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TimesLIVE
7 days ago
- Business
- TimesLIVE
Senegal working on rebasing country's GDP, says finance ministry
Senegal has begun recalculating its gross domestic product using an updated base year in a move that could result in an improvement in its debt metrics, its finance ministry said on Tuesday in response to a credit rating downgrade. Senegal revealed last year it had billions of dollars of previously unreported debt, leading the International Monetary Fund (IMF) to suspend its lending programme and triggering a series of ratings downgrades and a sharp selloff in its government bond market. The IMF is awaiting final details on the extent of the misreporting and how it was able to take place before possibly restarting its programme with the West African nation. "While the [Senegalese] authorities have expressed their intention to rebase GDP, this is not a prerequisite for progressing in our engagement," said the IMF via a spokesperson. "The timing of a potential Board meeting will depend on the progress made in resolving the misreporting issue and reaching agreement on key policy measures." The government has been working on a "GDP rebasing exercise" the finance ministry said in a statement, the results of which are expected to be published in the coming months. "This exercise, which has been in preparation for some time, will provide a more accurate picture of the size of the Senegalese economy by adopting a scope aligned with its level of economic development," the ministry said, without providing an estimate of the likely revision. Updating the base year that a country uses to calculate its economic output is an internationally accepted practice. It is meant to take into account new emerging industries and other developments, but it can raise questions among economists when it results in big debt-to-GDP improvements. The finance ministry statement was responding to a credit rating downgrade by S&P late on Monday, in which the agency warned that the government's debt-to-GDP ratio had jumped to almost 120%. S&P debt figures had not taken account of the potential impact of the ongoing rebasing exercise, however, the finance ministry said. Senegal's international bonds , which have lost over a quarter of their value since September's hidden debt announcements, rose following the government's response to the ratings downgrade. The country's 2033 maturity climbed by almost 1.6 cents to 66 cents on the dollar — a third below its face value. Senegal's finance ministry did not respond to requests for comments on the GDP rebasing plan. Some observers remained sceptical of the long-term effectiveness of the exercise. "It will flatter the debt-to-GDP ratio but gross financing needs will remain elevated," said Kevin Daly, portfolio manager for emerging debt at Aberdeen Investments in London. Aurelie Martin, emerging market fixed income analyst at Ninety One, said Senegal's long-term stability will also require it to ensure revenue and foreign exchange generation. "A higher GDP mechanically results in a lower debt-to-GDP ratio, which is undoubtedly positive. It is not, however, a silver bullet," she said.
Reuters
17-06-2025
- Business
- Reuters
Senegal delays publication of quarterly budget execution reports
JOHANNESBURG, June 17 (Reuters) - Senegal has postponed until June 23 the publication of its budget execution reports for the last two quarters, the finance ministry said in a statement, as the new administration works to rebuild investor trust after a hidden-debt scandal. The original release date for the reports was not immediately clear. The International Monetary Fund froze disbursements on its programme with Senegal last year after the nation admitted it had misreported debt and deficit data. The IMF, whose financing is seen as key for the West African nation, said no talks on a new arrangement can start until the case is resolved. A review of government finances by Senegal's court of auditors in February found Dakar had understated its deficits by up to seven percentage points of GDP a year, pushing the end-2023 debt ratio to about 100% of GDP versus the 74% the previous government had reported. The finance ministry said in a communique dated June 16 that fourth-quarter 2024 and first quarter data will now be released on June 23 to guarantee the "sincerity and reliability" of the figures. That reflects the government commitment to "restore budget orthodoxy and transparency", it said, adding identifying, reclassifying, and verifying data was part of its strategy to clean up public finances. Earlier in June, the IMF welcomed Senegal's plan to boost tax compliance and cut reliance on external funding, but stressed it does not affect the waiver process, leaving the programme still in limbo after a year without cash. Kevin Daly, investment director at aberdeen Investments, said it was still potentially "a very bumpy road ahead for Senegal". "We are negative on Senegal," he said. Senegal's dollar bonds are the worst performing in Africa according to JPMorgan data, handing investors losses of 11.5% year-to-date, against 4.9% returns for the average African sovereign. Senegal's 2033 bonds traded 0.3 cents down at 65.75 cents, Tradeweb data showed. They are at a significant discount to regional peers, said Ninety One portfolio manager Thys Louw.
Reuters
27-03-2025
- Business
- Reuters
Central banks of Ghana and Kenya to pause rates in coming days until May: Reuters poll
JOHANNESBURG, March 27 (Reuters) - The Bank of Ghana and the Central Bank of Kenya will pause cutting interest rates at their upcoming meetings and resume in May, a Reuters poll found on Thursday, as inflation challenges in the region suggest a cautionary stance for policymakers. While central banks in countries directly in the firing line of U.S. President Donald Trump's import tariffs pause or end cutting cycles, some in Africa are expected to cut between 125-400 basis points (bps) this year. The Bank of Ghana (BOG) has cut rates by 300 bps since last year and the survey suggested rates would be cut 100 bps to 26.00% in May with another cut of 125 bps to 24.75% in the third quarter. The key rate was seen ending the year at 23.00%. All but one of 10 analysts surveyed between March 20 and 26 expected the BOG to keep rates steady at its monetary policy meeting on Monday. "In Ghana, we believe that inflation hovering well above target and recent FX weakness will lead the BOG to hold rates at 27.00%," wrote Kevin Daly, managing director and senior economist at Goldman Sachs. "That said, given the BOG's history of premature monetary easing, the possibility of a cut cannot be completely ruled out." The case for pausing is similar in Kenya, where all but one analyst expect Kenya's central bank to keep the benchmark rate on hold at 10.75%. The meeting in Nairobi is due on April 8. Inflation in Kenya rose for a fourth month in a row in February, reaching 3.5%. A 75 bps cut to 10.00% in May is expected, followed by a 50 bps cut in the third quarter that will see rates end the year at 9.50%. The Central Bank of Kenya has cut rates by 200 bps since August. "Disinflation in coming months will motivate rate cuts in Kenya and Ghana," Rafiq Raji, non-resident senior associate with the Africa programme at the Center for Strategic and International Studies in Washington D.C.. The Central Bank of Nigeria (CBN) is expected to keep rates unchanged at its meeting due next month through to end-June before cutting 150 bps to 26.00% in the third quarter and by 100 basis points to 25.00% in November. Since the start of last year the CBN has hiked rates by 475 bps. Inflation there eased to 23.18% in February from 31.70% from a year earlier, a month after it rebased its Consumer Price Index to reflect changes in consumption patterns.
