• Iran war triggered capital outflow that hurt debt market, but equities were not spared either
• Egypt's divestment program stalled and underperformed in 2025, but bourse officials promise restart in 2026
• 20 state-owned companies will be temporary listed on EGX in April ahead of IPOs
• GCC funds previously showed strong interest in buying stakes in state-owned companies, real estate investments

The benchmark EGX 30 index fell by strong 7.9% m/m in March as the war in Iran hurt the local equity and debt markets, according to data released by the stock exchange. Over the past two years, foreign investors were actively buying Egyptian T-bills on the EGX, and stocks accounted for less than 10% of the total value traded on the bourse. The Iran war triggered capital outflows, which hurt both the debt and the equity segments of the EGX. While net disposal of equity by foreign funds is relatively mild, the timing of this sell-off poses a severe challenge for Egypt - the government is about to restart the stalled divestment program and this time the program will focus on IPOs rather than searching for core investors who want to acquire majority stakes. Egypt has just announced plans to temporary list 20 state-owned companies in April. These companies will have six months to complete their paperwork for the upcoming stake sales.

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Foreign non-Arab investors remained net sellers of equity in March, recording a net outflow of EGP 7.4bn (USD 136mn), which is a record high, but pales in comparison to the USD 2.1bn net disposal recorded in the T-bill/bond segment. Foreign investors have been mostly net sellers since Feb 2020, worried by Egypt's large twin deficits and FX challenges, and the series of global and regional shocks that dragged on investor sentiments. Foreign non-Arab investors are likely to remain cautious about long-term investments in the country, until regional security improves and the government scales down its involvement in the economy. Foreign Arab investors remained net sellers as well, with a net outflow of EGP 2.0bn. GCC funds were expected to play a major role in acquiring stakes in state-owned companies when the IPO program resumes, but it remains to be seen how the Iran war affected their plans. Since the beginning of the year, non-Arab foreigners were net sellers of equity with EGP 4.0bn (accounting for 10.3% of all value traded in listed stocks after excluding deals), and Arab investors were net sellers with EGP 4.2bn.

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• Wage bill reportedly to increase by 10% to EGP 750bn in 2026/27

Egypt will increase the minimum wage by 14% to EGP 8,000 (USD 149) a month from July, the finance ministry said on Wednesday. The ministry also announced a EGP 750 monthly bonus for all public employees and additional salary increases and bonuses for those in the healthcare and education sectors.

The hike was announced a few weeks ago when the Ramadan-related social package was announced. The wage bill is set to increase by 10% to EGP 750bn in 2026/27, unnamed government officials told the local press, which means the additional costs from the minimum wage hike will be around EGP 70bn.

Egypt to raise minimum wage to EGP 8,000 from July: Cabinet (Ahram)

Egypt bans women from traveling abroad for domestic work, cafés jobs (Ahram)

Egypt aims for oil and gas self-sufficiency by 2030: PM (Ahram)

Egypt's strategic goods reserves sufficient for six months, prime minister says (Zawya)

UAE's Dragon Oil eyes injecting USD 3bn investments in Egypt (Zawya)

Egypt targets USD 1bn annual marble, granite exports (Zawya)

Egypt Raises Local Wheat Procurement Price to Boost Strategic Reserves (Sada Elbalad)

El-Sisi directs government to finalize Post-IMF economic roadmap (Egypt Today)

Egypt's primary surplus jumps to EGP 656.8bn in 8 Months (Egypt Today)

Strong expectations for CBE to hold interest rates (Daily News Egypt)

• Iran War triggered capital outflows, but FX market has been liquid enough to accommodate orderly exit
• Foreign non-Arab funds sold USD 4.5bn worth of debt instruments, but foreign Arab investors bought USD 2.4bn
• Foreign investors held USD 45bn worth of T-bills as of end-September, but this includes USD 24bn pledged as collaterals
• Pound has lost 11% since start of the war

Foreign institutional investors bought EGP 674bn worth of T-bills and bonds through the local exchange (EGX) in March and sold EGP 784bn worth of the debt instruments, recording a net disposal of EGP 240bn (USD 2.1bn) in one of the most volatile months in recent years, according to data from the local bourse. The non-Arab institutional investors, who we believe are more sensitive to global and regional volatility, recorded a net outflow of USD 4.5bn in the month, while foreign Arabs were net buyers with USD 2.4bn, thus providing a significant support to the EGX amid the sell-odd triggered by the Iran War. Consequently, the pound which has been shored up by strong portfolio and remittance inflows over the past year, has lost around 11% of its value since the start of the war. On a positive note, the FX market appears to be liquid enough to accommodate a smooth and orderly exit, but there is still uncertainty how the war will end.

