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Angola

December 06, 2019
ANGOL 8 1/4 05/09/28 Price
ANGOL 9 3/8 05/08/48 Price

IMF approves second disbursement

In a statement published today, the IMF announced the completion of the second review of the economic program under the USD3.7bn Extended Fund Facility (EFF) agreement. This second review unlocks a USD 247 mn disbursement.

Mr. Tao Zhang, IMF Deputy Managing Director and Acting Chair said that the Central Bank of Angola (BNA) has made progress eliminating the remaining imbalances in the foreign exchange market and that they reduced the restrictions on the formation of market prices in foreign exchange auctions. Similarly, it recommends the BNA to maintain its strict monetary policy stance and be ready to harden further in order to support the deflation process.

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Mozambique

December 06, 2019
MOZAM 10 1/2 01/18/23 Price

Slow economic growth in the third quarter

In the third quarter of the year, Mozambique's economy grew 0.3% compared to the previous quarter of the agreement to the National Statistics Institute (INE). In year-on-year terms, GDP grew 2.0%. With this result, the economy continues to slow down. After the fourth quarter of 2018 grew an annual rate of 3.0%, Mozambique's economy slowed, with growth rates of 2.5% in the first quarter, 2.3% in the second quarter and now 2.0% in the third quarter.

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Ukraine

December 06, 2019
UKRAIN 9 3/4 11/01/28 Price

Zelenskiy and Putin will hold talks on Monday over the Donbass territory

On Monday, president Volodymyr Zelenskiy will have his first meeting with Russian leader Vladimir Putin to end the five-year conflict with Moscow-backed separatists in eastern Ukraine. The talks will pursue three goals: to reach a prisoner exchange, a lasting ceasefire and regaining full control over Ukraine border with Russia.

Zelenskiy faces significant internal political pressures from right-wing parties to not sign an agreement. Nevertheless, it is unlikely that he will take a radical approach. He is trying instead to exchange prisoners or troops pulling back from the front line.

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Egypt

December 05, 2019
EGYPT 6.588 02/21/28 Price
EGYPT 7.903 02/21/48 Price

Government launches a new economic recovery program

This Wednesday, December 4, during a cabinet meeting government launched several initiatives in cooperation with the Central Bank of Egypt (CBE) to support the industrial sector, housing, and boost investment as part of its economic recovery program.

These measures are the most recent push of the government to stimulate competitiveness and growth in private sector, a key element in the next stage of the economic program launched at the end of 2016 with the devaluation of the currency.

The IHS Markit Egypt Purchasing Managers ’Index (PMI) — which reflects the conditions of companies in the non-oil sector–  decreased to 47.9 in November from 49.2 in October, well below the 2019 monthly average of 49.2 and below the 50.0 threshold that separates growth from contraction.

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Pakistan

December 05, 2019
PKSTAN 6 7/8 12/05/27 Price

Moody’s improves credit rating

On December 2, Moody’s upgraded Pakistan’s credit rating outlook from negative to stable due to the IMF assistance program, which has helped stabilize the economy. A statement explains that the balance of payments dynamics will continue to improve, supported by policy adjustments and currency flexibility, as well as decreased external vulnerability risks.

Moody's expects Pakistan's current account deficit to continue narrowing in the current and next fiscal year (ending June of each year), averaging around 2.2% of GDP, from more than 6% in fiscal 2018 (the year ending June 2018).

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El salvador

December 05, 2019
ELSALV 8 5/8 02/28/29 Yield
ELSALV 6 3/8 01/18/27 Yield

Is Bukele approaching China?

The president of El Salvador, Nayib Bukele, is making an official visit to China. This is the second time that a Salvadoran president visits the country after the renewal of diplomatic relations last year.

The chinese government already approved a non-reimbursable cooperation deal that will be used for the construction of a stadium, a national library, a water treatment plant and other infrastructure projects. Although Bukele did not disclose the total planned investment, he described the donation as "gigantic."

The main concern about Bukele's approach to China is its possible impact on bilateral relation with the US. Bukele has established strong ties with Donald Trump’s administration. In October, US ambassador to El Salvador, Douglas Johnson, advised President Nayib Bukele to "act cautiously in his involvement with China, in order to avoid diplomatic and debt traps." So far, Bukele has not established any agreement that involves financing from China. On his Twitter, Bukele clarified that the resources granted by China do not represent a debt trap because they are donations.

