Ethiopia's reform momentum faces risks, waning donor support: IMF
The IMF, in an extensive report, praised Ethiopian authorities for implementing economic adjustments, including subsidy cuts, monetary tightening and tax reforms.
However, it warned that rising risks, such as a resurgent parallel foreign exchange market and fragile security conditions, could hinder progress and complicate debt restructuring efforts.
Ethiopia remains in default and is seeking comparable debt relief from bondholders after agreeing terms in principle with official creditors earlier this year.
"The outlook remains subject to downside risks given security challenges and declining donor support," said IMF deputy managing director Nigel Clarke.
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The Citizen
3 hours ago
- The Citizen
G20 finance downside risks dominate global economic outlook
The global economic outlook is not as rosy as it seemed to be just a few months ago due to geopolitical issues and US tariffs. The downside risks still dominate the global economic outlook, with policy priorities for the G20 finance ministers and central bank governors will focus on building resilience and boosting medium-term growth. Gita Gopinath, the first deputy managing director of the IMF, states in her closing remarks after the third meeting of G20 finance ministers and central bank governors that high levels of policy uncertainty remained a key theme in these discussions. 'But so too did the shared objective to navigate through this uncertainty and seek ways, domestically and collectively, to spur growth.' She says in April the IMF's World Economic Outlook forecast projected global growth of 2.8% in 2025 and 3.0% in 2026, well below the historical average of 3.7%. 'This included significant downgrades to major economies such as the US and China, owing to greater policy uncertainty, trade tensions and softer demand momentum. 'Global headline inflation was projected to decline, but at a slower pace, reaching 4.3% in 2025 and 3.6% in 2026.' ALSO READ: SA to prioritise food security, economic growth in G20 presidency, says Ramaphosa IMF has strong evidence of front-loading ahead of US tariff increases Gopinath pointed out that since April, economic indicators reflect a complex backdrop shaped by trade tensions. 'We saw strong evidence of front-loading ahead of tariff increases and some trade diversion. 'We also saw an improvement in global financial conditions as select trade deals lowered average tariffs. On inflation, cooling demand and falling energy prices point to a continued decline, albeit with variation across countries. 'While we will update our global forecast at the end of July, downside risks continue to dominate the outlook and uncertainty remains high.' Against this backdrop, she says, policymakers should focus on resolving trade tensions and implementing macroeconomic policies to address underlying domestic imbalances. 'This includes restoring fiscal space and ensuring debt is on a sustainable path. 'To maintain price and financial stability, monetary policy must be carefully calibrated to country-specific circumstances and use clear and consistent communications. Central bank independence must be protected. 'Structural reforms remain essential to lift medium-term growth and offset demographic shifts, by boosting productivity, supporting job creation and leveraging new technologies.' ALSO READ: 'Not very pleasing' – Ramaphosa's tough talk to Gauteng ahead of G20 Summit Important to strengthen public finances for global economic outlook Gobinath also emphasised the importance of strengthening public finances. 'The IMF welcomes the renewed focus on domestic revenue mobilisation, which is indispensable for strengthening public finances and helping countries, especially here in Africa, to achieve development goals. 'Our analysis suggests that low-income countries could raise an additional 7% of gross domestic product (GDP) if they achieved their estimated tax potential.' She said the IMF is playing its part by supporting countries in reforming domestic tax policies and broadening tax bases, strengthening administration to improve tax collection and their efficiency and improving tax legal certainty to attract foreign and domestic investment. 'We also support a stronger focus on public spending efficiency, which is vital for investing in sustainable development within tight fiscal constraints. The IMF is helping through governance diagnostics, macro-fiscal framework design, and improvements to public investment management and the management of state-owned enterprises.' She pointed out that although financial conditions have eased since April, trade and geopolitical uncertainty are still elevated and financial stability risks remain in focus. 'Vigilant surveillance and robust supervision remain paramount and recent progress in financial sector oversight must continue, particularly for NBFIs, which now account for more than 50% of the financial sector. 'Improving cross-border payments systems, including through new financial technologies, can help boost growth and strengthen macro-financial stability.' ALSO READ: Deputy Minister warns low-income countries will be hit hardest by geopolitical tensions Godongwana also worried about global economic outlook South Africa's Minister of Finance, Enoch Godongwana, stated that the meeting took place during a period of fragile global economic growth. 'While inflation is gradually moderating and financial conditions have started to stabilise in some regions, uncertainty continues to weigh heavily on global growth prospects. 'Rising trade barriers, persistent global imbalances and new geopolitical risks are significant concerns. Many developing countries, especially in Africa, remain burdened by high and rising debt vulnerabilities, constrained fiscal space and a high cost of capital that limits their ability to invest in their people and their futures.' He warned that technological shifts and climate-related shocks and extreme weather events pushes the achievement of the Sustainable Development Goals (SDGs) by 2030 further out of reach. 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IOL News
a day ago
- IOL News
Kenya's defiant youth committed to ousting impotent Ruto
