• Egypt plans to accelerate its divestment program, targets USD 6bn proceeds this year

Egypt's sovereign fund has invited investment banks and specialised financial institutions to submit technical and financial bids to manage the sale of a stake of up to 20% in Misr Life Insurance, the investment ministry said. The selected investment bank will be responsible for leading and marketing the offering, managing the book-building process, and coordinating with local and international investors to achieve the best value for the transaction. Interested investment banks must submit an introductory profile and their track record by March 8, 2026, for an initial internal review.

Misr Life Insurance, which holds around 22% share of the life insurance market in Egypt, was approved for a temporary listing on the local stock exchange earlier this week. In fact, according to unnamed sources, Egypt plans to list some 20 companies on the EGX this year ahead of offering them in IPOs. The sources said Egypt aims to raise USD 6bn this year in proceeds from its divestment program, which has stalled since 2024.

Egypt advocates dialogue on Iran (Ahram)

President El-Sisi reviews Egypt gas supply plans amid escalating regional tensions (Ahram)

US Embassy in Cairo: Our overall assessment of security situation in Egypt has not changed (Egypt Today)

Sovereign Fund of Egypt invites proposals for IPO of Misr Life Insurance Stake (Egypt Today)

Planning Minister discusses expanded food security cooperation with IFAD (Daily News Egypt)

Industry Minister reviews USD 480mn expansion plans with Elaraby Group in New Quesna (Daily News Egypt)

Egypt to add 2,500MW of renewable energy capacity to national grid (Daily News Egypt)

Egypt's sovereign fund seeks investment banks to manage 20% Misr Life Insurance stake sale (Daily News Egypt)

Egyptian government to announce new minimum wage by end-March (Zawya)

EBRD backs aluminium manufacturing in Egypt via USD 16mn loan to Alumil Misr (Zawya)

Strait of Hormuz closure poses no threat to Egypt's energy supplies: Badawi (Zawya)

• Next MPC meeting: April 2, 2026, but there is chance for unscheduled meeting before that
• Current policy rate: 19.5%
• EmergingMarketWatch forecast: 19.5% - 20.5%

As expected, the war in Iran has triggered capital outflows from Egypt and the pound weakened to USD/EGP 50.0 for the first time since the 12-day war in June 2025. Although the current conflict is more severe and has spilled over the region, Egypt's external position is comparatively stronger now, and the depreciation of the pound underlines CBE's commitment to a flexible FX rate. Foreign investors sold a total of USD 1.1bn worth of T-bills/bonds and equity through the local bourse during March 2-3, and the daily turnover at the interbank FX market also jumped to around USD 700mn, and the FX market appears liquid enough to accommodate a smooth and orderly exit.

Overall, we think that Egypt has the resources and the tools to absorb a short-term shock, and this is not the first time CBE is confronted with capital outflows triggered by major external shock. In fact, this is the third such shock in less than a year, and CBE's track record has been robust. Should the conflict persist or intensify, further depreciation of the pound appears inevitable. We expect the MPC to step in with a rate hike of at least 100bps, making the key question how much additional FX weakness the committee is willing to tolerate before acting. At this stage, we think that a USD/EGP level in the 52-53 range could trigger such intervention.

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Further, a prolonged war will be a major drag on the economy and will surely force the MPC to reverse the monetary easing cycle. Egypt's foreign reserves have been boosted by tourism and portfolio inflows (both vulnerable to the war in Iran), while Suez Canal revenues have just showed signs of recovery before the war dealt a serious blow to maritime activity in the region. The spike in oil and gas prices is another issue for Egypt, which has become heavily reliant on expensive LNG imports to meet its energy needs, opening a large deficit in the oil merchandise trade balance.

• Total assets of banking and financial sector exceed USD 1.48tn

Khaled Mohamed Balama, Governor of the Central Bank of the United Arab Emirates (CBUAE), said that the UAE's banking and financial sector continues to demonstrate the highest levels of resilience and stability, according to the Emirates News Agency (WAM).

The governor said that banks, financial institutions, and insurance companies across the country are operating normally and continue to deliver their services to customers and the public efficiently and without disruption nationwide. The UAE's banking and financial sector has consistently demonstrated a strong capacity for resilience, adaptability, and sustained growth.

Meanwhile, the UAE's banking and financial sector continues to maintain very strong levels of capital adequacy and liquidity. The capital adequacy ratio currently stands at 17%, while the Liquidity Coverage Ratio (LCR) exceeds 146%. Both metrics are significantly above the regulatory thresholds recommended by international supervisory bodies and global financial institutions.

Additionally, total assets of the UAE banking and financial sector now exceed AED 5.42tn (USD 1.48tn).

We think the governor is making these statements in the context of the ongoing Iran conflict. Mentioning the high LCR is meant to show that the banking and financial sector is strong enough to absorb external shocks. High liquidity means that even if there were a sudden flight to safety or a spike in withdrawals due to regional panic, the banks have more than enough cash on hand to cover it.

Similarly, the mention of USD 1.48tn in assets can be framed as the UAE's role as a regional financial anchor. When the surrounding region is tense, capital often flows into the UAE because it is perceived as a regional safe haven.

Historically, the UAE has seen significant influx of capital and high-net-worth individuals during regional crises, such as the 2011 Arab Spring and following Russia's invasion of Ukraine in 2022. The UAE's policy of political neutrality and developed legal and financial infrastructure make it a default destination for capital seeking safety.

• Police inspector-general launched committee to develop legal and operational framework
• Committee has 4 weeks to submit recommendations on recruitment, funding, accountability, oversight
• Centralized policing faces criticism for slow responses to local security challenges

The push for state police in Nigeria is advancing after the new inspector-general of police Tunji Disu inaugurated a high-level committee on Wednesday (Mar 4) to develop a legal and operational framework for its implementation. Disu was sworn into his role on the same day, succeeding Kayode Egbetokun. Disu described decentralized policing as a permanent reform and said it would bring law enforcement closer to local communities and improve response to security challenges. The committee is to be chaired by academic Olu Ogunsakin, who is the director-general of the National Institute of Police Studies. Ogunsakin's committee is tasked with studying domestic and international policing models, addressing risks of abuse, and proposing structures for recruitment, training, funding, accountability and oversight. The committee has four weeks to submit its report.

Nigeria currently operates a centralized policing system, where the Nigeria Police Force is under the control of the federal government. Commissioners of police report to the inspector-general of police, not to state governors. Over the years, this centralized structure has drawn criticism for being slow to respond to localized security challenges which include insurgency in the Northeast and banditry in the Northwest. The push for state police gained renewed momentum under president Bola Tinubu's administration. In late Feb, Tinubu called on the senate and house of representatives to begin the process of amending the 1999 Constitution so that state governments can legally operate their own police forces.

• Security forces were deployed around buildings, diplomatic zones, major roads
• Lockdown targets planned protests by groups such as Islamic Movement in Nigeria
• US embassy in Abuja cancelled all visa appointments for March 4

According to reports, Nigerian security forces imposed a heavy lockdown this week across several areas of Abuja amid the escalating war between the United States, Israel and Iran, now in its fifth day. Armed personnel were deployed around government buildings, diplomatic zones, major roads and transit points to prevent potential unrest or spillover from the Middle East conflict. The measures included roadblocks and checkpoints. This is particularly meant to stop planned protests by groups like the Islamic Movement in Nigeria (Shiites) in response to the US-Israeli strikes on Iran, which had already sparked demonstrations in states such as Niger, Kaduna and Sokoto.

The US embassy in Abuja cancelled all visa appointments scheduled for Mar 4. The embassy said the decision was taken out of an abundance of caution due to the rapidly evolving crisis, though emergency consular services would continue to be available. The embassy also issued a security alert warning American citizens of the high risk of protests and demonstrations in the Federal Capital Territory. It advised US nationals to stay indoors and remain vigilant. Operations at the US consulate in Lagos remained unaffected.

• CBN increased gold holding with locally sourced LBMA-standard gold
• Gold was purchased in naira, preserving foreign currency reserves
• Governor highlighted gold's role as hedge against market volatility and geopolitical risks

The CBN has raised its gold holdings to approximately USD 3.5bn (around NGN 4.8tn) by adding domestically sourced gold refined to London Bullion Market Association (LBMA) Good Delivery standards. This is according to a statement by the bank on Wednesday (Mar 4). Previously in 2024, the CBN reported its gold reserves at NGN 2.77tn, up from NGN 1.28tn in 2023. CBN governor Olayemi Cardoso explained that purchasing gold in naira at prices linked to LBMA benchmarks strengthens reserves without using foreign currency, which supports broader macroeconomic stability and reserve diversification. Cardoso said this reflects global trends in central bank reserve management where gold is increasingly used as a hedge against inflation, market volatility and geopolitical risks.

The governor noted that the programme also supports domestic mining development and provides a platform for stakeholders to explore opportunities across the gold value chain. The programme works with local miners following OECD and World Gold Council responsible sourcing guidelines. Following the CBN's statement, industry leaders praised the programme's compliance with international standards. Representatives from the World Gold Council, the Africa Finance Corporation and Kian Smith Gold Company commended the programme for its model of responsible sourcing and investment facilitation.

Alleged terrorism: AGF takes over Malami, son's trial (Punch)

State police: IG sets up panel to propose framework (Punch)

Five-year port drug seizures hit N3tn - Report (Punch)

Power firms install 677,942 meters in one year (Punch)

NIPCO to deploy 20 new CNG stations nationwide (Punch)

Security Forces Lock Down Abuja Amid Escalating US-Israel, Iran War (ThisDay)

TCN: Over $1.3bn Transmission Projects Funded By Multilateral Agencies Ongoing Nationwide (ThisDay)

CBN Boosts Foreign Reserves with Indigenous Gold as Holdings Hit $3.5bn (ThisDay)

CBN withdraws N13.41 trillion from financial system in January 2026 - FMDA (Nairametrics)

Taiwo Oyedele says 12 states have adopted tax harmonisation framework (Nairametrics)

Dangote's PMS price hike will affect economy - PETROAN (Nairametrics)

• System will integrate multiple trade-related agencies into single online portal
• First phase will include online import permits and risk management system
• Authorities said platform will reduce delays and improve trade competitiveness

Nigeria will launch its National Single Window (NSW) platform on Mar 27, aimed at simplifying import and export procedures across the country. Speaking at a stakeholders' meeting at the presidential villa on Wednesday (Mar 4), chief of staff Femi Gbajabiamila said the initiative, first introduced nearly two years ago by president Bola Tinubu, forms part of a wider fiscal reform agenda to strengthen Nigeria's global competitiveness. The government established a committee for the project in Apr 2024 and directed that the digital trade platform be fully operational by Q1 2026. During the stakeholders' meeting on Wednesday, government officials expressed support for the project. Finance minister Wale Edun described the platform as a growth-enabling reform while CBN governor Olayemi Cardoso highlighted the need to close Nigeria's trade facilitation gap.

The system will integrate multiple trade-related agencies into a single digital portal, allowing importers and exporters to process documentation and clear goods more efficiently while reducing port delays and bureaucratic bottlenecks. NSW coordinator Tola Fakolade indicated that the first phase will allow online processing of import permits, electronic submission of cargo manifests and the introduction of a centralized risk management system. Pilot testing will be conducted before the platform goes live later this month.

• Wage growth to speed up in real terms in January
• Employment grows m/m for sixth month running

The real average wage of salaried Israeli workers rose by 0.8% y/y in December (seasonally-adjusted data), marking the sixth consecutive increase, the stat office (CBS) reported. The pace did ease though m/m and was the lowest since the upward trend started. In nominal sa terms, wages grew by 3.4% y/y in December, slower than in November, at a rate that was slightly higher than the flash estimate based on partial data and published a month ago. According to the new flash estimate of the CBS, the nominal average wage (non-adjusted) rose by 3.7% y/y in January speeding up m/m. This implies that real wages have improved at an even faster pace because of the strong inflation deceleration in early 2026.

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The number of Israeli employees, also part of the survey, rose by 1.5% y/y in December easing from Oct-Nov. In monthly terms, the employee jobs also rose, by 0.2% and this was the sixth consecutive increase of the indicator. The job positions rose by 0.4% y/y but fell by 0.8% m/m in January, according to the new flash estimate.

• Net profit rise in 2025 is due to higher revenues
• Profit jumps by 60% y/y in Q4 alone

The net profit of one of the two country's largest banks, Hapoalim Bank, jumped by 28.4% to NIS 9.8bn, a record high for the lender. The improvement comes partially at the back of a large one-time provision of NIS 597mn for an efficiency plan that eroded annual profit in 2024. The bottom-line was also positively affected by revenues of some NIS 300mn due to the start of the liquidation of the subsidiary in Switzerland, as well NIS 380mn insurance reimbursement paid in Q3 2025 as part of the US tax investigation conducted against the bank. Total income increased by 11.8% last year while total expenses remained unchanged when excluding the item related to the early retirement plan. Net profit increased despite the higher provision for credit losses in 2025.

In Q4 alone, the bank's net profit surged by 64% y/y to NIS 2.08bn. The result was affected by NIS 200mn provision related to a labour dispute at the bank. Hapoalim will pay a dividend of NIS 1.24bn or some 60% of the Q4 profit (50% of the actual profit and NIS 200mn in capital surplus), including NIS 991mn in cash, and NIS 248mn in the form of a share buyback program. The dividend distribution amounted to NIS 4.9bn in 2025, which is half of the net profit. Credit increased by 4.9% in Q4 and by 13.4% in the full of 2025. NPL ratio decreased to 0.48% at the end of 2025, and the NPL coverage ratio rose to 310%, the bank also said.

• Next two weeks to focus on "systematic pounding of military targets"
• Official earlier said Israel was ready for war to continue by end-March

The Israel Defence Forces (IDF) and the US army are expected to achieve full air superiority over Iran's entire airspace in the coming hours, local media quoted senior IDF official as saying on Wednesday evening. Media also quoted military sources as saying that the US would achieve full maritime freedom of action, e.g. the destruction of the entire naval fleet of Iran, within the next two days. Then, the next two weeks will be dedicated to "systematic pounding of military targets" as one official described it, according to media. This involved the destruction of thousands of military targets. Overall, the comprehensive damage to the regime's military infrastructure would require weeks and the pace of progress will depend on the level of US involvement. The sources stressed that there were no constraints in terms of resources or time and there are no restriction on the part of the US like in the past.

A senior Israeli official said for public broadcaster KAN News earlier this week that Israel was prepared for the war with Iran to continue until Passover, which starts on Apr 1. Also, recent security cabinet meetings concluded that the rate of fire coming from Iran will slow down due to damages inflicted by the US and Israeli strikes as Iran is estimated to have left with less than half of the missile launchers it had at the start of the fighting. We note that PM Netanyahu has said that the war would be quick and decisive but may take some time although not years like previous conflicts in the region and statements by US President Trump has indicated a range of 4-5 weeks.