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Venezuela

December 04, 2019
VENZ 9 1/4 09/15/27 Price
VENZ 7 03/31/38 Price

Opposition lawmakers involved in acts of corruption

On December 1, investigative journalism site Armando.info denounced a corruption scheme that involves nine representatives from the opposition parties Primero Justicia (PJ), Voluntad Popular (VP) and Un Nuevo Tiempo (UNT). The operation was intended to clean the image of Colombian businessman Carlos Rolando Lizcano, owner of Salva Foods 2005, the company that manages the stores of the Maduro’s state-backed food distribution program “Local Supply and Production Committee (CLAP).”

Interim president, Juan Guaidó, reacted to wrongdoing allegations by announcing on his Twitter account that the National Assembly would invalidate all documents exonerating companies or citizens linked to corruption. He also announced the restructuring of the Comptroller's Commission of the AN; the suspension of deputies involved in the "Maletín Verde" case; and the beginning of an independent investigation with the participation of NGOs.

The scandal is a strong setback for the Guaidó administration’s dwindling momentum, and puts the interim president in a tough spot for the January 5 National Assembly board of directors meeting, which is set to pick the assembly’s president for 2020 (Guaidó is seeking reelection).

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Zambia

December 04, 2019
ZAMBIN 8.97 07/30/27 Price

Seeking to increase mining production

November inflation print was the highest in three years and stood at 10.8% year-on-year. Last week, as indicated in our last report, the country's central bank increased its interest rate from 10.25% to 11.5% aiming to contain currency depreciation and keep inflation within the target range (7%, +/-1%). To further complicate things, the low production of copper - whose export earnings constitute 70% of total fiscal revenues – has deepened the kwacha depreciation trend.

On December 1, the Minister of Mines, Richard Musukwa, hosted a meeting with investors to attract FDI to the country's mining sector. Musukwa says he "trusts" that gold mining at several strategic locations in the nation will greatly contribute to the country's economy.

“We have gold reserves across several parts of Zambia, but the Mwinilunga one, is phenomenon because it has brought new tidings in terms of Zambia’s mineral resources and we strongly feel that once exploited, this is the resource that can make a huge contribution to gold reserves across the world,” said the minister.

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Lebanon

December 04, 2019
LEBAN 7 03/20/28 Price
LEBAN 7 1/4 03/23/37 Price

New rumours for prime minister nomination arise; Central Bank cuts rates

Today, the Central Bank of Lebanon announced a cut to interest rates on dollar and local-currency deposits to 5% and 8.5%, respectively, starting on December 5.

The cut on interest rates provides relief to the banking system by substantially reducing its foreign currency needs. The measure ends an era of high rates on bank deposits, which had been used to attract dollars to Lebanese banks. The foreign currency inflows helped Lebanon to cover its external gap, but at a cost that ultimately became unsustainable.

The measures will last six months. The bank seeks to gain time until a new government is formed and more aggressive measures can be taken. Regarding the election of the new Prime Minister, President Michel Aoun will meet with legislators on December 9 to appoint a new Prime Minister. Sunni businessman Samir Khatib has emerged as the favorite. Shiite groups are expected to support him in the meeting. However, protesters rejected Khatib possible nomination.

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Sri lanka

December 04, 2019
SRILAN 6 3/4 04/18/28 Price

Fiscal deficit will soar to 7% of GDP in 2019

The fiscal deficit could reach 7% of GDP in 2019 due to higher electoral spending and the fall in revenues due to Easter Sunday attacks, Finance Minister Mahinda Rajapaksa said Tuesday in a statement. Sri Lanka expects to reduce the fiscal deficit in the medium term to -4%.The figure implies a significant increase of the 2.2% deficit target by April-end 2020 presented in the provisional budget approved by parliament on October 23.

The deterioration in the fiscal gap is also a consequence of the fiscal stimulus measures announced last week by Mahinda Rajapaksa that had been promised during the election campaign of Gotabaya Rojapaksa. The Nation Construction Tax (NBT) was eliminated and the Value Added Tax (VAT) was reduced from 15% to 8%.

The statement published by the Minister of Finance says that fiscal stimulus measures will boost economic activity and decrease the prices of goods and services and eventually lead to lower inflation.

