to jumpstart debt restructurings

Currencies flat ahead of U.S. CPI, geopolitical tensions hit HK shares

IMF warns deeper financial turmoil would slam global growth

South Africa’s rand shines ahead of factory data as dollar dips

The developing countries facing a debt crisis

Emerging market currencies to gain as U.S. Fed nears endgame

Airlines warn blocked funds dispute could hamper Africa growth

Fiscal Policy Can Help Tame Inflation and Protect the Most Vulnerable

Key Fed inflation gauge rose 0.3% in February, less than expected

Stocks, currencies eye second straight quarterly gain

World Bank’s long-awaited reform plan would boost lending by $5 billion a year

Stocks up on Alibaba optimism, currencies subdued by dollar

Stocks, currencies pressured by banking crunch

US Vice President Harris to address China’s influence and debt distress in Africa visit

Stocks slide as bank fears linger, South African rand down before protests

South African rand rises against soft dollar, CEE FX eyed ahead of ECB decision

Frontier countries to suffer most if Fed rate gets to 6% -analysts

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