• Schools to remain closed for now, education ministry to consider reopening them next week

Following a situation assessment and demands on the part of the finance ministry, the Home Front Command eases the restrictions on activity switching from the red level, which allows only essential activities, to the orange level. The new guidelines will come into effect as of 12:00 today and will allow for gatherings of up to 50 people provided that it is possible to reach a standard protected space while self-isolating; and activities in workplaces where it is possible to reach a standard protected space while self-isolating. The schools remain closed for now, which to some extent restricts the returning to normal working hours of parents with small children. The education ministry said that distance studying will continue on Thursday and Friday and added that a gradual return to physical studying would be considered as of next week. We note that the finance ministry estimates the costs from the closing of the economy under the red level at some NIS 9.5bn (about 0.45% of GDP) per week while at only NIS 4.5bn under the orange level. In both cases, the largest price comes from the economy shutdown - NIS 8.04bn under the red level and it falls to only NIS 2.41bn under the orange level. The closing of the education system costs NIS 0.87bn under the red level but this cost increases to NIS 1.23bn under the orange level. The costs for drafting reservists is estimated at NIS 0.47bn under the red level and NIS 0.66bn under the orange level.

In Striking Iran, Israel Inches Ever Closer to 'Might Makes Right' as a Policy (Haaretz)

IDF Eases Wartime Restrictions After Finance Ministry Push to Reopen Businesses (Haaretz)

Iran Has Fired at Least Six Cluster Missiles at Israel Since the War Began (Haaretz)

Iran will target Dimona nuclear site if regime change is sought, Iranian official says Iran will target the Israeli nuclear site of Dimona if Israel and the US seek regime change in the Islamic Republic, according to an Iranian military official. (Jerusalem Post)

Israel prepares for Iran war to last until Passover (Jerusalem Post)

Flights resume to Ben Gurion International Airport as airspace reopens (Jerusalem Post)

Night of launches from Iran and Lebanon; Home Front Command restrictions eased starting at 12:00 (Calcalist)

The dollar is strengthening globally and stable in the local market - at 3.07 shekels (Calcalist)

Race against time: The coalition has only 11 days of discussions to pass the state budget (Calcalist)

"I have no idea what I'll get": The economy partially reopens - but business owners are still in the dark (TheMarker)

Parents are at work but children are at home. The reason: There is insufficient protection in educational institutions. (TheMarker)

Leumi Partners earned half a billion shekels; executives will receive options worth 24 million shekels (TheMarker)

In three different waves: Millions of Israelis woke up in the middle of the night to warnings due to launches from Iran and Lebanon (Globes)

How will the war with Iran affect apartment prices? (Globes)

• Current policy rate: 4.00%
• Next monetary policy meeting: Mar 30, 2026
• Expected decision: Hold

While until recently we believed the chances for a rate cut and an on-hold decision were broadly similar, the start of new fighting with Iran has definitely removed any further easing from the calendar at least for the end-March rate-setting sitting. The MPC held the rate in February while analysts were split and hinted that the move was due to the increase in geopolitical uncertainties due to the possibility of new war with Iran. However, BoI governor Amir Yaron explained after that in series of interviews with local media that in fact inflation concerns were at the bottom of the decision and added that other macroeconomic indicators were also supportive like the strong economic growth, wage growth, shortages of workers and the renewed rise in rents and apartment prices. Thus, apart from the geopolitical situation, a change in inflation trends due to the drafting of more reservists, potential shekel weakening (not the case currently), impacts from world oil prices and general supply disruptions should be another consideration for the rate setters to abstain from any move for now.

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Inflation moderated to lower-than-expected 1.8% y/y in January, which is already below the middle point of the 1-3% target range. The easing was partially supported by the base effect of the VAT rate hike. Also, it should be taken into consideration the strong impact of the flight ticket prices, which are very volatile, and the positive contribution to inflation of the housing component (rents) in the past two months, which account for more than 27% of the consumer basket. Private demand remained robust in January and Yaron has said that one of the developments to assess when taking rate decisions would be the balance between the rebound of private demand and the closing of supply side shortages, which is a potential risk for inflation acceleration. The shekel appreciation has been an important factor behind the easing inflation and we note that the effect from the previous Iran war was beneficial for the local currency.

GDP increased by 4.2% saar terms (seasonally-adjusted annualised rate) in Q4 and by 2.9% in 2025. Initial data pointed to strong economic activity in Jan-Feb but with the start of the new fighting with Iran, things have changed for the worse. Economic activity was initially restrained to essential activities only and the finance ministry estimated that this would cost some 0.45% of GDP per week and a partial reopening started less than a week after the war started, which should more than halve costs. The previous conflict with Iran pulled the economy to a decline of 4.3% saar in Q2 2025 (previous Iran war was in June 2025) but a strong rebound of 12.7% in Q3 followed, which showed a more than full recovery of the economy. In any case, the MPC is stressing on inflation when deciding on the monetary policy and therefore we think that the economy would not be a major consideration when deciding on the policy rate.

Board statements, press briefings, minutes from MPC meetings

Calendar of MPC meetings

Latest BoI macroeconomic forecasts

Monetary policy reports

Bank of Israel Law

The Monetary Committee

• Bank to distribute some 58% of annual profit as dividend
• Business activity grows, NPL ratio improves to record low

The net profit of one of the two largest bank in the country, Leumi, increased by 4.7% to NIS 10.3bn in 2025, according to its latest financial report. In Q4 alone, the net profit rose by 4% y/y to NIS 2.5bn and Leumi said it would distribute 65% of it as dividend consisting in NIS 1.3bn in cash payment and a share buyback of NIS 382mn. In the entire 2025, Leumi would distribute some 58% of its net profit as dividend.

The improvement in Leumi's bottomline was supported by provisions for credit losses, which fell to NIS 450mn from NIS 713mn in 2024, a 3.7% decrease in operating expenses to NIS 6.65bn and the expansion of the credit portfolio by 14.1% to NIS 520bn at the end of 2025. Yet, the bank's interest income grew by only 2.1% to NIS 16.8bn, negatively affected by the lower inflation last year and an erosion in credit and deposit spreads. Commissions' income grew by 6.8% to NIS 4.1bn, mainly due to increased trading activity in the capital market and business credit. The NPL ratio fell to a historic low of 0.44% of total credit portfolio, down from 0.53% at the end of 2024. The write-off rate decreased to 0.08%, compared to 0.10% last year. Deposits from the public rose by 11.1% to NIS 686.9bn at the end of December.

• This will more than halve costs to economy from shutdown

Finance ministry director general Ilan Rom has addressed the Home Front Command urging for partial reopening of the economy as of tomorrow, Mar 5, local media reported. Rom demanded switching to the orange level warning about the heavy cost the economy is paying, estimated at some NIS 9.5bn per week (about 0.45% of last year's GDP) under the current red level, which allows for operating of essential activities only. Rom also questioned if the current level of risks justifies continuing such a broad shutdown. Switching to the orange level, meaning that activities in proximity to protected areas will also be allowed but schools will remain closed, is to reduce costs to only NIS 4.5bn per week. The official stressed that the strength of the economy was a necessity and referred to the already sharp increase in defence spending and its growing pressure on the budget.

• Ongoing Iran war strengthens Hezbollah's resovle to maintain its armed status
• Naim Qassem frames confrontation as existential defence as Israeli strikes intensify in Lebanon and displacement rises
• Qassem also criticises government ban on group's military activities

Hezbollah leader Sheikh Naim Qassem said that the Iran-backed group would confront what he described as Israeli-American aggression and would not surrender despite the imbalance in military capabilities between the sides. His remarks underscored Hezbollah's determination to remain engaged in the expanding regional confrontation, even as Israel intensifies its military campaign in Lebanon and domestic pressure grows for the group to disarm.

Speaking in a televised address, Qassem said Hezbollah's choice was to confront the attacks and continue fighting despite the risks. The speech was his first since the group launched rockets toward Israel on Monday, an attack that triggered a large-scale Israeli bombing campaign across Lebanon.

Qassem rejected the suggestion that Hezbollah had initiated the latest round of fighting, arguing that Israel's subsequent strikes were not a direct response but part of a pre-planned military operation. He framed Hezbollah's actions as legitimate self-defense against what he described as coordinated Israeli and American aggression. The conflict expanded into Lebanon earlier this week as Israel intensified operations against Hezbollah positions, later confirming that troops had entered several towns and villages in southern Lebanon. Lebanese authorities said on Wednesday that Israeli strikes had killed at least 72 people and displaced more than 83,000 residents.

The escalation has also deepened internal political tensions. On Monday, the Lebanese government announced an immediate ban on Hezbollah's military activities and called on the group to hand over its weapons, a move aimed at reasserting state authority and preventing Lebanon from being drawn further into the regional war. Qassem criticised the decision, accusing the government of aligning with Israeli demands rather than confronting the attacks on Lebanon. He insisted that Hezbollah's armed resistance was a legitimate right and said the group was fighting to defend Lebanon, its population and the country's future

• Deadly attacks follow renewed Hezbollah rocket fire
• Meanwhile, Lebanon arrests 27 suspects over illegal weapons

Israeli strikes on vehicles near Beirut killed three people and wounded six late Wednesday, Lebanon's health ministry said, marking a third consecutive day of Israeli bombardments following renewed Hezbollah attacks. The escalation reflects the widening regional fallout from the confrontation between Israel, the United States and Iran, which has drawn Lebanon back into cross-border hostilities.

The health ministry said two Israeli air strikes on the airport highway resulted in the casualties. Israel's military confirmed it had targeted two individuals in the Beirut area but did not immediately provide further details.

Separately, the Lebanese Army said it had arrested 27 people over the past two days for illegally possessing weapons and ammunition, in what it described as exceptional security measures following the government's decision to ban Hezbollah's military activities. In a statement, the army said troops at checkpoints detained 26 Lebanese nationals and one Palestinian across several areas as part of efforts to maintain security and prevent armed displays in different regions of the country.

Lebanon's government imposed the ban on Hezbollah's military activities on Monday after the Iran-backed group launched rockets towards Israel, saying it was retaliating for the killing of Iran's supreme leader during a wave of US and Israeli strikes. We remind that the United States and Israel carried out large-scale attacks on Iran on Saturday that killed Ayatollah Ali Khamenei, prompting Tehran to launch retaliatory missile strikes against Israel and attacks targeting countries in the region hosting US assets.

• Stronger new orders and output underpin faster private sector growth
• Business sentiment improves to six-month high but remains in contraction

Lebanon's Purchasing Managers' Index (PMI) rose to 51.2 points in February, up from 50.1 points in January, marking its seventh consecutive month above the 50.0 neutral threshold and signalling a modest acceleration in private sector growth, according to the latest survey data. The improvement suggests that, despite persistent economic and political headwinds, business conditions strengthened at a slightly faster pace midway through the first quarter of 2026, supported largely by domestic demand.

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The uptick was driven by a renewed expansion in new orders, which rebounded strongly after demand had nearly stalled in January. Underlying data indicated that the increase was primarily domestic as export orders declined marginally for a third successive month. Analysts linked the rise in sales partly to the government's announcement of higher petrol taxes, which took immediate effect, and proposed value-added tax (VAT) hikes still pending parliamentary approval. The prospect of rising prices appears to have prompted advance purchasing by customers, lifting both new orders and output.

Business activity responded accordingly, with output increasing at a relatively robust pace after stagnating at the start of the year. Firms also raised purchasing volumes for the sixth time in seven months, reflecting stronger workloads. However, capacity pressures became more evident, as backlogs of work accumulated to the greatest extent in a year. This prompted a modest increase in staffing levels, marking the first rise in employment since November, though job creation remained limited.

Inflationary pressures intensified during the month. While staff costs rose only marginally, ending a three-month period of stability, purchase price inflation accelerated to a five-month high, driven by higher excise taxes and increased fees on imported goods. Output charges were subsequently raised at the sharpest pace since September 2025 as firms sought to pass on part of the additional cost burden to customers. Despite the slight uptick in wage bills, real incomes continued to erode as price growth outpaced salary adjustments.

Looking ahead, business sentiment remained in contractionary territory, though the Future Output Index climbed to a six-month high. Ongoing economic fragility, inflation concerns and regional conflicts continued to weigh on expectations. At the same time, rising tensions between the United States and Iran have fuelled cautious optimism among some respondents that geopolitical shifts could eventually contribute to a breakthrough in Lebanon's prolonged crisis, underscoring the complex mix of risks and tentative hopes shaping the outlook.

• Strait of Hormuz is effectively closed to commercial maritime traffic
• QatarEnergy suspends natural gas exports
• Electricity prices in many countries are rising

The US and Israel launched a joint offensive against Iran on Feb 28, with the goal of destroying the country's nuclear and military capabilities. In response, Iran launched missile and drone strikes targeting Israel, multiple US military bases in the Persian Gulf region (including in Qatar, UAE, Bahrain, Kuwait, Jordan, and Saudi Arabia), and Gulf countries.

These attacks have essentially led to the closure of the Strait of Hormuz - the narrow waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. Major maritime insurers have cancelled war-risk coverage for the Gulf. Without insurance, almost no commercial tankers will attempt the passage.

Maritime traffic through the strait, which is just 34 kilometres wide at its narrowest point, has ceased. About 20% of global LNG shipments flow through the Strait of Hormuz.

However, perhaps the most significant blow to natural gas markets came when QatarEnergy stopped LNG production and declared force majeure on shipments of LNG following Iranian drone attacks. Even if the conflict ends immediately, it could take at least a month to return to normal production volumes due to the technical complexity of restarting gas liquefaction.

Unlike oil, which can occasionally be rerouted via pipelines or overland trucking, natural gas is tethered to specialized liquefaction terminals and cryogenic tankers. With the Strait of Hormuz closed, there is simply no immediate alternative infrastructure to replace the lost volumes. The blow to Europe is particularly severe because many countries had shifted their dependency from Russian gas to Qatari LNG following Russia's invasion of Ukraine in 2022.

Natural gas prices increased globally, particularly in Asia and Europe, following the start of hostilities. This is particularly evident as markets account for the sudden loss of Qatari volumes, which represent a significant portion of the world's seaborne gas supply.

The spike in natural gas costs is a primary driver for the expected increase in global inflation. Natural gas is not only a heating and power source but a critical industrial input; its scarcity is felt across all manufacturing and utility sectors.

Because natural gas is the marginal fuel for electricity generation - meaning it often sets the price for the entire power grid - the halt of Middle Eastern LNG has sent electricity spot prices higher. The Japan-Korea Marker (JKM), the spot price benchmark for LNG in Asia, has jumped.

In high-intensity manufacturing hubs like Germany and Northern Italy, day-ahead electricity prices have spiked significantly, leading some heavy industries to pre-emptively curtail production to avoid operational costs.

In Japan, Tokyo's wholesale electricity prices have reached record seasonal highs. In India, electricity exchanges hit price caps as daily arrivals of natural gas are blocked.

• Oil and natural gas prices increase
• Shipping rates are rising
• Inflation likely to increase everywhere

The US and Israel began attacking Iran on Feb 28, with the goal of destroying the country's nuclear and military capabilities. In response, Iran launched missile and drone strikes targeting Israel, multiple US military bases in the Persian Gulf region (including in Qatar, UAE, Bahrain, Kuwait, Jordan, and Saudi Arabia), and Gulf countries.

The ongoing economic fallout affects not just region, but the entire world. The Strait of Hormuz - narrow waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea - is of critical importance.

