SA: new cabinet, old problems; SDRs no bonanza

This week’s cabinet re-shuffle in South Africa has hit the rand and, while the new finance minister appears to be an investor-friendly choice, it will be a tall order to stabilise the public debt ratio. Meanwhile, the boost to IMF reserve assets (SDRs) approved by the Fund this week will provide some much-needed breathing space for policymakers in Zambia, Ghana, Ethiopia and Kenya. But the extra SDRs won’t resolve underlying debt problems.
Virag Forizs Emerging Markets Economist
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Africa Data Response

South Africa GDP (Q3)

South Africa’s GDP contracted by 1.5% q/q in Q3 as violent unrest and a third virus wave hit the economy hard, and the more recent data suggest that activity remained depressed even before the latest rise in COVID-19 cases driven by the Omicron variant. Against this backdrop, monetary policy tightening is unlikely to be as aggressive as most currently anticipate.

7 December 2021

Africa Economics Weekly

Lockdown lessons from SA, influx of jabs and cash?

South African policymakers appear to be reluctant to impose restrictions in the face of the threat from the Omicron variant, but their hand could be forced if the health system comes under strain. In previous waves, measures have been tightened when hospitalisations have breached 5,000. While we’re some way off that, the figures are on an upwards path. Meanwhile, ambitious pledges by Africa’s key development partners including China and the EU on vaccines and infrastructure investment will lift the region’s longer-term economic prospects. Finally, even with the IMF on board, restoring Zambia’s debt sustainability will remain challenging.

3 December 2021

Africa Economics Update

Debt sustainability in Zambia: mission impossible?

Zambia’s new administration has made encouraging noises about restoring macroeconomic stability and addressing the country’s public debt problem. But it will be a tall order to secure a large restructuring and stick to the fiscal consolidation that will be needed to leave the public debt ratio on an even keel.

2 December 2021

More from Virag Forizs

Africa Data Response

South Africa Manufacturing PMI (Jul.)

South Africa’s manufacturing PMI tanked in July as activity was hit by violent unrest and tighter virus containment measures. And while activity is likely to rebound this month, South Africa’s recovery is likely to continue to lag behind other major EMs.

2 August 2021

Africa Economics Weekly

South Africa’s fiscal tightrope, FX reshuffling in Nigeria

"Post-unrest relief measures announced by the South African authorities will probably go some way to offset the blow to the economy. The government expects to be able to stick to its fiscal consolidation plan, but the path to do so has narrowed again. Meanwhile in Nigeria, the central bank’s move this week to shake up foreign exchange provision in the country risks hurting economic activity and exacerbating inflationary pressures."

30 July 2021

Africa Economics Update

Nigeria: rate hike risks easing, FX rules surprise

Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting and, if we’re right in expecting the economic recovery to disappoint, policy settings are likely to remain unchanged for some time. Meanwhile, the announcement on changes in foreign exchange provision reaffirms our view that Nigeria’s heavily controlled FX system is not going anywhere either.

27 July 2021
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