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It should be noted that the EGX does not provide a breakdown by type of instruments - bonds vs T-bills - but we believe that foreign demand is geared heavily towards the short-term notes. Foreign investors held USD 45bn worth of T-bills as of end-September, accounting for 42% of the outstanding stock and for 91% of CBE's official FX reserves. The CBE said that the foreign holdings include collaterals (contingent liabilities) worth USD 24.1bn, so the actual holdings are around USD 20bn.

• Authorities are making life difficult for Iranians living in UAE
• Many Iranians are forced to leave UAE

For decades, the glittering skyline of Dubai served as a neutral ground where the geopolitical rivalries of the Persian Gulf were paused at the water's edge. Iranian merchants, doctors, and families formed a cornerstone of the Emirates' cosmopolitan identity. But since the outbreak of hostilities on Feb 28, that long-standing social contract has been abruptly torn up.

In the weeks following the start of the war, the UAE has moved to dismantle the infrastructure of its Iranian diaspora. What began as heightened security has evolved into a systematic decoupling, leaving nearly half a million Iranian citizens in a state of precarious limbo.

The most visible sign of the fracture appeared at the region's aviation hubs. By early April, major carriers including Emirates and Etihad implemented a near-total ban on Iranian passport holders. For a nation that prides itself on being the crossroads of the world, the closure of Dubai International Airport to Iranians - even those merely transiting - marks a profound change.

Additionally, the UAE has begun unilaterally revoking residency permits for Iranians, including 10-year Golden Visas. These cancellations have primarily affected individuals who were outside the country when the measures were implemented around March 27.

While airline directives from Emirates and Etihad officially list Golden Visa holders as exempt from the current travel ban, ground reports suggest a different reality. Hundreds of high-net-worth Iranians - many with substantial portfolios in Dubai's real estate and tech sectors - have reportedly had their visas revoked while traveling abroad.

Reports suggest a specific focus on Golden Visas obtained through property investment or company registration.

Dismantling the Iranian Diaspora

The crackdown has moved beyond the borders and into the heart of the Iranian community. The compulsory closure of the Iranian Hospital in Dubai, along with the shuttering of Iranian-run schools and social clubs, marks the end of a self-sustaining ecosystem. These institutions were not just community centres; they were the employers of thousands of professionals whose residency permits were tied to their operations.

With these closures, the UAE is effectively forcing a mass repatriation of the Iranian middle class. For many, the exit is permanent, as property-based 99-year leaseholds are being tied to cancelled residencies, forcing fire sales or total asset abandonment.

The financial fallout is equally severe. Authorities have moved to freeze billions in Iranian held assets and have shuttered money-exchange networks. While the UAE frames these actions as a necessary defence against the financing of the Islamic Revolutionary Guard Corps (IRGC), the collateral damage is being felt by thousands of ordinary business owners whose residency permits are being cancelled alongside their bank accounts.

The UAE Ministry of Foreign Affairs has been careful to frame these measures not as a vendetta against a people, but as a response to an existential threat. Following a series of missile and drone strikes on Emirati territory in early March, the government maintains that institutional frameworks must prioritize national safety.

Official statements continue to champion the UAE's brand of tolerance and coexistence, yet the reality on the ground tells a different story. The message is clear: the UAE is no longer willing to host a community it now views as a potential fifth column.

Consequences

The implications of this shift extend far beyond the Gulf. By effectively expelling its Iranian middle class, the UAE is betting that it can maintain its status as a global financial hub while completely insulating itself from its most populous neighbour. It is a high-stakes gamble that may permanently alter the demographic and economic landscape of the Emirates.

As the Iran war enters its second month, the Dubai model of apolitical commerce is facing its greatest test. For the Iranians who once called these desert cities home, the dream of a neutral sanctuary has been replaced by the cold reality of a region at war.