The Strait of Hormuz is just 34 kilometres wide at its narrowest point, it facilitates the transit of about 20mn barrels of oil per day - one-fifth of the world's seaborne supply. In the immediate wake of the strikes, Iran issued explicit warnings that no vessel would be permitted to pass. While the US Navy has reported engagement with Iranian naval assets to maintain freedom of navigation, the threat of asymmetric drone strikes and advanced mines has achieved a de facto closure.

Safety concerns have prompted a mass exodus of commercial operators. As of March 5, the following major shipping entities have formally suspended or redirected all transits through the Strait of Hormuz:

• Maersk: The Danish giant has suspended all vessel crossings through the Strait until further notice.
• Mediterranean Shipping Company (MSC): Has instructed all vessels in or bound for the Gulf to proceed to "safe shelter" and has suspended all bookings for the region.
• Hapag-Lloyd: Has officially suspended all transits, citing the regulatory and security closure.
• CMA CGM: Has ordered vessels to shelter and suspended all bookings for major regional ports, including those in Bahrain, Kuwait, and Qatar.
• Nippon Yusen (NYK), Mitsui O.S.K. Lines (MOL), and Kawasaki Kisen (K Line): All three Japanese majors have halted passage, a critical blow given Japan's 90% dependence on Middle Eastern crude.
• Norden: Has suspended all new business requiring transit through the Strait of Hormuz.

The paralysis of the Strait of Hormuz has not merely interrupted shipping. As of this writing, both the oil and natural gas sectors are navigating a perfect storm of physical scarcity and speculative panic.

While global oil demand for February hovered around 105mn barrels per day (bpd), the de facto closure of the Strait has removed 20mn bpd from the immediate supply chain. In response, eight countries of the OPEC+ alliance announced a production increase of 206,000 bpd starting in April.

However, this measure is largely symbolic because most of this spare capacity is located within the Persian Gulf and remains physically trapped.

The International Energy Agency (IEA) has advised member countries to prepare for a coordinated release of Strategic Petroleum Reserves. While the United States and South Korea hold significant buffers, emerging markets like India are far more vulnerable, with their domestic supply heavily reliant on the daily arrivals.

The price of a barrel of Brent crude oil has jumped above USD 80.

While oil often dominates the headlines, the crisis in the LNG market is arguably more acute due to the lack of alternative infrastructure. Natural gas prices have increased, particularly since QatarEnergy stopped LNG production and declared force majeure on shipments of LNG following Iranian drone attacks.

Additionally, the Gulf is a hub for fertilizer production. A prolonged shutdown of the Strait of Hormuz threatens the global supply of ammonia and nitrogen, risking a secondary global food price shock.

All this means that inflation is likely to increase across the world.

The Strait of Hormuz has transitioned from a maritime corridor to a frontline. If a diplomatic or military breakthrough does not reopen these waters soon, the global economy faces a stagflationary shock.

• Forecast made before US and Israel began attacking Iran

Global oil demand will grow 1.4mn barrels per day (bpd) in 2026, reaching an average of 106.5mn bpd, according to OPEC latest monthly report. This growth is heavily weighted toward non-OECD nations, which are projected to contribute 1.2mn bpd to the total increase. This trend is expected to be driven by resilient income growth and supportive government policies in these regions.

Global oil demand will then grow 1.3mn bpd in 2027, averaging nearly 107.9mn bpd. Similar to the 2026 outlook, the non-OECD region will remain the primary engine of expansion, accounting for about 1.2mn bpd of the y/y growth. These projections remain unchanged from previous assessments, signalling confidence in a stable path for global energy consumption over the medium term.

The report also provides a detailed look at price movements throughout January. The OPEC Reference Basket (ORB) experienced a modest increase during the month, rising by less than USD 1, or roughly 1%, to reach a monthly average of USD 62.

This upward movement in the ORB was part of a broader recovery in crude spot markets, which rebounded firmly after several months of decline.

The report emphasizes the role of monetary policy in supporting the oil demand outlook for 2026 and 2027. With major central banks - including the US Federal Reserve and the ECB - having pivoted toward easing in 2025, lower interest rates have improved financial conditions for households and businesses. This easing, combined with a relatively stable US dollar, has helped sustain global economic growth at a forecast 3.1% for 2026.

We should note that these assessments were made before the US and Israel began attacking Iran on Feb 28. This is a black swan event that has fundamentally shifted the oil market from a state of manageable oversupply to a high-stakes geopolitical crisis.

The most critical development is not just the damage to Iranian infrastructure, but the closure of the Strait of Hormuz. While the waterway remains technically open under international law, Iran's Islamic Revolutionary Guard Corps (IRGC) has issued warnings that no vessels are permitted to pass.

Tanker traffic through the Strait of Hormuz has decreased significantly and more than 100 vessels are currently anchored outside the Strait, unable or unwilling to risk passage.

The price of a barrel of Brent crude oil has jumped around 10% since the attacks and is USD 80 as of this writing. This follows a year where prices were actually trending down due to a global glut.

About 20% of global oil and LNG supply is currently trapped. We are seeing reports of Iraq beginning to shut down operations at the Rumaila oil field because storage is full and tankers cannot leave the Gulf.

In response to recent events, eight countries of the OPEC+ alliance decided to increase oil production by 206,000 bpd starting in April.

• Automotive, chemicals, metals lift manufacturing while food and electrical equipment weaken
• Construction growth driven by civil engineering and specialized works, building activity flat
• Q1 outlook positive for food and chemicals but phosphate extraction and energy output seen falling

Industrial and construction activity increased in Q4 2025, while business surveys point to moderate but uneven momentum heading into Q1 2026, according to the quarterly business confidence survey by the statistical office HCP. Manufacturing production rose in Q4, supported mainly by gains in automotive, chemical, non-metallic mineral and metallurgy industries, while food processing and electrical equipment production declined. Order books were broadly assessed as normal, employment remained stable and capacity utilisation reached 74%. Supply disruptions persisted, affecting 35% of manufacturers -- mainly due to imported raw material shortages -- while 18% of firms described their cash flow situation as difficult, rising to about 40% in the pharmaceutical industry.

Extractive industry output remained broadly stable as phosphate production stagnated, with prices declining and employment unchanged. Energy production contracted, driven by lower electricity and gas output, accompanied by falling prices and employment. Environmental industry activity was stable, with unchanged order books and staffing. Construction activity increased in Q4, led by civil engineering and specialised construction work, while building construction stagnated. Order books were assessed as normal and employment remained stable, with capacity utilisation at 69%. Supply difficulties were reported by 9% of firms, while 31% cited tight cash flow conditions.

Looking ahead to Q1 2026, manufacturers expect production to rise, driven by stronger food, chemical and metal product industries, though automotive and non-metallic mineral manufacturing are expected to decline. Employment in manufacturing is projected to increase slightly. Extractive output is expected to fall due to weaker phosphate production, although firms anticipate a rise in employment. Energy production is also forecast to decline further with lower staffing, while environmental industry activity and employment are expected to remain stable. Construction firms anticipate overall activity growth in Q1, supported by building construction and civil engineering, though specialised construction work may contract. Employment in the sector is expected to rise.

Overall, the surveys point to continued but uneven industrial momentum entering 2026. Stronger construction and resilient manufacturing employment could help sustain domestic demand, though weaker phosphate and energy output may weigh on export and industrial production trends in the near term. The balance between construction-led growth and external-sector volatility will remain key for the GDP trajectory in 2026.

• Government says FX reserves and energy transition help absorb higher oil prices
• Authorities expect investor confidence to hold given Morocco's political stability

The economy has the capacity to absorb the shocks from the ongoing Middle East crisis, Finance Minister Nadia Fettah said in a radio interview on Wednesday, citing strong external buffers and a diversified economic strategy. Fettah explained the rise in oil prices above the USD 65 per barrel level assumed in the budget remains manageable for public finances. She noted Morocco's foreign exchange reserves and expanding renewable energy mix help limit the impact of higher energy costs. The minister also downplayed concerns that geopolitical tensions could deter foreign investors. Morocco's political stability and integration with global markets continue to support investor confidence, she said, highlighting the country's role as a reliable industrial platform. Beyond economic policy, Fettah emphasised Morocco's balanced diplomatic approach and strong ties with Europe, the Gulf states, the US, positioning the country as a stable partner in an increasingly fragmented global environment.

Fettah said the government is pursuing a dual strategy of attracting foreign capital while strengthening domestic industrial ecosystems. Recent investments by France's Safran worth about EUR 500mn and creating 800 jobs in the aerospace sector illustrate how foreign projects can help develop competitive local suppliers, she added. Authorities aim to replicate this model in sectors including electric batteries, renewable energy, textiles, agriculture and tourism.

Looking ahead, she said preparations for the 2030 FIFA World Cup -- which Morocco will co-host with Spain and Portugal -- are expected to support infrastructure investment and tourism development, with the government aiming to ensure long-term economic benefits for regions across the country.

While higher oil prices could widen Morocco's energy import bill and pressure the current account in the near term, authorities appear confident that strong fx buffers, growing renewable capacity and steady tourist, remittance and FDI inflows will help contain external risks. The government's emphasis on industrial ecosystems and World Cup-linked investment suggests policy will remain focused on boosting export capacity and growth potential ahead of the next economic cycle.

• Property sales growth moderates despite strong 18.4% q/q rebound
• Land and professional segments lead activity recovery
• Price growth stays marginal, pointing to still-soft demand conditions

The number of real estate transactions increased 3.6% y/y and 18.4% q/q in Q4 2025, according to the latest quarterly report by Bank Al-Maghrib and the National Agency for Land Conservation, Cadastre and Cartography. The quarterly rebound in activity followed the strong recovery already seen in Q3, although annual growth slowed markedly from 26.6% in Q3. The increase in activity was broad-based across segments. Residential transactions rose 15% q/q and 0.6% y/y, supported by apartment sales (+0.4% y/y) and a strong 23% surge in villa transactions, while house sales declined slightly (-0.9% y/y). Land transactions increased 25.4% q/q and 12% y/y, indicating continued demand for development plots. Sales of professional properties rose 29.6% q/q and 7.5% y/y, with particularly strong growth in office transactions.

Price dynamics remained subdued. The real estate price index (IPAI) rose 0.2% q/q and 0.2% y/y, reflecting limited price pressure despite the recovery in activity. Residential prices edged up 0.1% q/q and 0.2% y/y, with stronger gains for villas (+2.4% y/y) compared to apartments and houses. Land prices increased 0.4% q/q but were flat y/y, while commercial property prices rose 0.3% q/q and 0.2% y/y.

For 2025 as a whole, real estate prices rose 0.6% y/y, while transactions increased 3.1%, pointing to a gradual normalization in market conditions after earlier volatility.Looking ahead, the real estate market's trajectory will likely depend on domestic credit dynamics, investment demand and housing affordability, with still-moderate price growth suggesting scope for further activity gains if financing conditions remain supportive.

• Drone attacks from Iran halt Qatar's LNG production

QatarEnergy has declared force majeure on shipments of LNG following Iranian drone attacks that halted production at key facilities. The state-owned company's unprecedented move disrupts global energy supplies, particularly for Asian buyers who rely heavily on LNG from Qatar.

Iranian drones struck Ras Laffan Industrial City and Mesaieed Industrial City on March 2, 2026, targeting energy infrastructure including LNG processing units and a power facility water reservoir. QatarEnergy suspended all LNG and associated products like urea, polymers, methanol, and aluminium production for safety. The halt affects the 77mn tonnes per year Ras Laffan LNG terminal, prompting the force majeure declaration today.

Force majeure relieves QatarEnergy from delivery obligations due to uncontrollable events like these attacks, with notices issued to affected buyers. India's Petronet LNG, a major long-term buyer (7.5 million tonnes/year), received notice for vessels like the Disha, loaded but delayed near the terminal amid Strait of Hormuz transit pauses. About 82% of QatarEnergy's clients are in Asia.

Qatar supplies around 20% of global LNG, so this shutdown threatens shortages and price spikes, especially in Asia. US firm Venture Global offered to fill gaps, signalling spot market volatility. Broader disruptions include paused Hormuz transits, raising shipping costs and rerouting needs.

Major carriers like Maersk and Hapag-Lloyd have suspended transits, with many vessels now rerouting around the southern tip of Africa, adding weeks to delivery times. At least 14 LNG tankers were observed slowing down or performing U-turns near the strait as insurers cancelled war risk coverage.

Meanwhile, tanker freight rates and insurance premiums have spiked as the Persian Gulf is designated a high-risk war zone.

Saudi air defenses intercept 3 cruise missiles, 3 drones near Al-Kharj (Zawya)

Saudi's SAL to acquire Belgium ground handling firm Aviapartner Liege for USD 33mn (Zawya)

Saudi Arabia reports drone attack on Ras Tanura refinery (AGBI)

Saudi Industrial Export Scraps Advanced Energy Acquisition Plan (Maaal)

Goldman Sachs Raises Brent Price Forecast to USD 76 a Barrel in Q2 (Maaal)

(Moody's): Impact of Iran War on GCC Insurance Companies Will Remain Limited (Maaal)

11 private deals executed in the Sukuk and Bonds market totaling SAR 125mn (Maaal)

14 private Deals executed in Saudi Stock Exchange Worth SAR 133mn (Maaal)

US guarantees for Gulf maritime trade 'doable' but could take weeks, experts warn (Arab News)

Middle East war economic impact to depend on duration, damage, energy costs, IMF official says (Arab News)

GCC banks resilient to Iran conflict risks amid strong buffers (Arab News)

• Headline inflation accelerates but core continues to ease to 4.6% y/y in February
• Monthly inflation remains subdued at 0.1% m/m despite higher food prices
• Food inflation accelerates to 6.7% y/y, driven by fresh food categories
• Clothing prices fall sharply on a monthly basis due to seasonal sales
• High global oil prices present substantial risks to inflation, external and fiscal balances

Consumer price inflation accelerated slightly to 5.0% y/y in February, up from 4.8% y/yin January, according to the latest release from the national statistics office INS. The rise was primarily driven by acceleration food price growth, while other components showed stable or moderating trends. On a monthly basis, consumer prices increased by 0.1% m/m, indicating that short-term price pressures remain contained.

Data Download

In a positive note, however, core inflation (excluding food and energy) declined to 4.6% y/y from 4.9% y/y in January, reinforcing the view that underlying inflationary pressures continue to moderate. Prices of non-regulated goods rose 6.1% y/y, compared with just 0.8% y/y for regulated items, highlighting the continued divergence between market-determined and administered prices within the inflation basket.

In the CPI breakdown, food and non-alcoholic beverage inflation accelerated to 6.7% y/y from 5.9% y/y in January, reflecting stronger increases across several fresh food categories. Fruit prices rose 17.7% y/y, while lamb prices increased 16.3% y/y, fresh fish 14.0% y/y, and poultry 12.8% y/y, the stats office said. In contrast, edible oil prices continued to decline sharply, falling 10.3% y/y, partly offsetting the broader increase in food prices.

Prices of manufactured goods increased by 4.6% y/y, mainly underpinned by firm clothing and footwear (8.9% y/y) and household cleaning products (4.8% y/y). Services inflation remained relatively moderate at 3.8% y/y, reflecting in part a notable increase in accommodation services (11.3% y/y).

