The South African rand could strengthen if credit rating agencies downgrade the country’s debt to junk status at the end of this year, according to economist Dawie Roodt.
The country’s struggling economy is facing possible credit downgrades by the global rating agencies Moody’s, Standard & Poor’s and Fitch by the end of the year after escaping the cut in June.
Stuttering economic growth, rising fiscal debt levels and political squabbles ahead of municipal elections are however likely to push the rating over the edge in the next review, Roodt said.
“Based on these three variables, I think chances are very good that we’re going to see a downgrade,” he told Fin24. “Ironically, I think a downgrade will probably lead to an appreciating currency.”
The South African rand, which depreciated 26 percent last year, strengthened extended its 8 percent rally this year after S&P’s held the country’s credit rating at an investment grade above junk.
It is however widely expected to come under pressure if rating agencies eventually lower their ratings in the next round of reviews in December.
The imminent downgrade will make investors perceive debt instruments in the Africa’s second largest economy as riskier and hurt foreign direct inflows into the economy, Mail & Guardian Africa reported.
This could lead to an undervalued currency that present attractive buying opportunities after the run-in.
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FOREX Africa: A Rating Downgrade Could Be Good For The South African Rand
The South African rand could strengthen if credit rating agencies downgrade the country’s debt to junk status at the end of this year, according to economist Dawie Roodt.
The country’s struggling economy is facing possible credit downgrades by the global rating agencies Moody’s, Standard & Poor’s and Fitch by the end of the year after escaping the cut in June.
Stuttering economic growth, rising fiscal debt levels and political squabbles ahead of municipal elections are however likely to push the rating over the edge in the next review, Roodt said.
“Based on these three variables, I think chances are very good that we’re going to see a downgrade,” he told Fin24. “Ironically, I think a downgrade will probably lead to an appreciating currency.”
The South African rand, which depreciated 26 percent last year, strengthened extended its 8 percent rally this year after S&P’s held the country’s credit rating at an investment grade above junk.
It is however widely expected to come under pressure if rating agencies eventually lower their ratings in the next round of reviews in December.
The imminent downgrade will make investors perceive debt instruments in the Africa’s second largest economy as riskier and hurt foreign direct inflows into the economy, Mail & Guardian Africa reported.
This could lead to an undervalued currency that present attractive buying opportunities after the run-in.
Source
Africa: Illicit Financial Flows Threaten Africa’s Growth, Says UNECA
Illicit financial flows across the continent continue to be the biggest avenue of losses of revenue across Africa, officials from the United Nations Economic Commission for Africa (UNECA) have said.
Officials from the commission say that Africa continues to lose a significant amount of revenue which has had grave consequences on the development of the continent.
Illicit financial flows are illegal movements of money or capital from one country to another especially to safe havens without paying necessary taxes and appropriate revenues in countries where they are earned.
This in turn reduces domestic resources and tax revenue needed to fund development.
A 2015 report by the Africa Progress Panel led by former South African president Thabo Mbeki had put the value of illicit financial flows at $50b, but UNECA puts it over $80b.
Abdalla Hamdok the deputy Executive Secretary and Chief Economist at UNECA said that the illicit flows mostly stem from capacity deficits of some countries to deal with tax evasions as well as inadequacies in tax collection.
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Foreign workers return to Algeria’s Krechba gas plant after March rocket attack
KRECHBA, Algeria (Reuters) – Some foreign workers have returned to Algeria’s Krechba gas plant after they were evacuated following a rocket attack in March, a senior plant manager said on Friday.
Benmaazou Slimane told Reuters the number of foreign staff at Krechba would be lower than the 340 that used to work there, and their security would be assured by the military.
The facility, the hub for an area that produces 9 billion cubic metres of gas per year, is operated by state oil company Sonatrach with BP and Statoil. Sonatrach says the plant has been operating since the attack.
Krechba’s managers say 25 new wells are planned around Krechba to maintain production at current levels.
Foreign workers previously represented 10 percent of staff at the site and Slimane said their number would be reduced because of high costs, adding it might be possible to give some of their positions to Algerians.
“We have agreed with our partners to reduce the number of expats as much as possible,” Slimane said on a tour of the site. “Most of the expats are working in engineering, the launching of new projects – mainly in technical profiles.”
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Kenya is pressuring thousands of expat NGO workers and volunteers to go home
When Madonna visited Kenya last week, she snapped a photo of a murky, trash-filled stream in a slum in Nairobi. “Imagine this is where your water comes from!” she wrote on Instagram, plugging a local NGO that works on water sanitation in Kibera, one of the largest informal settlements in Africa.
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