• Gross reserve level in Feb-Mar remains highest since April 2013
• Reserves are expected to reach USD 51bn in 2026
• CBN introduced new FX measures affecting remittances, IOCs earnings

The gross external reserves of the central bank (CBN) fell by USD 398mn or 0.8% m/m to USD 49.3bn as of end of March, after growing by 7.4% m/m the month before. Over the course of the month, reserves peaked at USD 50.03bn on March 11 but have declined continuously since then. Geopolitical conflict in the Middle East triggered a flight from emerging markets, leading to some portfolio outflows from Nigeria. Despite elevated global oil prices, Nigeria has not seen a strong boost in FX earnings because oil production remains limited. March's level of reserves is still among the highest the country has ever recorded (before this year, the highest was USD 47.9bn in April 2013). Reserves are up by a net of NGN 3.8bn in 2026, from USD 45.5bn at the end of December 2025. This is mostly due to a large jump in reserves during February. The central bank projects that Nigeria's external reserves will reach USD 51bn in 2026.

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The decline in reserves has put some downward pressure on the naira during the past month. The naira closed February at USD/NGN 1,364 and had appreciated to USD/NGN 1,344 by March 19, before steadily weakening to USD/NGN 1,387 by the end of March. On a m/m basis, the currency depreciated by 1.7%. To address currency pressures and boost liquidity, the CBN is introducing new FX measures. Starting May 1, international money transfer operators (IMTOs) must route all diaspora remittances only through naira settlement accounts with authorised banks. Additionally, FX restrictions on international oil companies (IOCs) have been removed which will allow them full repatriation of export proceeds. While analysts caution that giving IOCs full access to FX could temporarily increase FX demand, the long-term benefits are expected to outweigh short-term pressures by easing operational constraints for IOCs and attracting foreign capital inflows.

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• Oil and condensate reserves fell 0.74% between Jan 2025 and Jan 2026
• There are not enough major new oil discoveries to fully replenish reserves
• Total gas reserves rose 2.21% over same period, attributed to new discoveries

According to a recent press release from the NUPRC, Nigeria's oil reserves experienced a slight decline in the first month of 2026, while the country's gas resources recorded a notable increase. Total oil and condensate reserves stood at 37bn barrels as of Jan 1 2026. This represents a decline of 0.74% from 37.3bn barrels in Jan 2025. Nigeria's oil reserves are slowly shrinking because the country continues to produce oil without enough major new discoveries to fully replace what is extracted. Meanwhile, Nigeria's total gas reserves increased to 215.2tn cubic feet as of Jan 1 2026. This is a rise of 2.21% compared to 210.5tn cubic feet in Jan 2025. The growth came from new discoveries and improved technical assessments of existing reservoirs through detailed studies.

The reserves life index (the estimated number of years the resources would last at current production rates) now stands at 59 years for oil, which is down from around 64 years previously. The index for gas is 85 years (down from 93 years). Nigeria's gradual shift toward a gas-focused energy strategy aligns with the government's "Decade of Gas" initiative and efforts to develop cleaner hydrocarbon resources under the Petroleum Industry Act. The NNPC has set ambitious targets to grow gas reserves significantly and attract around USD 60bn in investments into the sector.

• AGROW project aims to boost smallholder farmers' productivity
• Programme targets staple crops including rice, maize, soybeans
• Farmers will gain access to climate-resilient seeds, agricultural research
• Six-year project expected to attract additional USD 220mn in private agribusiness investment

The World Bank approved a USD 500mn International Development Association (IDA) credit this week to support Nigeria's agriculture sector through the Nigeria Sustainable Agricultural Value-Chains for Growth (AGROW) project. The programme targets increasing smallholder farmers' productivity and strengthening agricultural value chains. Nigeria's agriculture sector is the country's largest employer but it continues to face structural challenges such as climate shocks, weak market connections and limited access to quality inputs. Many smallholder farmers are still engaged in subsistence farming which doesn't address food and nutritional insecurity.

The AGROW project seeks to address these constraints. According to the World Bank, the project will focus on linking smallholder farmers to markets and agribusinesses, which is expected to expand access to climate-resilient seeds and agricultural research. The project targets staple crops such as rice, maize, cassava and soybeans. Farmers will also benefit from digital advisory services such as localised weather and climate information to increase resilience to environmental shocks. The six-year project, running from 2026 to 2032, is expected to generate an additional USD 220mn in private agribusiness investment.