On a monthly basis, the 0.1% m/m increase in the CPI was largely driven by higher food prices, which rose 1.3% m/m, supported by increases in fresh fish, lamb, fruit, and poultry prices. This was partly offset by a 4.6% m/m decline in clothing and footwear prices, reflecting winter seasonal sales.

The February CPI release shows prices remain sticky and inflation is slow to recede. Against this backdrop, the seasonal Ramadan food price hikes and the spike in energy prices due to the war in Iran are not good news for the domestic inflation trajectory. Pressure on energy import costs spells trouble for domestic inflation and the external energy balance. If severe oil price turmoil is sustained, this would have material implications for the trade and budget balances and will generate pressures on foreign reserves.

• Donors to review portfolio of about 80 infrastructure projects tied to the 2026-2030 development plan
• Financing expected through concessional loans, green funds, and public-private partnerships

Tunisia is seeking to mobilize around TND 60bn in external financing at a planned "Friends of Tunisia" summit in March, aimed at supporting the country's 2026-2030 Economic and Social Development Plan. The five-year strategy, approved by the council of ministers under PM Sarra Zaafrani, outlines TND 120bn in public investment and prioritizes reducing regional inequalities, strengthening energy and water security, and promoting social inclusion. The plan was developed through more than 3,600 local and regional consultations and focuses on decentralizing industrial development, modernizing agriculture, and accelerating the transition toward a green and digital economy.

International partners in the Friends of Tunisia network include the EU, the AfDB, the EBRD, and Gulf countries. The partners are expected to review a portfolio of around 80 infrastructure projects at the summit. The government plans to finance these initiatives through concessional loans, green financing, and public-private partnerships, with the state providing sovereign guarantees for part of the funding. Planned investments include highways, hospitals, renewable energy projects, and desalination plants, while Tunisia aims to sign 40 public-private partnership agreements by mid-2026 and mobilize TND 10bn in green funds to support implementation of the development program.

• Flood mitigation measures will be extended to highly vulnerable Western Tunis, Gabes, and Djerba
• Expansion will benefit over 660,000 additional people

The World Bank and the Government of Tunisia have expanded the Tunisia Integrated Disaster Resilience Program (ResCat) through an additional USD 50mn in financing, increasing support for urban flood protection, according to an official statement on Wednesday (Mar 4). The new funding will extend flood-mitigation measures to Western Tunis, Gabes, and Djerba, areas that are highly vulnerable to flooding. This expansion builds on earlier interventions in Bizerte, Monastir, and Nabeul and responds to the growing risks posed by climate change, highlighted by the severe floods of January 2026 that brought the heaviest rainfall in more than 70 years.

The scale-up focuses on densely populated corridors and key economic hubs, where improved flood protection is expected to benefit over 660,000 additional people. The investments aim to reduce service disruptions and economic losses while helping businesses remain operational and protecting jobs. In addition to strengthening physical infrastructure, the programme will create local employment opportunities related to the operation and maintenance of flood-protection systems, supporting livelihoods in vulnerable urban communities.

Beyond infrastructure, the additional financing will reinforce Tunisia's broader disaster-risk management framework by integrating hydrometeorological monitoring, early warning systems, and disaster-risk financing. Since its launch in 2021, the ResCat programme, jointly supported by the World Bank and the French Development Agency, has already helped protect nearly 170,000 people from urban flooding and strengthened national institutions responsible for disaster risk management.

• Oil revenue surges with USD 100/barrel, but output capped at 1.0mn bpd
• Budget and debt pressures ease, government may channel windfall into public investment
• Inflation remains contained, fuel subsidies limit pass-through, supporting monetary easing and fx stability

Note: This is one of our stories looking at the impact of the war in the Middle East on specific EM economies. In order to highlight vulnerabilities, we assume a risk scenario where the conflict is not resolved quickly, and risk premia/infrastructure damage/Hormuz strait closure keep oil prices around USD 100 throughout 2026, resulting in an energy price shock similar to the one in 2022.

Oil output and revenue

A significant increase in oil prices would naturally boost Angola's oil and LNG income. Mineral fuels account for 90.8% of total exports, so a sustained price around USD 100 will secure abundant fx earnings. Production, however, is constrained: current facilities operate at maximum capacity, with Angola producing roughly 1.0mn-1.05mn bpd and limited ability to expand without fresh investment. As a result, the country will benefit from higher oil prices but cannot materially scale output to fully exploit the spike.

Budget and debt servicing

The 2026 budget assumes an average oil price of USD 61/barrel, with oil-related revenues declining as a share of GDP-from 11.98% in 2024 to 5.49% in 2026-as non-oil revenues overtake oil for the first time. At USD 100, oil income would rise by more than 60%, returning it to a primary funding source, stabilizing government revenues, easing financing needs, and supporting debt repayments. Historically, Angola has used oil price spikes to reduce foreign debt, and this is likely to remain the main priority. However, with the 2027 elections approaching and July protests over fuel subsidies fresh in memory, part of the windfall could be redirected toward public investment in infrastructure, education, and health, potentially boosting GDP. Higher oil revenues may also lead to reconsideration of costly foreign debt issuance in favor of direct lending from IFIs or internal financing.

Inflation, exchange rate, and monetary policy

The inflationary impact of higher oil prices is expected to be small. Angola relies on imported fuel due to limited refinery capacity, and the government continues to subsidize domestic prices, keeping fuel among the lowest in the region. While gradual subsidy removal is planned, full removal is unlikely before domestic refining capacity expands (expected 2026-2027). Any inflation uptick will likely stem from subsidy reductions rather than the oil shock itself. Consequently, inflation should remain on a downward trajectory, albeit in double-digit territory. Higher oil revenues will also strengthen fx stability by enabling debt service payments, reducing depreciation pressures. Together with stable budget revenues, these factors support the central bank's ongoing monetary easing path.

Additional macro risks and near-term outlook

Angola's macro stability in 2026-2027 remains exposed to several risks despite the oil windfall. Oil price concentration leaves the economy vulnerable if production cannot expand, while high prices may create political pressure to spend quickly rather than save. Fiscal and political risks are heightened by the 2027 elections; incomplete fuel subsidy reform or politically motivated spending could undermine fiscal discipline, and shifts between internal and external debt financing could create domestic credit pressures. External vulnerabilities persist: Angola remains exposed to global financing conditions, and surges in LNG, fertilizer, or food prices could create secondary shocks. Careful management of windfall revenues and continued investment in diversification will be crucial to translate the short-term oil boom into sustainable macro stability.

• Party pledges inclusive government and invites reform-minded MPLA members to participate

The main opposition party UNITA said it expects to win the 2027 general elections and urged President Joao Lourenco to remain in the country after the vote. Speaking at a press conference marking the party's 60th anniversary on Wednesday, UNITA Secretary-General Liberty Chiyaka said the ruling MPLA would lose the next election and challenged Lourenço not to leave Angola following a potential defeat. Chiyaka said UNITA would guarantee political stability and would not allow the president to "flee the country," adding that the opposition intends to focus on national reconciliation and governance after the election. The party also pledged to form an inclusive and participatory government, potentially inviting members of the ruling MPLA who support reforms and anti-corruption efforts to take part in a future administration. UNITA reiterated its call for a "pact of democratic stability" aimed at ensuring a peaceful political transition and strengthening confidence in Angola's political system.

As recalled, UNITA came close to victory in the 2022 elections, securing around 44% of the vote, scoring victory in some of the big cities, including the capital Luanda and oil-rich Cabinda. UNITA prompted election fraud investigations, but they ultimately confirmed the MPLA's victory. The latest comments imply the opposition will focus on democratic transition and inclusive governance and suggest the campaign could centre on economic management, corruption and political reform in the coming electoral cycle.

• Country tries to recover USD 1.1bn from Switzerland, over USD 600mn from Singapore

Angola has asked authorities in Cyprus to freeze GBP 80mn in allegedly illicit funds, the Attorney General's Office said, as part of a broader effort to recover more than USD 1.9bn held abroad. At the opening of the 2026 judicial year, Attorney General Hélder Pitta Grós said the request was made recently after investigators identified recoverable assets in Cyprus linked to ongoing legal proceedings. Authorities are also seeking restitution of funds held in several other financial centres. These include USD 213.4mn in Bermuda, USD 556.8mn and EUR 42.8mn in Singapore, about USD 1.1bn in Switzerland, USD 3.6mn in Luxembourg, USD 18mn in the United Arab Emirates, and USD 20.9mn in Portugal. Portugal has already returned USD 3mn of those.

Angola's continued push to recover assets abroad highlights the authorities' efforts to strengthen anti-corruption enforcement and financial crime investigations. Progress in cross-border cooperation could support further recoveries, although legal proceedings across multiple jurisdictions may remain lengthy and complex.

• GDP reaches AOA 104tn in 2024
• Luanda accounts for about one-third of national output, followed by Zaire and Benguela
• Provincial growth diverges sharply with strong gains in Benguela and Namibe but contractions elsewhere

GDP reached AOA 104tn in 2024, according to newly released provincial national accounts from the statistical office INE. The figures mark the first comprehensive breakdown of economic output by province for the 2015-2024 period.The dataset shows that economic activity remains heavily concentrated in a small number of regions. Luanda generated AOA 32.3tn in output in 2024, representing 31.0% of national GDP. Oil-producing Zaire followed with 17.7%, while Benguela accounted for 7.5% and Uíge for 5.8%. At the other end of the distribution, Cuando Cubango, Cunene, and Namibe recorded the smallest shares of economic activity, each contributing around or below 1% of total GDP.

Economic growth also varied widely across provinces. National GDP expanded 4.95% y/y in real terms in 2024, but regional performance diverged significantly. Benguela recorded the strongest growth at 33.1% y/y, followed by Namibe (18.3% y/y) and Bié (8.7% y/y). In contrast, several provinces posted contractions, including Cuando Cubango (-12.8% y/y), Lunda Sul (-6.2% y/y) and Cunene (-5.1% y/y).

Sectoral patterns differ sharply across regions. Agriculture and fisheries activity is concentrated in Uíge, Cuanza Sul and Malanje, while industry is dominated by the oil-producing provinces of Zaire, Luanda and Cabinda. Meanwhile, services activity is strongly centred in Luanda, which accounts for more than half of national services value added. Income disparities between provinces also remain pronounced. Zaire recorded the highest GDP per capita, followed by Cabinda and Cuanza Norte, reflecting the impact of extractive industries in those regions.

The new provincial accounts provide a clearer picture of Angola's regional economic structure and highlight the concentration of growth in the capital and hydrocarbon-producing provinces. Going forward, the data are likely to play a growing role in public investment planning, regional development policy and diversification efforts, particularly as authorities seek to reduce reliance on oil and broaden growth across the country.

• Regional authorities cite treasury cash shortages and delayed federal transfers
• FY 2025/26 federal allocation to Tigray estimated at ETB 18.8bn
• Payment delays highlight ongoing fiscal and political tensions with Addis Ababa

The Tigray Interim Administration halted salary payments to public servants after reporting severe cash shortages in the regional treasury, highlighting growing fiscal strain in the war-affected region, according to media reports. According to a letter reportedly issued by the office of Interim President General Tadesse Worede and circulated to government departments, the regional administration said it currently lacks sufficient funds to pay public sector wages, including salaries for the Ethiopian month of Yekatit (February). Regional authorities attributed the situation to delays in budget transfers from Ethiopia's federal government as well as weak cash circulation in the local economy. Officials did not specify how long the suspension of salary payments could last. The development has intensified economic pressure on public servants in the region, where the cost of living has reportedly risen sharply in the aftermath of the conflict in northern Ethiopia. For FY 2025/26, Tigray was allocated an estimated ETB 18.8bn in federal budget transfers, according to the regional Planning Commission. The regional administration had previously indicated that monthly transfers for capital spending amounted to roughly ETB 844mn. However, tensions over fiscal transfers have persisted. In December 2025, Tigray officials claimed the federal government had delayed budget transfers for nearly two months, prompting the regional administration to seek clarification from Addis Ababa. The federal government has not publicly commented on the latest salary suspension.

At the same time, relations between the federal government and the Tigray leadership remain strained. Authorities in Addis Ababa have accused the regional administration of diverting federal funds to support more than 200,000 armed forces linked to the Tigray People's Liberation Front (TPLF), allegations that have further complicated fiscal coordination between the two administrations. The issue also comes amid renewed political tensions in northern Ethiopia. In a recent interview with state media, Prime Minister Abiy Ahmed alleged that the TPLF was preparing for renewed military confrontation, warning that any escalation would trigger a strong federal response. The disruption of salary payments underscores the fragile fiscal and administrative situation in Tigray as the region continues to rebuild following the 2020-2022 conflict, while unresolved political tensions between federal and regional authorities continue to weigh on economic recovery and public sector functioning.

• Authorities propose national trust fund financed by SOEs, businesses and donors
• Says education spending declined from 4.5% of GDP in 2014 to 2.2% in 2023
• Government spending on the sector rose to ETB 240bn in FY 2023/24

Government proposed the establishment of a National Trust Fund (NTF) to address widening financing gaps in the education sector after spending fell sharply as a share of GDP, according to local media reports. According to a strategy document published by the Ministry of Education, education spending declined from 4.5% of GDP in 2014 to 2.2% in 2023 amid shifting fiscal priorities, rising debt servicing costs and declining external support. The decline occurred despite nominal government expenditure on education increasing significantly, rising from ETB 10bn in FY2008/09 to ETB 240bn in FY 2023/24. The ministry noted that the government currently finances about three-quarters of the education sector but warned that fiscal pressures have limited the state's ability to sustain funding levels. "Although education has remained a stated priority, competing demands from other areas especially debt servicing have reduced the share of the national budget allocated to education," the document stated.

To address the funding gap, authorities are proposing the creation of a National Trust Fund jointly supervised by the Ministries of Education and Finance. The fund would pool resources from government grants, mandatory contributions from state-owned enterprises and Ethiopian Investment Holdings, pension funds, regional administrations and large taxpayers. The proposal also includes a new education tax that would require businesses to contribute 1% of profits to the fund, alongside philanthropic donations and technical support from international technology companies for digital learning programmes and scholarships. Under the proposal, up to 20% of the fund's assets would be held in liquidity reserves. The ministry also highlighted structural challenges within the education system. Gross enrolment rates for grades 7-8 declined from 69% to 66%, while secondary school enrolment dropped from 43% to 35%. An estimated 15-20% of students drop out of school, while roughly one in ten children never access formal education. The report also pointed to widening regional disparities, noting that urban students receive nearly twice the level of education resources as their rural counterparts. The richest 20% of households receive roughly 30% more education resources than the poorest quintile. We note that the funding gap is occurring amid ongoing disruptions caused by conflict in regions including Tigray, Amhara and Oromia, where thousands of schools remain closed or damaged, limiting access to education for millions of children and complicating efforts to strengthen human capital development.

