The weak inflation reading for June out of South Africa this week strengthens the case for the SARB to cut interest rates on Thursday. And further out we think that rates will be lowered by more than the consensus and investors currently anticipate, regardless of what happens with the inflation target. Elsewhere, Nigeria’s tax revenues are rising, but the recent GDP rebasing exercise means that, in the round, the tax-to-GDP ratio is now even lower than previously thought. Substantial increases in revenue will be needed if the government wants to raise spending in key areas as well as place the public finances on a stable footing.
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