While the South African economy is again stuck in a deep recession and measures aimed at fiscal consolidation are stalled, the new administration may have achieved sufficiently firm institutional gains to stave off a third sovereign credit rating downgrade by Moody’s in October.
Western donors are suspending budgetary support to Zambia’s government due to concerns over financial mismanagement, thus straining debt servicing ability and casting into doubt ongoing project finance deals.
The newly elected president has consolidated his political authority through shaking up the cabinet, while he is sending a reformist message to creditors that he will prioritise growth as a mechanism for development, beginning with measures to stabilise the country’s precarious fiscal and monetary positions.
Desperately searching for fresh funds to service its mounting debt burden, the cash-strapped government has stopped paying public salaries and repaying VAT rebates to mining firms, while offering state assets as collateral for new loans.
One year into its administration, Angola’s new government turns to the IMF seeking a three-year extended facility that will test the boundaries of its reformist credentials and potentially boost the country’s investment reputation.
On the one year anniversary of Angola’s political transition, there are growing indications that initial investor optimism has waned due to a persistently weak economy, rising debt levels, and fresh allegations of state corruption.
Policy uncertainty ahead of next year’s elections, mounting concerns over debt sustainability, and rising fuel prices are likely to mar Namibia’s economic recovery and drag down the economy’s growth outlook.
Despite its ballooning debt burden and widening fiscal deficit, Zambia expects to conclude a deal with the IMF on a credit facility in the four-month outlook, which would mitigate the probability of default in the short-term, but non-payment risks will remain heightened well into next year.
Falling copper prices are adding to Zambia’s economic woes, while the government is making fresh strides towards fiscal prudence and is floating austerity measures to rein in a mounting debt burden.
The finance ministry has announced a raft of measures to curb fiscal imprudence and to halt further borrowing, yet it still does not acknowledge Zambia’s total external debt and remains unwilling to specify how much debt it intends to dishonour.
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