• Abiy says renewed destabilisation attempt "will be the last"
• Comments highlight rising tensions following the Tigray conflict
• Relations have deteriorated since the 2022 Pretoria peace agreement

Ethiopian Prime Minister Abiy Ahmed issued a strong warning to Eritrea, stating that any further attempt by the Eritrean government to destabilise Ethiopia "will be the last," underscoring rising tensions between the two countries following the Tigray war. Speaking in an interview with the state-run Ethiopian News Agency, Abiy said Ethiopia would not tolerate renewed interference by Eritrean authorities, whom he repeatedly referred to as "Shaebia," the name commonly associated with Eritrea's ruling political establishment. The remarks come amid worsening relations between Addis Ababa and Asmara despite the historic 2018 rapprochement that ended two decades of hostility between the two countries. Abiy acknowledged that Eritrean civilians and authorities initially assisted Ethiopian soldiers who were retreating following the November 2020 attack on the Northern Command that triggered the war in Tigray. However, he said Eritrean forces later committed widespread abuses during the conflict.

According to the prime minister, Eritrean troops carried out killings of civilians and large-scale destruction of property in several towns in the Tigray region, including Axum, Adwa, Adigrat and Shire. He alleged that hundreds of youths were killed in Axum over two days and accused Eritrean forces of looting machinery and public institutions. "We tactically prevented them from entering Mekelle because they committed destruction in every city they occupied," Abiy said, adding that Eritrean forces continue to appear intermittently in certain areas. The prime minister also criticised Eritrea's political and economic system, arguing that the country's leadership does not prioritise development or institutional governance. He said many factories that existed at the time of Eritrea's independence are no longer operational and claimed the closure of Asmara University has left the country without a functioning higher education institution.

Abiy further linked Eritrea's governance model to significant outward migration, saying many Eritreans have fled to neighbouring countries including Ethiopia, Sudan, Kenya and Uganda. He also alleged that Eritrean authorities deploy operatives within refugee communities to monitor and intimidate exiles. The interview comes against the backdrop of deteriorating bilateral relations since the November 2022 Pretoria Agreement that formally ended the Tigray war. Tensions were further exacerbated in October 2023 when Abiy described access to the Red Sea as an "existential issue" for Ethiopia, prompting concern in Eritrea and across the region. The conflict in northern Ethiopia has been widely investigated by international organisations. Reports by the United Nations and other international bodies have documented alleged atrocities committed by multiple parties during the war, including Eritrean forces, Ethiopian federal troops, regional militias and Tigrayan fighters. Eritrea has consistently rejected accusations of wrongdoing, stating that its military involvement occurred at Ethiopia's request during the conflict. However, Abiy said Ethiopia's past engagement with Eritrea had demonstrated that "nothing good can be expected from this force."

• Former prime minister Bilie-By-Nze called the ban unprecedented
• Four other citizens petitioned the Constitutional Court
• Government is preparing draft ordinance to regulate social media use

Several Gabonese individuals have filed legal challenges against the suspension of social media platforms, which has lasted for more than two weeks. The country's media regulator HAC ordered the suspension on Feb 17 "until further notice", citing the spread of harmful online content. The measure was introduced as president Brice Clotaire Oligui Nguema faced several social protests earlier this year, including many in the public sector. On Wednesday (Mar 4), opposition figure and former prime minister Bilie-By-Nze filed an urgent request with the Libreville Court of First Instance, describing the blanket shutdown as unprecedented and unjustified. He argued that the government and HAC do not have the legal authority to impose such an indefinite restriction.

Last week, four other citizens filed a petition with the Constitutional Court because of what they called a violation of civil liberties. As of Mar 4, platforms such as Facebook, TikTok, YouTube and Instagram remain inaccessible while WhatsApp operates only partially. HAC president Germain Ngoyo Moussavou defended the decision and said the regulator's priority is to maintain a safe digital environment. Over the last week, government officials have held discussions with TikTok as well as Meta (which owns Facebook, WhatsApp and Instagram) to improve content regulation. Authorities said they are now preparing a draft ordinance to regulate social media use.

Question:

Where can I find information on the execution of the government budget? What is the latest information available?

The question was asked in relation to the following story: Finance minister addresses 2026 budget, tax measures, IMF program

Answer:

Gabon doesn't release this type of information unfortunately. The finance ministry hasn't published a budget execution report since 2018. The Court of Accounts is also responsible for monitoring the budget but it hasn't published a finance law report since 2022. You can find the available reports here.

Towards the end of last year, media articles mentioned a 2024 report from the Court of Accounts report but journalists seemed to have their own hard copies because it's not online; we covered that here.

• Reduced-Rate Agricultural Credit Fund aims to improve financing access for farmers
• Project targets large reduction in Gabon's 70% reliance on food imports
• SOGADA is expanding into pork sector with XAF 16bn agro-industrial project

On Wednesday (Mar 4), agriculture minister Pacome Kossy signed a partnership agreement with the Bank for Trade and Entrepreneurship of Gabon (BCEG) to establish the operational framework for the Reduced-Rate Agricultural Credit Fund. This fund is aimed at improving access to financing for local farmers while ensuring the viability of agricultural projects submitted for funding. According to BCEG director general Daisy-Helen Eyang Ntoutoume, the collaboration will also provide financial and technical training for producers through the bank and the ministry's technical departments. Intended as an initial step in a broader food security strategy, the project aims to sharply cut Gabon's current 70% reliance on food imports. It builds on BCEG's known role in mobilizing agricultural funds, including a previous XAF 11bn envelope aimed at boosting sectors like poultry production.

In a separate development, the Gabonese Agricultural Development Company (SOGADA) is expanding into the pork industry through a large agro-industrial project in Meyang, Gabon. According to statements from the company this week, the project has already attracted more than XAF 16bn in investment. Pork consumption has increased in recent years throughout Gabon because it is generally more affordable than beef or mutton, but local production has been insufficient to meet national needs. The Meyang project is designed as an integrated agro-industrial model that covers the entire supply chain, from farm production to retail distribution, with the goal of improving the reliability of domestic food supplies.

• Mediation committee met on March 3-4 to guide conflict prevention, peacebuilding
• Sessions focused on consolidating strategic documents and regional mediation framework

Libreville hosted the first annual statutory meeting for the Economic Community of Central African States (CEEAC) mediation committee on Mar 3-4. The committee, composed of former heads of state and government, serves as an advisory body within Central Africa to help prevent conflicts and support peacebuilding across member states. Member countries are Angola, Burundi, Cameroon, Central African Republic, Chad, Congo-Brazzaville, Democratic Republic of Congo, Equatorial Guinea, Gabon, Rwanda and São Tomé and Príncipe. The sessions this week took place at the Gabonese national assembly and focused on updating strategic documents and reviewing contributions to a regional framework on mediation and preventive diplomacy. At the conclusion of the meetings, the committee adopted a consolidated roadmap for 2026.

On the sidelines of the main meetings, Gabon's mediator of the republic Alexis Boutamba Mbina held discussions with the mediation committee on Mar 3. This separate meeting focused on institutional mediation mechanisms and the challenges facing Gabon's mediation office amid growing demands for transparency and good governance. Mbina said he aims to help strengthen crisis prevention and stability as the region continues to face persistent security and political challenges.

• Company says onshore exploration well spudding expected in Q3 2026
• This will be Ghana's first onshore well since 1970s
• Government is looking to increase oil reserves given natural depletion of existing fields

The state-owned GNPC Explorco, the oil exploration arm of the GNPC, signed a deal with local company LubriMax Ghana and its Dutch technical partner Well Engineers and Planners (WEP), under which the latter will provide end-to-end project management consultancy services for the onshore drilling campaign in the Voltaian Basin. The planned oil exploration well will be the first onshore one in the country since the 1970s. GNPC Explorco's Samuel Opoku Arthur said the well is projected to be spudded in Q3 2026.

The GNPC is looking to increase its oil reserves given the natural depletion of its existing fields Jubilee, TEN and Sankofa-Gye Nyame. Ghana's oil production fell by 24.2% y/y to 27.9mn barrels in Jan-Sep 2025 and is certain to come below the 2025 budget projection of 46.35mn (about 127,000 bpd). The 2026 budget based on production projection of 37.95mn barrels (about 104,000 bpd). The Voltaian Basin covers approximately 103,600 square kilometres, spanning roughly one-third of Ghana's landmass across the Northern, Savannah, Bono East, Oti and Ashanti Regions, and preliminary geological studies have indicated strong hydrocarbon presence in commercial quantities, although commercial production is not expected before 2033-2036.

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• Teams will be set up at the planning, energy and trade ministries to propose measures if necessary
• Trade ministry can proposes measures to stop companies from unreasonably raising prices

The government said after its regular meeting on Mar 4 that it had decided to set up three monitoring teams to follow closely the situation in the Middle East and propose actions. One of the teams will be formed t the planning ministry, one at the mines, oil and energy ministry, and one at the trade and industry ministry. They will monitor the situation and consider measures if needed, which in the case of the trade ministry might include steps to prevent economic operators from raising the prices of basic consumer goods without valid reason. No more details were provided.

• Minimum bid rate lowered to 3.00%, marginal lending rate to 5.00%
• Decision follows continued regional deflation in Q4
• UEMOA expects inflation to pick up to 1.4% this year but remain below 3% norm
• Economic growth seen to remain robust at 6.4% this year but Middle East conflict poses risks

The West African central bank's MPC (BCEAO) decided to cut its benchmark interest rates by 25bps at its meeting on Mar 4. The minimum bid rate for liquidity auctions was cut to 3.00% from 3.25% and the marginal lending rate to 5.00% from 5.25%. The mandatory reserve ratio was left unchanged at 3.0%. The next MPC meeting should be held in June 2026.

The decision to cut the rates follows another consumer price decline in Q4 2025. According to the BCEAO data, the average inflation rate in the West African Economic and Monetary Union (UEMOA or WAEMU) was negative at -0.8% y/y in Q4 2025 after -1.4% in Q3 due to lower food prices. For 2026, inflation is expected to average 1.4%, picking up from around 0.0% in 2025, with risks skewed to the upside due to the escalation of geopolitical tensions and their potential impact on international markets.

As for economic activity, the BCEAO said that the regional economic growth was estimated to have accelerated to 6.7% in 2025 from 6.2% in 2024 driven by strong agricultural production, robust services sector and rising extractive and manufacturing activity. Credit to the economy expanded by 5.6% in 2025, up from 4.5% in 2024, and the trade balance improved on higher fuel, gold and cocoa exports, as well as lower food and energy imports. The BCEAO expects GDP growth to remain robust at 6.4% this year, supported by healthy domestic demand and continued strong results in agriculture and mining.

• Cut is smaller than expected as govt seeks to support farmer income
• Government also moves forward mid-crop start date to Mar 4
• Minister explains that climate change has affected agricultural calendar and some harvests start earlier
• He says 1.5mn tonnes of cocoa have been purchased so far which means full-season crop should be around last season's 1.8mn

The government decided to lower the minimum guaranteed farm-gate cocoa price by 57.1% to XOF 1,200 (USD 2.1) per kg for the mid-crop from XOF 2,800 (USD 5.0) for the main crop, agriculture minister Bruno Kone said. A cut was expected given the sliding global market prices, but media reports suggested the authorities were considering an even lower level of between XOF 800 and XOF 1,000. The minister explained that based on simulations carried out by the regulator, the farm-gate price, which is set at no less than 60% of the international market price, should have been fixed at around XOF 947 but President Alassane Ouattara insisted that it should be higher than XOF 1,020 to protect farmers' income.

To cover the difference, the government plans to use about XOF 231bn from the stabilisation fund in addition to the around XOF 280bn to be spent on buying unsold cocoa from the main crop. The stabilisaiton fund was set up years ago to protect against price fluctuations, more specifically when the price drops significantly, and is replenished when the prices are higher. It is not clear how much money it holds at present. There is also a reserve fund which holds proceeds from registration taxes and is used when the stabilisation fund is exhausted.

Another change announced by the minister, and expected too, was moving forward the starting date of the mid-crop to Mar 4 from previous Apr 1. Kone explained that climate change and its effects were increasingly affecting the agricultural calendar and some harvests were occurring earlier than usual, which necessitated the change. Furthermore, he said some farmers had already asked for an earlier start date to allow them to get cash for their production earlier and thus prepare their children for school before the start of the academic year. The minister said the changes were made following consultation with the Ghana Cocoa Board which is also opening its light crop in March.

Kone also said that more than 1.5mn tonnes of cocoa have been bought at the main crop price. It is not clear whether this number includes the 100,000 tonnes that the government has stepped in to buy, but in any case, it indicates that the main crop is at least 1.5mn tonnes. The mid-crop is forecast at around 350,000 tonnes which should bring the total crop to 1.8-1.9mn tonnes, more or less in line with last season's 1.82mn tonnes.

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• Reports KES 112bn revenue gap in FY2025/26 first half despite double-digit growth
• Ordinary revenue underperformed plan while ministerial AIA broadly met targets
• Spending also undershoots H1 target by KES 77bn
• Downfall driven by lower interest payments, delays in county govt disbursements
• H1 deficit reached KES 489bn or 2.5% of GDP, exceeding target of KES 442bn
• Revised FY2025/26 framework projects deficit at 6.1% of GDP, up from 4.7% in the initial budget
• Presentation coincides with end of IMF mission, underpinning unlikelihood of funded program
• Pre-election pressures and external risks cloud fiscal outlook

Kenya's National Treasury reported a revenue shortfall in H1 of the current FY2025/26 (July - June) as Finance Minister John Mbadi presented the Supplementary Budget to Parliament on Wednesday. Total revenue collection, including AIA, reached KES 1.53tn in H1, compared with a target of KES 1.64tn, leaving a gap of KES 112bn. Despite missing targets, overall revenue continued to expand, rising by 11.4% y/y compared with 4.2% growth recorded in December 2024, Mbadi said, noting the performance reflects ongoing progress in revenue mobilisation.

The underperformance was largely driven by weaker ordinary (mostly tax) revenue receipts, which amounted to KES 1.24tn against a target of KES 1.35tn, resulting in a shortfall of KES 111bn. Within this category, the largest miss came from other income tax, which fell short by KES 77bn as collections printed at KES 239bn against a target of KES 316.1bn. Additional gaps were recorded in VAT and excise tax collections. By contrast, ministerial AIA collections were broadly on target, reaching KES 283.8bn compared with the projected KES 284.8bn.

Government expenditure and net lending amounted to KES 2.02tn in H1, falling short of the KES 2.10tn target by KES 77bn. Recurrent expenditure reached KES 1.47tn, compared with a projected KES 1.51tn, reflecting an underspending of KES 37bn. The main driver was lower-than-expected interest payments. By contrast, spending on operations and maintenance exceeded expectations by more than KES 40bn. On the upside, development expenditure also overshoot the target, reaching KES 338bn vs the planned KES 326bn. Transfers to county governments recorded the largest deviation among spending categories, falling short of the target by KES 50bn as disbursements stood at KES 180bn, compared with the planned KES 230bn. Overall, total expenditure increased by 6.6% y/y compared with the same period in FY2024/25.

The fiscal deficit including grants widened to KES 489bn in H1, equivalent to 2.5% of GDP, exceeding the targeted deficit of KES 442bn or 2.3% of GDP. The higher-than-expected deficit reflects the combination of weaker revenue performance and expenditure adjustments.