Data from the statistics office shows that Nigeria's total exposure to the World Bank Group amounted to USD 19.5bn as of Q3 2025. This includes USD 18.2bn from the IDA and USD 1.4bn from the International Bank for Reconstruction and Development (IBRD). The World Bank's IDA remained the largest creditor with a share of about 37.5% of total external debt.

World Bank approves $500m credit for Nigeria's agricultural value chains (Punch)

Bank recapitalisation: Local investors provide 72% of N4.6tn (Punch)

Plateau killings: Tinubu visits Jos, IG deploys mobile police (Punch)

PDP Convention: Strategy For Party's Unity Ahead Of 2027 Polls (ThisDay)

Reforms: World Bank Hails Nigeria As Pacesetter, Seeks Stronger Oversight (ThisDay)

Nigeria Launches $2bn Digital Economy Research Clusters To Boost Innovations (ThisDay)

Emefiele: Buhari Approved Local Production Of New Naira Notes, Witness Tells Court (ThisDay)

Nigeria faces price surge as experts predict 2026 inflation spike (Nairametrics)

NUPRC declares 37 billion barrels oil, 215Tcf gas reserves as of January 2026 (Nairametrics)

• Domestic investors provided 72% of funds raised during recapitalisation
• Few banks that missed targets remain under regulatory or judicial processes

The CBN's bank recapitalisation exercise officially ended on Tuesday (Mar 31). In a press release on Wednesday, the CBN said 33 banks successfully met the revised minimum capital requirements. Over the 24-month exercise, these banks raised a total of NGN 4.65tn in new capital. This has pushed capital adequacy ratios across the sector above Basel benchmarks. The recapitalisation saw strong domestic investor participation, with 72.55% of the funds raised from local sources. A month before the deadline, the CBN had reported that 20 banks met the requirements. Of the NGN 4.05tn amount in February, NGN 2.9tn (71.67%) was mobilised domestically and NGN 1.15tn (28.33%) came from foreign investors.

According to the CBN, the recapitalisation programme was completed without any disruption to banking operations and all banks in the country remain fully operational. In the latest press release, the central bank said a limited number of banks that did not meet the targets are subject to ongoing regulatory and judicial processes within the existing supervisory framework. Examples include Unity Bank which is merging with Providus Bank, and Union Bank whose acquisition by Titan Bank is under judicial review.

The CBN initiated the recapitalisation exercise in March 2024, with different capital targets set for different categories of banks. Commercial banks with international licences were told to meet a minimum capital base of NGN 500bn, while national and regional banks were required to hold NGN 200bn and NGN 50bn respectively. Merchant banks with national licences had to maintain NGN 50bn. National and regional non-interest banks were required to hold NGN 20bn and NGN 10bn.

EmergingMarketWatch coverage of Israel will be limited on 02 Apr 2026 due to a public holiday.

• Current policy rate: 4.00%
• Next monetary policy meeting: May 25, 2026
• Expected decision: Hold

The fighting with Iran and Hezbollah has completely changed the path of the monetary policy and any monetary easing is likely to be delayed towards the end of the year or even early next year. The next decision is set to take place on May 25 with latest central bank and government projections assuming that at least the war with Iran would have ended by then. The duration of the war and its outcome are likely to have a material effect on inflation developments and therefore it is very difficult to predict at this point when and if the monetary easing would continue this year at all. The latest central bank forecast assumes 1-2 policy rate cuts by Q1 2027 as compared to predicted 2 rate cuts by the end of 2026 in the previous projection from January. Governor Yaron has suggested that some easing might indeed take place but certain conditions need to be met.

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Inflation sped up to 2.0% y/y in February and even if slightly higher than expected, it remained at the mid-point of the 1-3% target range for the second consecutive month and within the band ever since August. The outlook, however, has deteriorated with the start of the Iran war and the next print will very likely confirm that a change in trend has taken place in February. One of the immediate effects on inflation should come from the spike in world oil prices, which in Israel would be moderated in March by the fact that gasoline prices are regulated and were already fixed for March before the war began but we estimate a relatively strong impact of some 0.4pps in April. Flight tickets and sea freight transportation are likely to have added to the upward pressure too as well as another reversal towards a stronger tightening of the labour market due to absences from work and a spike in the number of reservists and general transportation disruptions. The housing component has been with an inflationary impact in the past few months and might continue pushing up the headline CPI increases in the following months as housing stock will be affected by damages from missiles. The shekel appreciation has been an important factor behind the easing inflation but after the initial euphoria at the start of the fighting, the shekel started weakening and will not be able to offset inflationary pressures at least in the short term, we think.

