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IMF says Mideast, North Africa economies resilient in 2022

IMF says Mideast, North Africa economies resilient in 2022

The economies of Middle Eastern and North African countries were resilient this year, but double-digit inflation is expected to slow growth in 2023, the International Monetary Fund said Monday.

The IMF forecast GDP growth at 5% in 2022 for countries in the region. For oil-exporting nations, growth was projected at 5.2%, mainly due to high oil prices and robust GDP growth in other countries, which offset the impact of high food prices.

But the rate of growth is expected to slow in 2023, due in part to inflation driven by high food and commodity prices, the report said. And the outlook remained so dire for politically unstable Lebanon and war-scarred Syria that the IMF reported no economic projections for either.

Higher energy prices sustained oil-producing nations, such as Saudi Arabia, where economic growth is expected to hit 7.6% this year. Oil exporters are also benefitting from trade diversions caused by the war in Ukraine, as some European countries look to replace their oil purchases from Russia.

As a whole, the IMF expects that in the next five years, the level of additional inflows and financial reserves to Mideast oil-exporting countries will exceed $1 trillion.

The extra financial inflows are critical to Gulf Arab countries as they try to diversify their economies away from dependence on oil and as the world seeks greener technologies to power industry.

Growth in the region next year is projected at 3.6% due to worsening global conditions such as the consequences of the war in Ukraine for commodity prices and the slowing global economy. For oil exporters, growth will likely slow to 3.5% as oil prices weaken, global demand slows and OPEC production reduces.

“We expect the outlook for next year to be less variable than this year, growth will go down for both oil-exporting countries and oil-importing countries,” Jihad Azour, director of the IMF’s Middle East and Central Asia department, told The Associated Press.

Inflation, meanwhile, is expected to remain in the double digits in the region in 2023, for the third consecutive year. For Sudan, the situation is particularly dire. Consumer price inflation has surpassed the double digits and is forecast to hit 154.9% this year. In 2021, the figure hit a whopping 359%, skyrocketing since the country’s 2019 ouster of autocrat Omar al-Bashir.

“Inflation surprised on the upside, this is the third year where you have double-digit inflation especially for the oil-importing countries … We expect still that inflation will remain high next year driven by high food and commodity prices,” Azour said.

The IMF has warned that high food and fertilizer prices can create severe food security challenges for low-income countries, which could lead to social unrest.

Food prices are still above their 2021 average and expected to increase by more than 14% year-on-year in 2022, according to the report. And although wheat prices are lower than their prewar levels, due to the agreement between Russia and Ukraine to resume Black Sea grain exports, they remain about 80% higher than their average in 2019. Russia’s invasion of Ukraine has impacted exports like sunflower oil, barley, and wheat worldwide.

However, Russia announced on Sunday it would immediately halt participation in the U.N.-brokered deal, prompting President Joe Biden to warn that global hunger could increase. Russia’s move came after it alleged that Ukraine staged a drone attack on Saturday against Russia’s Black Sea Fleet ships off the coast of occupied Crimea. Ukraine has denied the attack, saying that Russia mishandled its own weapons.

Egypt is the world’s largest wheat importer, most of which comes from Russia and Ukraine. Its economy has been hard-hit by the coronavirus pandemic and the war in Ukraine. Last week the IMF reached a preliminary agreement with Egypt that paves the way for the economically troubled Arab nation to access a $3 billion loan.

The IMF says one of the most pressing priorities now is to mitigate the cost-of-living crisis. To do so, Azour says the IMF must control inflation, shift social spending away from “an untargeted system that is now mainly driven by the subsidy on food and on energy to something that is more targeted,” and create more jobs — especially for middle-income people.

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DMO Issues Two FGN Savings Bonds At N1,000/unit

The Debt Management Office (DMO) has announced its Dec. issuance of two Federal Government of Nigeria (FGN) Savings Bonds at N1,000 per unit.