Under the revised assumptions, the government expects total revenue to rise to 17.9% of GDP, up from the 17.2% of GDP projected in the original approved budget. The statement does not provide a detailed breakdown of how additional revenues are expected to be generated, despite the shortfall recorded during the first half of the fiscal year. At the same time, total expenditure and net lending have been revised upward more significantly, increasing from 22.2% of GDP to 24.1% of GDP. Grants are projected to contribute 0.2% of GDP to the budget. As a result of these revisions, the overall fiscal deficit including grants is projected at 6.1% of GDP for FY2025/26.

The government plans to finance the deficit primarily through domestic borrowing. Net domestic financing is projected at 4.7% of GDP, while net external financing is expected to account for 1.4% of GDP, slightly lower than the 1.5% of GDP previously envisaged in the approved budget.

The bulk of the spending adjustment comes from ministerial expenditure, which rises by KES 287bn to KES 2.84tn. In the breakdown, recurrent expenditure accounts for the largest increase, rising by KES 201bn to KES 2.01tn. Development spending is also revised upward, increasing by KES 86bn to KES 831bn. Spending under Consolidated Fund Services (CFS), which includes interest payments, pensions and salaries for state officers, is revised upward by KES 29bn to KES 1.37tn. Transfers to county governments remain unchanged at KES 415bn. Overall, the supplementary budget raises total expenditure by 13.5% relative to the original FY2025/26 budget.

The presentation of the supplementary budget coincided with the conclusion of the latest IMF mission to Kenya, underpinning the view that securing a new funded program seems unlikely in the near term. The outlook for fiscal consolidation is further complicated by the domestic political cycle. Kenya is already entering a pre-election period ahead of the 2027 polls, a phase that limits the government's willingness to pursue politically costly reforms. Resistance to tax increases remains strong following the contentious fiscal measures proposed in recent years, reducing the likelihood that the authorities will introduce additional revenue-raising steps.

At the same time, external developments could add further strain to the fiscal outlook. The escalation of the Iran conflict pushing up global energy prices and increasing import costs, would raise spending pressures while weighing down on economic activity. Together, these factors point to a more challenging environment for both revenue mobilisation and expenditure control in the near term.

• Says second phase of mass registration begins on March 30 nationwide
• Electoral body urges political parties to mobilise youth amid low uptake

The electoral commission plans to launch a second phase of nationwide voter registration at the end of March as it seeks to expand the voter roll ahead of future elections. The exercise will begin on March 30.

IEBC chair Erastus Ethekon reportedly expressed concern about low youth participation in previous registration efforts and urged politicians to prioritise mobilisation of potential voters rather than criticising the commission's work. He said the IEBC has already undertaken outreach activities involving youth groups, civil society organisations, media and political parties to improve engagement and transparency.

The IEBC also signalled plans to expand public engagement forums beyond the capital to counties across the country in an effort to strengthen trust in the electoral process. Ethekon said the commission intends to improve early communication and stakeholder engagement while building on Kenya's use of electoral technology and legal frameworks governing elections.

• Investors place bids for 12.49bn shares, exceeding 11.81bn offered
• Government retains 35% stake
• IPO proceeds to support infrastructure fund

Kenya Pipeline IPO enjoyed strong investor interest, with the subscription rate reaching 105.7%, according to a presentation of the outcome made by finmin Mbadi. About KES 112.3bn worth of bids were submitted for roughly 12.49bn shares compared with the 11.81bn shares offered at a price of KES 9 per share. Despite the higher demand, the government said it would only accept bids equivalent to the targeted amount for the transaction, according to local news reports.

Local investors accounted for the majority of allocations, receiving about 7.95bn shares, or around 67% of the offer. Domestic institutional investors alone are expected to hold about 41% of the company following the listing. Investors from across the East African Community were allocated around 3.86bn shares, representing about one-third of the offering, with the main entrant being the Uganda National Oil Company.

Following the transaction, the Kenyan government will retain a 35% stake in KPC, while regional investors will hold about 21.22% of the company. A small portion of shares was also allocated to oil marketing companies.

The KPC transaction represents Kenya's first state-backed listing on the Nairobi Securities Exchange since 2008 and the first public offering conducted under the Privatization Act 2025. The process was completed through a fully electronic application system and attracted more than 70,000 Kenyan investors. The company is expected to begin trading on the exchange on March 9, 2026.

The proceeds from the sale will help operationalise the planned National Infrastructure Fund, once the Parliament passes the legislation. The govt then intends to use to mobilise financing for development projects. It has also indicated plans to continue divesting stakes in mature state assets to raise seed capital for the facility.

• Lending arrangement remains distant despite request, Mbadi tells Reuters
• There have been disagreements within the govt over the necessity of a new program
• Medium-term budget plans do not envisage IMF funding

The finance ministry held discussions with a visiting delegation from the IMF as part of ongoing engagement on fiscal policy reforms and technical cooperation. The meeting, led by finmin John Mbadi and IMF Fiscal Affairs Department deputy director S. Ali Abbas, focused on Kenya's fiscal reform agenda, including strengthening domestic revenue mobilisation, improving the medium-term fiscal framework and enhancing the efficiency of public spending, according to a note by the Treasury posted on social media. Officials also discussed ongoing IMF technical assistance and capacity development support aimed at strengthening public finance management and institutional capacity. According to the Treasury, both sides reaffirmed their commitment to continued cooperation to support fiscal sustainability and macroeconomic stability.

The mission, which started last week, ended on 4 March, the IMF said in a statement. According to that statement, the discussions focused on macroeconomic developments, policy priorities and potential risks, including spillovers from tensions in the Middle East. The Fund said strengthening fiscal discipline, improving fiscal credibility and enhancing public sector efficiency would be important to reinforce resilience to external shocks. Talks are expected to continue during the upcoming IMF-World Bank Spring Meetings.

Separately, in an interview with Reuters, Mbadi said the current IMF mission is not expected to result in a new lending programme. The discussions remain at a technical stage and are very far from an agreement, Mbadi reportedly said. The country has formally requested a fresh arrangement with the Fund after the expiry of its previous USD 3.6bn programme in April 2025, even though there have been divisions within the govt on the necessity of such. Significant disagreements seem to also persist between the authorities and the Fund over several issues, including the exchange rate management and the securitisation of revenue streams. Medium term budget plans also do not envisage IMF funding.

• Talks for new IMF Extended Credit Facility ongoing since April 2025
• Outstanding IMF credit stands at 226% of quota
• Mozambique faces repayments of nearly USD 471mn between 2026 and 2029

Government confirmed that negotiations with the IMF for a new Extended Credit Facility (ECF) programme remain ongoing despite the absence of any reference to fresh financing in the Fund's latest review, according to local media reports. Government officials said discussions with the IMF have been underway since April 2025 and stressed that the institution's most recent assessment formed part of regular consultations rather than signaling a halt in negotiations. "The possibility remains open, and the process is still under negotiation with the IMF," a government source said. Under its previous ECF programme approved in 2022, Mozambique secured USD 468mn in financing from the IMF. However, the arrangement was suspended in April 2025 after USD 343mn had been disbursed in four tranches.

According to the IMF's latest Article IV consultation report approved in February, Mozambique's outstanding credit with the Fund currently stands at 226% of its quota. According to the report, Mozambique faces repayment of nearly USD 471mn during 2026-2029, with USD 98mn due in 2026. The IMF indicated that a post-financing assessment is scheduled for August 2026, while the next Article IV consultation is expected within 12 months. Mozambican authorities said they are intensifying efforts to implement IMF recommendations aimed at strengthening governance, public administration and fiscal transparency. Officials also highlighted the country's removal from the Financial Action Task Force (FATF) grey list following nearly three years of reforms targeting anti-money-laundering and counter-terrorism financing frameworks. Securing a new IMF programme could play a critical role in supporting macroeconomic stability and unlocking additional concessional financing as Mozambique faces rising external repayment obligations and elevated public financing needs.

• Says smelter owned by foreign shareholders, authorities monitoring reports of possible shutdown
• Energy supply challenges cited as key issue affecting operations

Government said that any decision regarding the potential closure of the Mozal aluminium smelter rests with the company's foreign shareholders and is not under the authority of the state. Government spokesperson Inocêncio Impissa stated that while the facility operates in Mozambique, strategic decisions regarding its operations are made by the company's corporate owners. "The business is not Mozambican," Impissa said, adding that the country hosts the smelter's infrastructure but does not control operational decisions. Mozal, one of Mozambique's largest industrial projects, has historically been a key contributor to the country's export revenues and industrial output.

Authorities said they are monitoring the situation closely, noting that the smelter generates significant economic benefits through employment creation, tax revenues and broader economic activity linked to its operations. Energy supply constraints have emerged as a central factor in discussions surrounding the plant's future operations. The government acknowledged that ensuring sufficient energy supply would be important for maintaining large-scale industrial activity in the country. However, officials stressed that the challenges related to energy supply are not exclusively Mozambican and involve broader structural issues affecting the industrial value chain. The government added that it would continue monitoring developments and provide further updates as more information becomes available.

We note that the statement follows recent reports suggesting that Mozal could cease operations by mid-March, something that was recently cited by Oxford Economics which subsequently slashed its 2026 GDP growth forecast for Mozambique to just 0.3%, down sharply from 2.5% attributing the revision to flood damage, the Mozal closure and scheduled maintenance at the Coral Sul FLNG platform. This confluence of industrial shutdowns and climate shocks is expected to weigh heavily on exports, production, employment and household consumption, compounding an already fragile macroeconomic environment marked by post-election unrest, debt distress and constrained fiscal space, underscoring that while the government may not control corporate decisions, it bears the economic consequences of reduced industrial activity and the urgent need to secure renewed external support through a potential IMF programme this year.

• Over 19,000 public employees to be dismissed by June this year
• Measure expected to save more than MZN 600mn
• Government plans automated system to enforce retirement rules

Government plans to dismiss more than 19,000 public servants by June 2026 as part of efforts to reduce the state wage bill and improve efficiency in the civil service, according to local media reports. The announcement was made by government spokesperson Inocêncio Impissa following the sixth ordinary session of the Council of Ministers. According to authorities, the measure is expected to generate savings of more than MZN 600mn (approximately USD 9.2mn) and create room for the recruitment of around 6,000 new civil servants. The dismissals primarily involve employees who have reached the legal retirement age of 60 but have remained on the government payroll due to administrative delays. To address the issue, the government plans to introduce an automated system that will identify public servants who have reached retirement age and automatically process their departure from the civil service.

Impissa said the reform is intended to streamline the retirement process and reduce bureaucratic delays that have previously slowed the formal termination of employment contracts. "Automation will solve the problem and within the framework of innovation and digitalisation we will introduce this mechanism," he said. The minister noted that many public servants fail to complete the required administrative steps to formalise retirement, leaving the responsibility with human resource departments that have struggled to enforce the process. Official data indicate that around 17,400 public servants were already eligible for retirement by December 2025. The move forms part of broader efforts by the Mozambican government to rationalise public expenditure and contain fiscal pressures as the country continues to face rising financing needs and ongoing fiscal consolidation challenges.

We recall that the IMF, in its recent Article IV consultation report, urged govt to implement decisive fiscal consolidation measures, including reducing the wage bill from 14.4% of GDP in 2024 to 11% by 2028 through nominal wage freezes, strict hiring limits and elimination of the 13th-month salary. The government's plan to dismiss over 19,000 public servants by June 2026, saving approximately MZN 600mn, represents a direct response to these recommendations, yet the scale of the adjustment appears modest relative to the magnitude of the fiscal challenge with the wage bill having already exceeded budget targets in 2025 at MZN 209bn and projected to rise further to MZN 211.8bn in 2026. While the introduction of an automated retirement system addresses the administrative bottlenecks that have kept over 17,400 eligible employees on payroll, the net savings of MZN 600mn represent only a fraction of the MZN 3.5bn overrun recorded in 2025, underscoring that deeper structural reforms including the politically sensitive freeze on the 13th-month salary will likely be required to meet the IMF's 11% of GDP target by 2028 and restore fiscal sustainability amid debt levels exceeding 91% of GDP.

• Main policy rate reduced to 3.00% and marginal lending rate to 5.00%
• Decision follows negative inflation and steady regional growth outlook
• Geopolitical tensions pose risks going forward

The Central Bank of West African States (BCEAO) has lowered its key policy rates by 25bps following its monetary policy committee meeting held on March 4. The bank reduced the minimum bid rate for liquidity auctions to 3.00% from 3.25% and cut the marginal lending rate to 5.00% from 5.25%, with the new levels set to take effect on March 16. The required reserve ratio for banks operating within the union was left unchanged at 3.0%.

The decision comes amid easing inflationary pressures across the region, according to the press release. Consumer prices declined by 0.8% in Q4 2025 after another 1.4% drop in the previous quarter, reflecting lower food prices supported by strong domestic harvests and reduced import costs for key food products. Inflation across the union averaged around 0% in 2025 and is projected to rise gradually to about 1.4% in 2026, although geopolitical tensions could pose upside risks.

Economic activity in the region remained robust, with real GDP growth estimated at 6.7% in 2025 compared with 6.2% in 2024, supported by strong agricultural output, services and extractive industries. Growth is expected to remain solid at about 6.4% in 2026, underpinned by resilient domestic demand and continued strength in mining and agriculture. Credit to the economy expanded by 5.6% in 2025, while the region's external position improved thanks to stronger exports of petroleum products, gold and cocoa and lower import costs for food and energy.

• To close 19 parapublic entities with combined XOF 28bn budget
• Reform expected to generate at least XOF 55bn in fiscal savings over three years
• 10 additional public entities to be restructured through revised mandates and governance
• Cabinet also reviews agro reforms, supply risks linked to rising geopolitical tensions

The government has approved a plan to streamline the parapublic sector as part of efforts to reduce public spending and improve the management of state entities, according to the meeting communique. The reform programme, result of the work of a previously formed committee, includes the closure of 19 public entities whose combined 2025 budget allocations total about XOF 28bn and whose annual wage bill is estimated at XOF 9bn for 982 employees. The entities also carried outstanding liabilities of roughly XOF 2.6bn as of December 2024.

Authorities estimate the restructuring could generate cumulative net fiscal savings of at least XOF 55bn over the next three years. In addition to the closures, 10 other public entities will be restructured through revised mandates, updated legal frameworks and adjustments to their investment strategies. The government said the reform will also involve redeployment of staff and measures to manage potential legal or labour disputes arising from the changes.

The cabinet also reviewed recent developments in the agricultural sector, noting that the 2024/25 and 2025/26 production campaigns were supported by budgeted subsidies of XOF 120bn and XOF 130bn respectively. Authorities said a new national agricultural and agro-industrial policy aligned with the Senegal 2050 transformation agenda is being finalised and is expected to be submitted to the prime minister by April 30. The government is also preparing a strategy to reduce post-harvest losses in crops such as onions and potatoes, which officials estimate currently range between 30% and 40%.

Separately, the cabinet discussed the potential macroeconomic and supply risks linked to rising geopolitical tensions, including possible disruptions to global energy and shipping routes, and agreed to establish a crisis-monitoring mechanism under the prime minister's office. Other discussions covered progress on digital sector reforms, butane gas pricing harmonisation and measures to improve livestock production as part of the country's food sovereignty strategy, alongside continued investment in education infrastructure and preparations for the 2026 Youth Olympic Games in Dakar.

