Zam­bia’s State of the Econ­omy re­port, Ghana’s New Tax pol­icy and Kenya’s rate cut

Zambian Business Times - - EQUITIES -

AFRICAN mar­kets started April on a mixed note with Uganda achiev­ing the best per­for­mance fol­low­ing strength­en­ing fun­da­men­tals in the coun­try. Var­i­ous de­vel­op­ments drove the stock mar­ket per­for­mance key of which in­clude:

Ghana’s new tax pol­icy

New tax pol­icy mea­sures could be pre­sented to par­lia­ment by July says Ghana­ian Fi­nance Min­is­ter Ken Ofori-Atta. These new taxes are in­tended to sup­port the coun­try’s ris­ing ex­pen­di­ture. The Fi­nance Min­is­ter also in­di­cated that Ghana could tap into the in­ter­na­tional mar­ket to raise about $1.5bn by end of April 2018. IMF sug­gested that Ghana should re­duce the tar­get to $500mn in or­der to con­trol the coun­try’s debt stock. The GSE added 0.77%.

Kenya’s 50bps rate cut

The Cen­tral Bank of Kenya (CBK) has de­creased the cost of its dis­tress lend­ing fa­cil­ity for banks from 16% to 15.50% fol­low­ing the re­cent change in pol­icy rate. This re­duc­tion mir­rors the 50 ba­sis points cut of the bench­mark lend­ing rate ear­lier in March. The NSE added 1.90%.

In La­gos, af­ter some de­lay due to the in­abil­ity of the com­mit­tee to have a quo­rum, the mon­e­tary pol­icy com­mit­tee fi­nally met this week. For its first meet­ing, the Cen­tral Bank of Nige­ria (CBN) re­tained the Mon­e­tary Pol­icy Rate (MPR) at 14%. There is a case for eas­ier pol­icy in Nige­ria with in­fla­tion some­what de­cel­er­at­ing re­cently. Should in­fla­tion con­tinue to de­cel­er­ate, next MPC meet­ing could see in­ter­est rate cut. The NGSE lost 1.60%.

Zam­bia’s state of the econ­omy

Mar­garet Mhango Mwanakatwe, Zam­bian Min­is­ter of Fi­nance, pre­sented the state of the econ­omy last week. She re­ported that Zam­bia’s ex­ter­nal debt is cur­rently at $8.7 bn from $6.9 bn in De­cem­ber 2016. Zam­bia’s debt has be­come a cause for con­cern for the mar­ket with the Min­is­ter her­self rec­og­niz­ing that fi­nanc­ing its de­vel­op­men­tal pro­grammes from debt and hand­outs from co­op­er­at­ing part­ners is not sus­tain­able. Ms Mwanakatwe an­nounced that the gov­ern­ment is car­ry­ing out a de­tailed debt sus­tain­abil­ity ex­er­cise to be com­pleted within the next two weeks be­fore dis­cus­sions with the IMF. Al­ready in Septem­ber 2017, a debt sus­tain­abil­ity anal­y­sis by the IMF and the World Bank showed that Zam­bia’s debt had been ris­ing ex­ces­sively since 2011. At the end of 2011 Zam­bia’s debt stood at $1.9 bn. More­over, the re­port high­lighted the shift in the com­po­si­tion of pub­lic debt to­wards ex­ter­nal non-con­ces­sional debt like the Eurobonds which rose to al­most 50% in the same pe­riod. The LuSE added 0.70%.

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