Protesters chant anti-government slogans atop a vandalised car used as a barricade to block a road during Saba Saba Day demonstrations in Nairobi on July 7, 2025. Saba Saba Day marks the uprising on July 7, 1990 when Kenyans demanded a return to multi-party democracy after years of autocratic rule by then-president Daniel Arap Moi. Image: AFP Kim Heller President William Ruto is facing fierce scrutiny. Calls for the first citizen of Kenya to resign are mounting as rage simmers around the government's inability to fuel economic recovery and growth, corruption, and police brutality. Kenya is experiencing significant political turbulence. In June 2024, the youth of Kenya, worn down by poverty, joblessness, and ever-increasing living expenses, took to the streets in a show of wrath against the Finance Bill and the Ruto administration. The Bill proposed taxation on basic goods and would have placed an unbearably heavy economic burden on Kenya's most indigent citizens. At least sixty protestors were killed in the 2024 anti-taxation protests. This year, blood has continued to flow in the streets of Kenya. The anti-taxation protest has evolved into a mighty movement against the lacklustre economic performance of the Ruto administration, its unscrupulous and repressive state institutions, and its score of broken promises to revive youth employment and economic prospects. Since 25 June, forty-seven protestors have been killed by the police, and hundreds arrested. Muffling the cries of anguished young Kenyan protestors through state savagery is the mark of a government in the throes of illegitimacy. Public trust in Ruto's administration is plunging. Neo-liberal, anti-poor reforms and austerity measures, devised by the IMF and World Bank and poorly navigated by Ruto, have brought no relief or prospects for Kenya's young population. Kenya is the IMF's second-largest borrower, after Egypt. Its dependency on the IMF poses a perpetual threat to Kenya's sovereignty. Kenya's former Chief Justice, Willy Mutunga, has criticised Ruto's administration for placing foreign creditors ahead of local needs. Ruto's fiscal approach, bankrolled by foreign parties, is geared towards keeping bankruptcy at bay and tackling debt servicing and inflation control. However, it appears to be backfiring, as ordinary Kenyans, especially the youth, reject foreign intervention as an economic burden, worsening the economic decline and debt situation. For now, the Kenyan economy is dangerously weak. Deep-seated frustrations with the incumbent government have created an ever-present storm of discontent. It is in this political whirlwind that Ruto could be ousted by a hostile electorate in 2027. The political quick fix of co-opting Raila Odinga into the government has not tamed discontent. Nor does it offer economic cure or consolation. Despite parliamentary domination and somewhat feeble opposition, Ruto may fail to win a second Presidential term. His survival will hinge on his readiness to reconfigure the economy to serve the neediest, abandon anti-poor fiscal policies, and create much-needed jobs. If he fails to address allegations of government corruption and denounce police violence against citizens, Ruto will be a no-hoper in the upcoming game of thrones. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ In a television interview with Citizen TV Kenya this week, well-known exiled Kenyan political activist and constitutional lawyer, Dr. Miguna Miguna, spoke about how, through the ages, the youth are always the mortar of change. He commended the current generation of youth in Kenya for doing a "marvellous, historical job". President William Ruto pipes an altogether different tune. On 9 July 2025, the President of Kenya instructed police to shoot protesters who damage businesses in the leg to hinder them. His message was clear: "Kenya cannot and will not be ruled through threats, terror, or chaos. Not under my watch." In the recent protests, a pre-teen was killed by a stray bullet. Her death will forever be a sad reminder of a nation at war with itself. It is heartbreaking treachery by Ruto, who pledged to be the champion of the youth. The recent death of well-known blogger, Albert Ojwang, while he was in police custody, and the killing of an innocent street trader, Boniface Kariuki, by police during the July 2025 protests have exacerbated tensions. The centre is not holding. The people of Kenya are decisively turning against their President. Ruto's international friends are unlikely to lend a hand to save him. Left to fester, the pandemonium of protests could impair the 2027 election, further imperil job creation, and endanger international and regional trade. Ongoing protest action also poses a threat to regional stability, trade routes and economic cooperation. Kenya, once a beacon of resilience in East Africa, is fast becoming a trigger for political mobilisation and activism of and by the youth, inspiring the birth of regional movements. The grievances that fuel the protest must be addressed, but not through repressive mechanisms. The challenge for Ruto is to move Kenya from rupture to recalibration. The wise words of renowned Kenyan author, Ngugi wa Thiong'o ring true, "Our lives are a battlefield on which is fought a continuous war between the forces that are pledged to confirm our humanity and those determined to dismantle it; those who strive to build a protective wall around it, and those who wish to pull it down." The Ruto administration is unlikely to find its humanity and humility in the current battleground that is playing out in the streets of Kenya. The current administration is failing in its duty to protect its citizenry. For many decades, Dr Miguna has spoken of the need for a new constitutional order in Kenya and the creation of a democratic developmental state, founded on economic decolonisation. This would be a promised land for the economically dislodged and disempowered youth of Kenya. But such economic and political recalibration is unlikely to be part of the playbook of the Ruto regime. The very generation that Ruto promised to uplift out of poverty in his election campaign is the same generation that could well drive him out of the seat of power. That would be a touch of justice. * Kim Heller is a political analyst and author of No White Lies: Black Politics and White Power in South Africa. ** The views expressed do not necessarily reflect the views of IOL, Independent Media or The African.
TimesLIVE
2 days ago
- TimesLIVE
IMF says Egypt makes mixed reform progress, cites state dominance of economy
Egypt's progress on structural reforms under an $8bn (R143.13bn) International Monetary Fund (IMF) loan agreement has been mixed, the fund says, citing the public sector's continued dominance of the economy as a problem. In its long-delayed staff report for the fourth review of Egypt's programme, the IMF said there had been limited headway in reducing the role of state- and military-owned firms which enjoy preferential treatment in the form of tax exemptions, access to prime land and cheap labour. These companies remain largely shielded from public scrutiny, with "very limited transparency about their financial condition", the fund said. Egypt's reliance on a state-led growth model, centred on mega-projects and public investment, was curbing job creation and stifling the private sector in an increasingly volatile global environment, it said. "The resulting financial and resource distortions have left Egypt with a large informal economy and few buffers against growing global financial, geopolitical and climate shocks," the fund said.