• Godongwana tells Bloomberg South Africa can withstand the Iran war shock
• Minister admits South Africa is price taker and high oil prices will feed through to inflation
• Current underrecovery data (which is not yet the full increase) shows 10% petrol price hike in April
• Diesel prices could rise by close to ZAR 4 per litre if global prices remain at this level

Finance minister Enoch Godongwana has told Bloomberg in a TV interview on Thursday (Mar 5) that the country still has enough buffers in the fiscal framework. Speaking amid rising global oil prices linked to the war in Iran, Godongwana warned that South Africa remains exposed to external shocks because it is effectively a price taker in global energy markets.

He said higher oil prices could obviously feed through into inflation if they persist, noting that the key question is whether the current spike proves temporary or persists for longer. However, Godongwana maintained that the government's fiscal framework still provides sufficient room to absorb potential pressures, allowing South Africa to continue pursuing its plans to stabilise public finances and reduce debt over the medium term.

We note that as of Mar 4, the daily petrol prices are already showing an under-recovery of ZAR 2.06 per litre of 95 grade petrol and ZAR 1.96 per litre of 93 grade. Diesel prices are headed for even sharper increase of close to ZAR 4 per litre in April as both international product prices and the rand are exerting the upside pressure. March prices were hiked by an average of about 1.0% but the increase in April is much more substantial at 10% (or more if international prices continue to rise). In our calculations, a 10% increase in April will add 0.5pps to headline CPI which will rise to 3.8% y/y as a result. This excludes the fuel levy adjustments which will take effect on Apr 2. The general fuel levy (ZAR 0.09/l of petrol and ZAR 0.08/l of diesel), the carbon fuel levy (ZAR 0.05/l of petrol and ZAR 0.05/l of diesel) and the Road Accident Fund levy (ZAR 0.07/l of petrol and diesel) will add a combined ZAR 0.21/l of petrol to the basic price.

• MTN's Iran stake poses growing legal and geopolitical risk for a major South African multinational
• Escalating sanctions and security concerns could strain South Africa's business and diplomatic environment

MTN's long-running investment in Iran is emerging as a growing geopolitical and legal risk, the Dialy Maverick is reporting. The telecom group owns a 49% stake in Irancell, Iran's second-largest mobile network operator. The investment, originally secured in 2005, has long been mired in controversy, including a USD 4.2bn lawsuit from Turkish operator Turkcell alleging corruption and bribery in the licensing process. The dispute is now moving through South African courts and could lead to one of the country's most high-profile corporate trials.

The situation has been complicated further by U.S. sanctions on Iran, which were reimposed in 2018 and have effectively frozen MTN's investment. The company told Daily Maverick it has been unable to repatriate profits or sell its stake in Irancell since then, leaving the asset stranded despite MTN's broader strategy to exit the Middle East and refocus on Africa.

Recent geopolitical developments in Iran have heightened the risks surrounding the investment. Leadership upheaval and regional conflict have disrupted the ownership structure of Irancell's Iranian partners, raising uncertainty over governance and who ultimately controls the company. Analysts warn that the power vacuum could allow the Islamic Revolutionary Guard Corps (IRGC), a group designated as a terrorist organisation by the United States, to consolidate influence over assets linked to the telecom network.

If that occurs, MTN could face increased legal exposure in the United States, where it is already dealing with investigations and civil litigation tied to alleged links between its Iranian operations and sanctioned entities. MTN's entanglement in the Middle Eastern market has evolved into a complex geopolitical and legal challenge for the South African telecoms giant, with limited options for exit while sanctions remain in place. This is not only a reputational risk for a major South African company operating abroad but may increase the diplomatic friction with the United States government.

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SA's biggest data centre 'monster' set to consume 25% of Durban's electricity (Daily Maverick)

MTN's Iran headache just got worse as sanctions, strikes tighten noose (Daily Maverick)

• Surcharge introduced due to heightened maritime security risks in the Straits of Hormuz and Bab el-Mandeb
• Fees reach up to USD 4,000 per refrigerated container on Gulf-Africa routes
• Measure likely to raise shipping costs for African imports

Mediterranean Shipping Company (MSC), the world's largest container shipping line, imposed a war risk surcharge on cargo shipments to African countries and Indian Ocean islands, citing heightened maritime security risks in key global shipping lanes. The surcharge took effect today 5 Mar and applies to shipments originating from the Indian subcontinent and Gulf countries destined for African ports and Indian Ocean island markets. According to the company, the measure was introduced after escalating geopolitical tensions in the Middle East disrupted maritime traffic through the Straits of Hormuz and Bab el-Mandeb, two strategic chokepoints that handle a significant share of global energy and container shipping flows. Under the revised pricing structure, cargo shipped from the Indian subcontinent to East Africa, Somalia, Mozambique and Indian Ocean islands will incur an additional USD 500 per 20-foot equivalent unit (TEU) for dry containers and USD 1,000 per TEU for refrigerated containers.

Higher surcharges apply to shipments from Gulf countries, including Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, to West Africa, East Africa, South Africa, Mozambique and Indian Ocean islands. MSC said it will charge USD 2,000 per 20-foot container, USD 3,000 per 40-foot container and USD 4,000 for refrigerated containers on these routes. The company said the surcharge will remain in place until further notice, noting that it continues to monitor developments in the region and coordinate with relevant authorities to ensure the safety of its operations. We note that the additional charges are likely to increase freight costs for African importers, particularly for food products and other temperature-controlled goods transported in refrigerated containers. The move also highlights the vulnerability of African trade flows to disruptions along key maritime corridors linking the Gulf and Asian markets to ports across the continent.

• Energy minister says there is no reason to raise prices at the moment
• She points to UNOC's statement assuring of stable fuel supply

Energy minister Ruth Nankabirwa called on fuel marketing companies to keep fuel prices stable. In a video posted on X, she said companies should not use the Middle East crisis as a justification to raise price and make profit, adding that the state-owned UNOC has already assured of stable fuel supply. Indeed, UNOC and the energy ministry said in a statement earlier this week that contingency measures were taken to make sure fuel supply is not affected amid the escalating tensions in the Middle East. While about a tenth of Uganda's fuel imports ta are estimated to come via the Strait of Hormuz, UNOC assured that it can source fuel from alternative markets if necessary. It also said that all scheduled cargo deliveries for March remain on track and prices should not change for the time being. Uganda imports about 2.5bn litre of petroleum products annually.

Govt moves to evacuate Zambian family from Iraq as Middle East tensions escalate (Zambia Monitor)

Lusaka business expo set to highlight local value chains across various sectors (Zambia Monitor)

ZANACO rolls out mobile money on POS, enables cash-out services on ATMs (Zambia Monitor)

Zambia immigration warns transporters after 21 undocumented Ethiopians apprehended in Nakonde (Zambia Monitor)

Hichilema dominates Mwamba online poll with clear majority (Lusaka Times)

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Brace yourselves for potential fuel increase, it's beyond our control - Govt (News Diggers)

• Total uranium resources rise to 58.8mn lbs U₃O₈
• Miner plans to start largest drilling campaign later this month
• Exploration target set between 40mn and 100.5mn lbs

Australian Securities Exchange (ASX) listed Atomic Eagle reported a 24% increase in mineral resources at its Muntanga uranium project in southern Zambia following completion of its maiden drilling campaign. Total resources at the project increased by 11.4mn pounds to 58.8mn pounds of triuranium octoxide (U₃O₈) at an average grade of 309 parts per million (ppm), according to the company.The updated estimate includes newly defined resources at several deposits within the project area. At Chisebuka, an inferred mineral resource estimate totals 19.9mn tonnes at 220 ppm U₃O₈, equivalent to 9.7mn pounds of uranium. Meanwhile, Muntanga East hosts an inferred resource of 3.1mn tonnes at 252 ppm U₃O₈, containing approximately 1.7mn pounds. Atomic Eagle said the resource upgrade was achieved at a discovery cost of USD 0.05 per pound, significantly below the current uranium spot price of around USD 89 per pound.

The company plans to launch the largest drilling campaign at the project in nearly two decades later this month as it seeks to expand the resource base further. Exploration targets currently range between 40mn and 100.5mn pounds of U₃O₈ at grades between 150 ppm and 350 ppm. Upcoming drilling will focus on expanding the newly identified resources at Chisebuka and testing additional targets across the project area, including Namakande and Muntanga North. Atomic Eagle said the Muntanga project remains relatively underexplored relative to its scale, suggesting strong potential for further resource expansion as drilling intensifies. The company currently holds USD 19.2mn in cash to fund exploration activities.

We recall that in November 2025, Atomic Eagle commenced trading on ASX under the ticker AEU, marking its formal debut as a uranium-focused resources company with Zambia's Muntanga Uranium Project at the centre of its strategy. The listing resulted from the merger of Tombador Iron and Canadian miner GoviEx Uranium, creating a consolidated entity dedicated to advancing African uranium assets. Backed by a USD 10mn re-compliance capital raise, the company now holds a USD 20mn cash position and a board drawn from the leadership of both predecessor firms. Atomic Eagle said the strengthened structure provides the platform needed to accelerate exploration and development activities. The Muntanga project now wholly owned by Atomic Eagle, already holds mining permits and is viewed by the company as its key value driver. Situated in southeastern Zambia, the project covers 719km² across three licences namely Muntanga, Dibbwi and Chirundu and roughly 200km south of Lusaka and north of Lake Kariba.

• Contributions reached ZMW 10.4bn, exceeding ZMW 10bn target
• Investment portfolio expanded to ZMW 113.5bn (or 13.9% of GDP) from ZMW 95bn
• Authority reports ZMW 30bn in outstanding employer contributions

The National Pension Scheme Authority (NAPSA) paid out ZMW 2.4bn in total benefits in 2025 while the fund's investment portfolio expanded to ZMW 113.5bn from ZMW 95bn the previous year, Director General Muyangwa Muyangwa said during a press briefing. The authority also exceeded its annual contribution target, collecting ZMW 10.4bn compared with the ZMW 10bn initially projected. NAPSA said the fund's growth remains critical to meeting long-term pension obligations as the scheme continues to expand. Of the total benefits paid in 2025, monthly pensions to 32,432 beneficiaries amounted to ZMW 1.06bn. Lump-sum payments, including pre-retirement withdrawals and partial benefits, reached ZMW 643mn and were paid to 38,560 members. Meanwhile, ZMW 495mn was disbursed in retirement, survivor and invalidity lump-sum payments to 9,176 beneficiaries. NAPSA also provides a funeral grant of ZMW 18,600 to registered members, while survivor benefits continue to be paid to dependants following a member's death.

The authority's membership base has grown steadily since its establishment, reaching about 3mn members cumulatively. However, only around 1.1mn members were actively contributing as of 2024. In 2024 alone, the scheme registered 207,345 new members. Despite the growth in assets and contributions, compliance among employers remains weak. NAPSA reported that only 42% of employers complied fully with monthly contribution requirements in 2025. Muyangwa disclosed that outstanding unremitted contributions total around ZMW 30bn, although the principal arrears amount to roughly ZMW 1.5bn, with the remainder consisting of penalties. Authorities are encouraging employers to utilise an existing penalty waiver programme designed to help firms regularise arrears without jeopardising their financial viability. Looking ahead, NAPSA aims to expand its net assets to ZMW 133bn by the end of 2026 while targeting an investment return above the actuarial hurdle rate of 12% annually.

We note that while NAPSA's asset base has grown to ZMW 113.5bn (approximately 13.9% of GDP), the ZMW 30bn in outstanding employer contributions equivalent to nearly 3.7% of GDP reveals persistent formal sector compliance weaknesses that could ultimately constrain both pension coverage and domestic institutional investment capacity. Critically, with only 1.1mn active contributors from a total registered membership of 3mn representing just 37% contribution activity and covering a mere 5.5% of Zambia's 20mn population, the scheme faces a structural duality of registration without contribution and exclusion of the broader population, raising fundamental questions about its long-term actuarial sustainability and social security mandate.

• Higher fuel import costs, sharper inflation and tighter FX trade-offs
• Fuel import bill and refined-product imports are a material external exposure
• A sustained Brent at USD 100 would add roughly USD 0.37-0.45bn to the annual fuel import bill
• Headline CPI would rise (0.6-0.8pp) and reserves face 6.7-8.3% drawdown risk
• Key vulnerable sectors: transport, agriculture, mining logistics and backup power

Note: This is one of our stories looking at the impact of the war in the Middle East on specific EM economies. In order to highlight vulnerabilities, we assume a risk scenario where the conflict is not resolved quickly, and risk premia/infrastructure damage/Hormuz strait closure keep oil prices around USD 100 throughout 2026, resulting in an energy price shock similar to the one in 2022.

The escalation in the Middle East between the US, Israel and Iran has caught Zambia at a particularly delicate moment. After nearly seven years, inflation just recently returned to the government's 6-8% target band, reserves have been rebuilt to USD 5.5bn as at end-Dec (approximately 4.7 months of import cover), and the sixth IMF ECF programme successfully concluded, with the Fund estimating growth at a respectable 5.2% for 2025. The authorities' challenge, in our view, is that an oil shock transmits through multiple channels simultaneously, the import bill, inflation expectations, fiscal trade-offs and external buffers, so even if the conflict remains geographically distant, policy bandwidth and hard-won stabilisation gains still get tested. In what follows, we set out why Zambia remains exposed despite recent improvements, quantify the potential first-round impacts on inflation and the external accounts, and assess how the authorities' recent policy tools, although fuel stocks, a price stabilisation mechanism, and stronger reserves might cushion but not eliminate the coming pressure.

GDP and fiscal outlook - fragile recovery faces immediate headwinds

Zambia's economy, which stood at USD 26.33bn in nominal terms in 2024, had been showing genuine signs of recovery, in our assessment. According to the International Monetary Fund's latest staff report for the sixth and final ECF review, real GDP growth is estimated at 5.2% in 2025 and projected at 5.8% in 2026, supported by mining expansion, a record maize harvest, and recovery in electricity generation following previous drought-induced power constraints.

That positive trajectory now faces significant downside risk from the oil price channel specifically, we think. A sustained Brent at USD 100 throughout 2026 representing an increase from the current approximate USD 85 to USD 100, or roughly 17.6% would deliver a material external shock to Zambia. The transmission mechanism runs through three interrelated channels namely, the import bill, household consumption, and fiscal accounts.

Firstly, the Import bill channel: Zambia imports virtually all its refined petroleum products. According to OEC trade data, refined petroleum was Zambia's single largest import category in 2024 at USD 2.11bn. Applying the 17.6% price increase to this baseline implies an additional annual import cost of approximately USD 370mn. To contextualise, that is equivalent to roughly 1.4% of 2024 GDP and represents about 7% of Zambia's gross international reserves (reported at USD 5.5bn in late 2025). This additional FX demand, absent offsetting revenue or spending adjustments, would narrow the current account and increase pressure on reserves, potentially forcing Bank of Zambia intervention.

Second, the consumption channel. Higher diesel and petrol costs transmit quickly through distribution and production margins. According to national accounts data, firms face a stark choice: absorb higher fuel costs by cutting profit margins or pass them to consumers. In an economy where household consumption remains sensitive to food and transport costs, a protracted oil shock would reduce real disposable incomes and weaken demand. The transport sector is the first-order victim as higher diesel directly lifts trucking and passenger-fare expenses, pushing distribution costs through to food and manufactured goods.