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Ecuador

December 03, 2019
ECUA 7 7/8 01/23/28 Price

Ecuador to issue USD 1.9 bn in domestic bonds

The Ministry of Finance announced through a statement addressed to the Stock Exchanges of Quito and Guayaquil the issuance of domestic law bonds in the domestic market worth USD 1,936 mn. Such issuances intend to partially finance the 2019-2020 investment program along with other investment programs and projects, according to the document dated November 28.

On November 28, the National Assembly returned the 2020 Draft Budget to the Executive branch with 20 observations. The Executive has until December 8 to send a new document or insist on the original version.

On Friday, November 29, the first debate on the tax reform proposal – which seeks to raise USD 620 mn by 2020 – took place within the National Assembly. There were 27 Parliament interventions. Broadly speaking, there was a better reception of this new draft, although some points are pending for an in-depth discussion

Two weeks after the collapse that led Ecuador's sovereign debt to its worst level in three years, bonds have registered a moderate recovery. ECUADOR 10.5% 2020 rallied from 95.76 to 99.22, led by a strong pull-to-par in anticipation of its maturity on March 24.

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Nigeria

December 03, 2019
NGERIA 6 1/2 11/28/27 Price
NGERIA 7 5/8 11/28/47 Price

Nigeria will issue debt in early 2020

On December 2, in an interview on the sidelines of a regional conference of the International Monetary Fund (IMF) in Dakar, Finance Minister Zainab Ahmed stated that they could issue debt in international markets during the first quarter of 2020 to complete the Budget financing. The amount the government offers will be determined by how much it raises from multinational banks such as the African Development Bank.

The 2020 budget estimates a fiscal deficit of USD 6.0 bn. Adding the debt service (USD 6.1 bn), the financing needs for next year would amount to USD 12.1 bn, which represents 2.6% of GDP.

On November 26, President Muhammadu Buhari submitted to the senate an external borrowing plan of USD 22.7 bn. Buhari summited a similar request for USD 30bn in 2016, but the Senate rejected his old request and said it would take indebtedness to an unsustainable level.

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Gabon

December 02, 2019
GABON 6.95 06/16/25 Price

The French Development Agency granted the last EUR 37 mn disbursement to Gabon

On November 29, the Ministry of Economy Roger Owondo Mba and the French Development Agency (AFD) signed an amendment to the Budgetary Support Agreement that triggers the last disburment of EUR 37.5 mn. This three-year agreement was signed in December 2017 for a total amount of EUR 224.8 mn, including the last disbursement.

The Fund is expecting to disburse the last EUR 372 mn out of the EUR 978.7 mn granted in total, the Gabonese Treasury has already paid EUR 606.7 mn. The IMF said GDP is expected to reach 3.4% this year, compared to the 0.8% in 2018.

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Suriname

December 02, 2019
SURINM 9 1/4 10/26/26 Price

President is found guilty of killing 15 political opponents in 1982

On November 29, a military court in Suriname found guilty President Desi Bouterse of executing 15 government critics in December 1982 following a coup. The trial that began in 2007 concluded that Bouterse oversaw an operation in which the soldiers under his command kidnapped 16 opponents of the government (lawyers, journalists, military and university professors) and 15 of them were killed in Fort Zeelandia in the capital, Paramaribo. Only one of the detainees - a union leader - survived the killings and was able to testify against Bouterse.The court sentenced him to 20 years in jail. However, the court has not yet issued an arrest warrant against him. Under Surinamese law, he cannot be arrested until all appeals have been exhausted.

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Angola

December 02, 2019
ANGOL 8 1/4 05/09/28 Price
ANGOL 9 3/8 05/08/48 Price

2020 Budget: Austere

On November 20, the Angolan government submitted to the Parliament the 2020 budget proposal. The General State Budget (GSB)  draft for 2020 estimates a budget surplus of 1.2% of GDP.

The Gross Domestic Product growth is projected at around 1.8% in 2020 driven mainly by a better performance of the non-oil sectors, including agriculture, fishing and manufacturing. In the opinion of legislator Albertina Ngolo, of the main opposition party National Union for the Total Independence of Angola (Unita), the PGE proposal generates uncertainty since the macroeconomic indicators are "discouraging."

On the same day of the presentation, the Assembly approved the budget with 119 votes in favor, 46 against and 9 abstentions. The deputies who voted in favor belong to the president's party (MPLA), which has a large majority in parliament with 150 of 220 seats.

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