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 but a partial reopening started less than a week after the war began, 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. This year's war is likely to have a much larger negative impact on GDP as it is already much longer and more intense. 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

• Government absorbs part of increases as regional tensions push energy prices higher

Jordan has raised fuel prices nationwide for April following a monthly review by the Energy Ministry's Fuel Pricing Committee, reflecting rising global oil costs while partially shielding consumers from the full impact of increases driven by regional developments. Under the new pricing schedule, 90-octane gasoline will rise to JOD 0.910 per litre from JOD 0.820 (+11.0% m/m), while 95-octane gasoline will increase to JOD 1.200 per litre from JOD 1.050 (+14.3% m/m). Diesel prices will climb to JOD 0.720 per litre from JOD 0.655 (+9.9% m/m). In contrast, kerosene will remain unchanged at JOD 0.550 per litre, while the price of a 12.5-kilogram household gas cylinder will stay fixed at JOD 7.0.

Domestic fuel prices are calculated based on international benchmarks, with adjustments made monthly to reflect global market movements. The committee noted that March saw sustained increases in global oil prices compared to February, largely driven by the escalating regional tensions and the ongoing Iran war. In line with government policy, only a portion of these increases has been passed on to consumers in order to limit the impact on households and key economic sectors, the committee said.

The government has continued to absorb part of the cost increases, providing subsidies particularly on diesel, kerosene, and household gas. Current pricing reflects only 37% of the actual increase for 90-octane gasoline, 55% for 95-octane, and around 14% for diesel, while the full increase in kerosene prices has been absorbed, according to a statement by the committee. Despite rising global liquefied petroleum gas costs, the household gas cylinder remains subsidised at approximately JOD 2.4 per unit. Officials estimate that the government has already incurred around JOD 150mn in direct energy and electricity costs since the start of the regional crisis, as it seeks to balance global price pressures with domestic stability.

We remind that the country's fuel pricing has previously sparked unrest. Around three years ago, violent protests and strikes erupted among truck, bus, and taxi drivers after the government removed the remaining fuel subsidies. Local authorities responded with mass arrests, and four police officers, including the deputy police director of Maan governorate, were killed during demonstrations that began in the southern governorate of Maan and later spread nationwide.

• Lebanese authorities report seven dead and dozens wounded in Beirut suburb strikes
• Strikes on Beirut come amid escalating cross-border exchanges between Israel and Hezbollah

The Israeli army said on Wednesday that it had killed Hajj Youssef Ismail Hashem, a Hezbollah commander, in a strike on Beirut a day earlier. It said Hashem was a senior figure within Hezbollah's Southern Front and described him as a key operational commander. The announcement came as Israel continued to frame its expanding strikes in Lebanon as part of an effort to target senior Hezbollah leadership.

Israeli airstrikes on Beirut's southern suburbs and a nearby town killed at least seven people and wounded dozens, according to Lebanon's health ministry. The ministry said the early Wednesday raid struck the Jnah area, which borders Hezbollah's stronghold in the southern suburbs of the capital. Lebanese security sources said several parked vehicles were hit along a street, indicating a targeted strike in a densely populated urban area. Witnesses reported multiple explosions that shook the capital during the night. A separate strike in the Khaldeh area south of Beirut killed two people and injured several others, according to the health ministry. Additional reports indicated further Israeli strikes on Beirut's southern suburbs, including the Hadath district, which has been largely emptied of residents after repeated bombardments and evacuation orders.

Meanwhile, Hezbollah said it carried out cross-border attacks into northern Israel and reported clashes between its fighters and Israeli troops in southern Lebanon. The group also claimed rocket fire targeting Israeli military positions near the border. In response, Israel reported continued rocket fire into its northern regions and ongoing operations against Hezbollah positions and personnel.

The escalation comes amid sustained fighting along the Lebanon-Israel border, where both sides have reported casualties in recent days. Lebanese authorities say the conflict has killed more than 1,200 people and displaced over one million since hostilities intensified. Israel has said its objective is to push Hezbollah away from the border and establish a buffer zone in southern Lebanon. Israeli officials have also signalled plans to expand the destruction of infrastructure in border villages, while Lebanon and international actors have warned that the campaign risks further escalation and long-term instability.

