March is starting on a positive note as most indices under our coverage had a positive performance.
The EGX30 is the best performer of the week gaining over 6% which marks its highest weekly gains since December 2016. The visit of the Saudi Crown Prince to Cairo with the talk of a cooperation in a new megaproject has scattered optimism in a context of a recovering economy.
It has been reported that Kenya has asked for an extension to its $1.5bn standby facility to the IMF. The facility is supposed to expire on 13th March of this year. To reach the goals of the programme, the government will take measure to cut its fiscal deficit and adjust controls on commercial interest rates. Kenya does not have access to the standby facility since June last year when it missed budget-deficit targets. The extension should enable the country to complete the necessary reviews. Key to IMF’s decision is Kenya’s willingness to review the cap it put on commercial interest rates which have been hampering credit growth to the private sector. IMF expects Kenya’s GDP growth to reach 5.5% in 2018 which is above sub-Saharan average. But the biggest news regarding Kenya this week is the meeting between President Kenyatta and opposition leader Odinga on Friday. Both leaders agreed to put in place a new office to tackle the divisions ranging from opposition complaints over the election to tensions between ethnic groups and corruption. The NSE lost 0.36%.
The JSE gained 2.47%. In an interview, newly appointed Public Enterprises minister Pravin Gordhan stated that South Africa’s economy “could easily” grow 2 to 3% in the next couple of years based on expected restructuring of the state-owned companies. According to Gordhan, the new administration is working on the governance of long-time troubled state companies among which is Eskom. The optimism regarding growth is shared by Finance minister Nene who mentioned that the country’s National Treasury will likely raise projections for economic growth this year in its October mid-term budget. VAT will increase starting from beginning April to stabilise debt and drive away a third credit rating downgrade. Higher taxes are expected to add 36bn rand in revenue in the year through 2019. This with additional budget cuts should amount to 85bn rand over three years. First, statistics showed that Q4 GDP grew above forecasts and now the new administration appears to be willing to make the necessary reforms, all of this is supportive for sentiment. Still, South African Airways reported a net loss of about 5.6 bn rand in the year through March 2017. While sentiment is on the positive side, we still need to wait a little for fundamentals to follow suit.
According to its central bank governor, Rwanda’s economy is expected to expand 6.5% this year up from 5.2% in 2017. Rwangombwa anticipates inflation to average 5% in 2018, slightly up from 4.9% last year. The RSE added 0.26%.
IMF said it is confident that Ghana will put in place remaining measures needed for a positive review of its $918 million aid programme next month. This is the final year of a programme to strengthen the country’s economy which suffered from deficits, public debt, low growth and high inflation following the commodity crisis. Ghana plans to issue up to $2 billion of sovereign issuance by June to pay down debt that reached 68.7% of GDP last November and finance the 2018 budget. The GSE lost 1.91%.