According to a statement by the DMO, the first offer is a two-year FGN Savings Bond due on Dec. 14, 2022, at an interest rate of 12.255 percent per annum.

The second one is a three-year FGN Savings Bond due on Dec. 14, 2025, at a 13.255 percent interest rate per annum.

It said that the opening date for the issuance of the bonds is Dec.5, the closing date is Dec. 9, the settlement date, is Dec. 14 while coupon payment dates are March 14, June 14, Sept. 14, and Dec. 14.

“They are issued at N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.

“Interest is payable quarterly, while bullet repayment is made on the maturity date, ” it said.

It added that FGN savings bonds qualify as securities in which trustees can invest under the Trustee Investment Act.

“They qualify as government securities within the meaning of the Company Income Tax Act and Personal Income Tax Act for tax exemption for pension funds amongst other Investors.

“They are listed on the Nigerian Stock Exchange and qualify as liquid assets for liquidity ratio calculation for banks,” it said.

The statement said they were backed by the full faith and credit of the Federal Government of Nigeria, and charged upon the general assets of the country.

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DMO Says It has Raised N130bn From Sukuk For Key Road Projects

The Debt Management Office (DMO) says it raised N130 billion from its N100 billion sovereign al ’Ijarah sukuk opened on November 21, 2022.

DMO, in a statement on Monday disclosed that the offer of N100 billion was “upsized to N130 billion due to the over 165 percent subscription level”.

The Sukuk is a strategic initiative that supports infrastructure development, promotes financial inclusion and deepens the domestic securities market.

Since the establishment of the initiative in September 2017, Nigeria has issued four sovereign sukuk: 2017 (N100 billion), 2018 (N100 billion), 2020 (N162.557 billion), and 2021 (N250 billion).

According to the statement, this year’s total sovereign sukuk issuance moved to N742.557 billion.

“The Debt Management Office (DMO) is pleased to inform the public of the successful conclusion of the issuance of N100 billion sovereign al ’ijarah sukuk. The offer for N100 billion opened on November 21, 2022, and was supported by wide public sensitisation to encourage subscription from diverse investors, particularly the retail investors,” the statement reads.

“The initial offer size of N100 billion was upsized to N130 billion due to the over 165 percent subscription level. The Sukuk was issued at a rental rate of 15.64 percent per annum. This brings the total sovereign sukuk issuance to N742.557 billion as at date.”

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CBN Limits Withdrawal To N100,000 Weekly

The Central Bank of Nigeria (CBN) on Tuesday slashed the cash withdrawal by an individual to N100,000 per week by an individual.

The apex bank also fixed N500,000 as the amount a company can withdraw in a week.

By this new policy, account holders can only withdraw a maximum of N100,000 weekly through Automated Teller Machine (ATM), subject to a maximum of N20,000 daily withdrawal.

Under the new policy, which is to take effect from January 9, 2023, the maximum cash withdrawal via Point of Sale (POS) shall also be N20,000 daily.

This was contained in a circular issued by the CBN on Tuesday, signed by director of banking supervision, Haruna Mustafa and addressed to deposit money banks and other financial institutions.

According to the circular, deposit money banks and other financial institutions are also mandated to ensure that over-the-counter cash withdrawals by individuals and corporate entities do not exceed N100,000 and N500,000, respectively, per week.

It further indicated that all cash withdrawals in excess of the stated limits will attract processing fees of 5 per cent and 10 per cent respectively.

The new policy also states that third party cheques in excess of N50,000 shall not be eligible for over the counter payment, while extant limits of N10,000,000 on clearing cheques subsist.

“Only denomination of N200 and below shall be loaded into the ATMs.

“In compelling circumstances not exceeding once a month, where cash withdrawals above the prescribed limits is required for legitimate purposes, such cash withdrawals shall not exceed N5,000,000 and N10,000,000 for individuals and corporate organisations respectively, and shall be subject to the references processing fees in (1) above, in addition to enhanced due diligence and further information requirements,” the circular stated.

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