Third, the fiscal channel. The IMF's fiscal projections had assumed a cash-basis deficit narrowing from about 4.6% of GDP in 2025 to 2.8% in 2026, supported by revenue-based consolidation. A sustained fuel-price shock would complicate this path in two ways: reduced economic activity would weaken tax collections from transport-dependent sectors, and authorities may face pressure for relief measures such as fuel subsidies or tax reductions. Both would widen the fiscal gap, testing the government's commitment to consolidation in an election year.

The 2025 outturn offered some cushion after the finance ministry reported a fiscal deficit of ZMW 28.3bn (approximately 3.46% of GDP), better than the revised 4.6% target but VAT and customs duties underperformed, signaling vulnerability in consumption-linked revenues. The 2026 budget targets a tighter 2.1% fiscal deficit policy target (with a ZMW 34.5bn (3.7% of GDP) financing gap), predicated on 6.4% growth and domestic revenue reaching 22.3% of GDP. Any fuel-related fiscal intervention whether subsidies, tax cuts, or arrears accumulation would widen the financing gap and increase reliance on domestic borrowing, potentially keeping yields elevated and testing market confidence.

Under the sustained USD 100 Brent scenario, we estimate that growth for 2026 could shave several tenths off the IMF's 5.8% baseline projection. This estimate derives from the combined effect of: (i) the direct drag from higher import costs (USD 370mn, or 1.4% of GDP, representing a leakage from domestic demand), (ii) the consumption compression from higher transport and food costs, and (iii) the fiscal drag if authorities pursue consolidation rather than stimulus. We would caution that this is a first-round estimate only. Empirical cross-country evidence from an IMF study suggests that oil price shocks of this magnitude typically reduce growth by 0.3-0.5 percentage points in net-importing economies, but the precise impact depends on the degree of pass-through, the policy response, and the extent to which firms can substitute inputs or adjust operations. If second-round effects through confidence and investment materialise or if the shock persists beyond 2026, the drag could be larger.

Inflation

Headline inflation delivered a decisive positive surprise in February, dropping to 7.5% year-on-year from 9.4% in January, a 1.9 percentage-point fall that moved inflation back inside the government's 6-8% target band for the first time since April 2019, according to the Zambia Statistics Agency. The decline was broad-based as food inflation slowed sharply to 8.2% year-on-year (down from 10.9% in January), while non-food inflation eased to 6.5% year-on-year.

According to the Statistics Agency, these developments reflected three converging factors: improved domestic food supplies, a stronger exchange rate compressing imported costs, and recent falls in domestic fuel pump prices. The Kwacha continued its firming trend through February, with Bank of Zambia market series data showing the exchange rate around ZMW 18.90 per US dollar in February, appreciating by approximately 6% month-on-month and extending the appreciation that began in late 2025. This FX move reduced pass-through to fuel, electricity and other imported items.

The Energy Regulation Board had further supported disinflation by trimming pump prices for February, citing lower international oil prices and Kwacha gains. According to ERB data, fuel prices were reduced by between 4.6% and 5.9% effective 1 Mar, driven largely by the Kwacha's 4.17% appreciation in February, which offset higher international refined product prices. These reductions contributed directly to the improved inflation outlook.

However, this hard-won progress now faces acute threat, in our assessment. According to the ERB, international crude oil prices have already increased by 4-5% in recent days, reflecting heightened supply risk following escalating tensions in the Middle East. While fuel accounts directly for only about 2% of Zambia's inflation basket, the indirect pass-through via transport and supply chain costs has a broader impact. Empirical cross-country evidence suggests that oil price spikes produce immediate first-round effects on headline CPI, with persistent shocks risking second-round wage and price responses.

Applying a conservative pass-through range to Zambia implies that a move from an approximate market Brent of USD 85 to USD 100, an increase of roughly 17.6% would generate a 0.6 to 0.8 percentage-point upward impulse to headline inflation on first-round effects alone. That would be sufficient to interrupt the current disinflation trend and push inflation back toward the upper bound of the target band, if not above it. The IMF's latest projections had anticipated inflation returning to the 6-8% target band by end-2027 although this happened sooner than anticipated as explained above. A sustained oil shock would certainly push inflation outside govt's target band, we think. We would also flag that these are first-round calculations and once pricing behaviour adjusts and second-round dynamics through wages and transport margins kick in, the total hit could run higher.

External accounts - reserves provide buffer, but shock is material

Zambia's external position has strengthened notably in recent years, providing some cushion against the coming shock, in our view. According to Bank of Zambia, gross international reserves climbed to USD 5.5bn at end-December 2025, an 83.3% increase from USD 3.0bn in August 2021. This represents approximately 4.3 months of import cover, up from 4.7 months at end-June 2025, based on IMF staff calculations. The reserve accumulation reflected multiple factors namely higher net statutory reserve deposits, interest earnings on reserves, and Bank of Zambia purchases of locally produced gold. Gold holdings now stand at 3,226.51 kg with a market value of roughly USD 446.9mn. The IMF's sixth review staff report noted that reserves rebounded following corrective measures after a missed Net International Reserves target at end-June 2025, for which the Board granted a waiver. Export performance has strengthened in recent years, according to Bank of Zambia Governor Denny Kalyalya, with non-traditional exports rising by 64.5% to USD 4.2bn between 2021 and 2025 (driven by nickel, electric cables, tobacco, sugar, maize and fresh produce) and traditional exports increasing by 5.7% to USD 8.9bn. This diversification provides some buffer, though copper remains dominant.

The January 2026 trade data, released before the recent escalation in Middle East tensions, shows the starting position from which Zambia now faces the oil shock. According to the Zambia Statistics Agency, the trade surplus widened to ZMW 4.71bn (USD 234.2mn) in January, up sharply from ZMW 1.01bn in December 2025. Exports rose 4.6% year-on-year to ZMW 27.60bn, while imports fell 16.9% year-on-year to ZMW 22.89bn. The driver was copper: volumes increased to 78,100 tonnes while prices climbed to USD 13,088.9/tonne, a 45.8% year-on-year increase. Copper receipts of approximately USD 1,022.2mn accounted for roughly three-quarters of total export earnings. This strong external position entering the crisis provides some cushion. The IMF, in its sixth ECF review, projects the current account to swing from a deficit of 2.1% of GDP in 2025 to a surplus of 1.7% in 2026, reflecting stronger copper earnings. January's outturn suggests Zambia was on track to meet that.

However, the crisis now creates two opposing forces. On one hand, heightened geopolitical tensions typically boost safe-haven demand for copper, potentially supporting prices. On the other hand, the oil shock will add approximately USD 370mn to Zambia's annual import bill, equivalent to roughly 1.6 times January's entire monthly trade surplus. Moreover, the import compression in January particularly the sharp drop in intermediate and capital goods may reflect timing of project implementation rather than structural improvement. If capital-goods imports rebound as investment picks up, the trade surplus could narrow even before the oil shock hits. In our assessment, the near-term external position provides a better starting point than Zambia had in previous shocks. But the scale of the oil import hit is material relative to even January's strong surplus. The vulnerability remains.

To put that in perspective, a sustained USD 100 Brent scenario representing a 17.6% price increase from the approximate USD 85 pre-crisis level would add an extra annual import cost of between USD 0.37bn and USD 0.46bn, depending on whether one uses the refined petroleum import figure (USD 2.11bn) or the broader mineral-fuels import total (USD 2.58bn) from 2024. This additional burden is equivalent to roughly 1.4% to 1.7% of 2024 GDP (USD 26.33bn), or approximately 1.1% to 1.3% of projected 2026 GDP (USD 35.02bn), and represents about 7% to 8% of Zambia's gross international reserves (USD 5.5bn at end-2025). While the reserve position provides a meaningful buffer, an additional USD 0.4bn in annual import demand is economically significant, in our view. If combined with capital-flow volatility, a likely consequence of heightened geopolitical risk, this could create acute monthly FX pressure and complicate access to external financing for a frontier economy now operating without an IMF programme.

Near-term fuel cushion

The Energy Regulation Board recently moved to reassure markets and consumers regarding near-term fuel supply security. According to ERB Director General Elijah Sichone, Zambia currently holds more than 20 days of petrol and diesel stocks that are already in-country but not yet released onto the market. This inventory position provides a short-term buffer despite rising geopolitical risks, in our view. The ERB also noted that the Kwacha had appreciated by as much as 24% during the recent pricing cycle, compared to an estimated 6% decline in oil prices at the time, helping to cushion pump price adjustments. However, officials stressed that exchange rate gains would need to offset higher crude prices and insurance premiums to fully neutralise upward pricing pressure. We would interpret this as a signal that the authorities are aware of the limits of currency-driven relief.

To moderate volatility, the regulator is utilising a temporary price stabilisation mechanism introduced in February. Under the framework, part of prior price reductions was retained in a fund to cushion future shocks. The extent of protection will depend on accumulated balances and the duration of the geopolitical disruption, we note. While near-term supply appears secure, prolonged instability could tighten supply chains and place upward pressure on fuel and transport costs, with broader inflationary implications. The ERB indicated that work on alternative supply routes is already underway, with options being explored including sourcing from Nigeria's Dangote Refinery, Angola, Walvis Bay in Namibia, and continued use of the Beira corridor. Government is also actively considering the establishment of strategic fuel reserves to strengthen long-term energy security. These are sensible medium-term responses, in our assessment, but they do not eliminate the immediate vulnerability.

Monetary policy

The Bank of Zambia had recently gained room for policy accommodation. At its 9-10 Feb meeting, the Monetary Policy Committee cut the policy rate by 75 basis points to 13.5%, citing faster disinflation as the rationale for further easing. According to the Governor's MPC presentation, this cut, alongside a firmer Kwacha and lower fuel prices, had opened room for additional cuts provided currency stability and food supply held. That room is now closing rapidly, in our view. An upward inflation impulse combined with tighter external conditions means policy will likely become more cautious. The central bank faces a complex trade-off. If authorities attempt to cushion retail petrol and diesel prices through tax reductions or subsidies, they will widen fiscal and financing needs. If they allow pump prices to adjust fully, inflation will rise and the central bank may be forced to keep rates higher for longer than currently expected, or even reverse the February cut.

According to IMF staff updates, macro policy will have to balance inflation-anchoring with preserving growth and external stability. The current disinflation trend would be interrupted, and any monetary easing previously anticipated for 2026 would likely be delayed, we think. The Bank of Zambia retains room to deploy FX interventions and liquidity tools, but reserve drawdowns would need to be carefully calibrated against the risk of depleting the hard-won external buffers. We would assess that the most likely outcome is a prolonged pause, with the MPC signaling its readiness to act if second-round effects materialise.

Debt implications

According to the Ministry of Finance's Debt Statistical Bulletin, total public-sector debt stood at an estimated USD 28.96bn at end-December 2025, equivalent to roughly 78.5% of GDP. This comprises central-government external debt of USD 16.15bn and domestic debt of USD 11.45bn (ZMW 253.73bn). The joint IMF Debt Sustainability Analysis concludes that Zambia's public and external debt remain at high risk of debt distress, despite being sustainable on a post-restructuring basis, reflecting a still-weak debt-carrying capacity (Composite Indicator at 2.60 versus 2.69 threshold). Crucially, the debt-service-to-revenue ratio breached its threshold in 2025 at 21.4%, driven largely by a fuel-arrears operation; excluding this, the ratio would have been 12.4%. This fuel-arrears reference is particularly relevant, in our view, as it demonstrates that energy-related pressures translate directly into debt-service metric breaches.

The government has secured agreements covering 94% of targeted debt, according to Secretary to the Treasury Felix Nkulukusa, leaving just 6% to be resolved namely disputes with Afreximbank (USD 45mn) and Trade and Development Bank (USD 500mn). An oil shock now complicates this fragile equilibrium. A sustained USD 100 Brent scenario would add USD 370-460mn to the annual import bill, potentially increasing reliance on domestic borrowing (putting upward pressure on yields), pressuring the already-breached debt-service-to-revenue ratio, and risking fresh arrears accumulation if the government resorts to fuel-supplier credits echoing the 2025 experience. In our assessment, Zambia enters this shock with a more sustainable debt structure than in 2020, but the margin is thin. The unfinished restructuring, elevated debt-service burden, and historical sensitivity of debt metrics to fuel-related pressures all point to heightened vulnerability.

Sectoral impacts

• Transport and logistics: The transport sector stands as the first-order victim of higher oil prices, in our view. According to industry data, higher diesel costs directly lift trucking and passenger-fare expenses, pushing distribution costs through to food and manufactured goods. Companies operating long freight routes will see margins squeezed and may either reduce volumes or raise prices to cope. The 20-day fuel stock buffer provides temporary relief, but sustained high prices would eventually feed through.
• Agriculture and food: Higher transport costs increase both farm-gate and retail prices for perishable goods. Zambia also relies on imported fertiliser and crop inputs; higher fertiliser prices and shipping costs would raise production expenses and risk lower yields in the following season if farmers are forced to cut application rates. This is particularly concerning given the record maize harvest cited in the IMF report, as transport costs to markets could erode farmer incomes and dampen next season's planting incentives, we caution.
• Mining and industry: Mining remains the backbone of Zambia's export receipts, with traditional exports increasing by 5.7% to USD 8.9bn between 2021 and 2025. According to sector analysis, miners are partly insulated by their FX earnings, but higher fuel costs nonetheless raise operating expenses, particularly diesel for haulage and generators. For smaller contractors and logistics providers, these costs could become binding, creating short-term supply-chain frictions. Electricity generation remains dominated by hydropower, which provides a partial buffer for grid costs, but miners and manufacturers often rely on diesel for backup power, and those costs rise immediately. The Bank of Zambia's gold purchases (now valued at USD 446.9mn) provide some hedge but represent a small fraction of sectoral exposure, we note.
• Utilities and public transport: If the government elects to shield consumers via subsidies, the fiscal cost will rise. If not, public transport fares and utility distribution costs will increase, amplifying inflationary effects for low-income households. The ERB's price stabilisation fund can provide temporary relief, but its accumulated balances will determine the duration of protection possible.
• Tourism and services: Indirect effects would materialise through higher air-travel and insurance costs, which can reduce inbound tourism and raise operating expenses for hospitality firms. Zambia's tourism sector remains smaller relative to energy and mining channels, but would still feel the impact through reduced visitor numbers and higher operating costs, we think.

Political and social considerations

Historically, visible spikes in pump prices generate rapid public and political scrutiny in Zambia. With inflation only just returning to the target band after nearly seven years, policymakers will face intense pressure to act, in our view, especially because this is election year. The core dilemma is clear: trade off immediate social relief through subsidies or tax cuts against medium-term fiscal credibility and debt sustainability. How the government frames and targets any relief will determine both the social fallout and investor reaction. The IMF staff report explicitly notes that completing creditor treatments and maintaining tight fiscal discipline are prerequisites to entrench improvements in debt sustainability. Any significant deviation from this path would likely concern international partners and investors. We would also note that with elections later in August this year, the political incentives around visible pump price increases become particularly acute.