• Hike follows first 14% increase on Mar16
• Morocco fuel pricing shows asymmetry, competition concerns rise

Fuel prices in Morocco rose by around 13% as of Apr 1, marking the second increase since the Iran war began, local media reported. Diesel climbed from MAD 12.79 to MAD 14.50/litre, while gasoline rose from MAD 13.92 to MAD 15.60/litre, driven by supply disruptions and higher global costs. The diesel and gasoline prices have already been hiked by roughly MAD 2/litre and MAD 1.5/litre on Mar 16, which will bring commulative increase to close to 30%. The government already reactivated direct aid to transport professionals as first measure to alleviate impact and limit pass through to consumers.

Meanwhile, a new report by the Competition Council released on Wednesday warned that global fuel price increases are not being consistently reflected at the pump, with signs of price alignment among retailers limiting competition. The report looked at the period between Mar 1-16 and found out that diesel price increases were not fully passed on (-0.89 MAD/L gap), while gasoline prices rose more than international benchmarks (+0.17 MAD/L), pointing to inconsistencies in pricing behavior. Upstream, distributors applied different transfer prices to service stations, but these variations did not translate into retail differentiation. Instead, price-matching behavior dominates, suggesting limited competitive dynamics at the consumer level. The Council has initiated talks with market participants to review the current biweekly pricing mechanism, aiming to enhance competition without destabilizing the market.

As a net fuel importer, Morocco remains exposed to global oil volatility, feeding into inflation dynamics and potentially influencing fiscal policy (subsidy debates) and external balances.

• Oman can export LNG because it does not need Strait of Hormuz

Oman's first LNG deliveries to Germany's state-owned SEFE have commenced as scheduled despite the ongoing Iran war, according to news reports. The deliveries stem from a Sales and Purchase Agreement (SPA) signed in March 2024 between state-owned Oman LNG and Berlin-based Securing Energy for Europe (SEFE).

This four-year contract supplies 0.4mn metric tonnes of LNG annually from 2026 to 2029, marking SEFE as the first German company importing Omani LNG. Omani officials hailed it as a milestone for bilateral energy ties.

The Iran War has disrupted energy flows as Iran has effectively closed the Strait of Hormuz. However, Oman has access to the Gulf of Oman and the Arabian Sea. This means that Oman does not rely on the Strait of Hormuz and its LNG deliveries can reach Europe.

This development bolsters Germany's diversification away from Russian natural gas.

Oman holds about 23.3tn cubic feet (Tcf) of proven natural gas reserves. This volume represents about 0.33% of the world's total gas reserves. Oman typically ranks around 29th in the world for proven natural gas reserves. Oman's natural gas reserves are smaller than those of regional neighbours Qatar, Saudi Arabia, and the UAE.

Oman's natural gas exports are primarily managed through state-owned Oman LNG. Unlike many regional neighbours, Oman's export terminals are located on the Gulf of Oman. This allows shipments to bypass the Strait of Hormuz, ensuring reliability even during regional maritime disruptions.

Oman LNG is owned by a consortium of shareholders, led by the Oman Investment Authority (the country's sovereign wealth fund), which owns 51%. Royal Dutch Shell owns 30% and TotalEnergies owns 5.5%.

• Exports to begin by July

Golden Pass LNG, a joint venture between QatarEnergy and ExxonMobil, has marked a milestone towards full operations of its LNG production and export facilities by achieving first LNG production from the first of 3 LNG trains comprising the 18mn tons per annum project.

This development sets the stage for Golden Pass LNG to deliver its first cargo from its facilities located in Sabine Pass, Texas, by achieving sustained liquefaction operations, and meeting its commercial and strategic objectives.

An LNG train (or liquefaction unit) is an independent, sequential processing unit within a larger LNG plant. Its primary function is to process, purify, and cool natural gas until it liquefies, which reduces its volume for storage and transport. The term train is used because the equipment is arranged in a sequential series where the natural gas moves from one process step to the next.

Golden Pass LNG is part of a wider QatarEnergy strategy for international investments. It also represents a significant part of the plans announced by QatarEnergy in 2018 to invest USD 20bn in the US energy sector.

Golden Pass LNG is a partnership between QatarEnergy (70%) and ExxonMobil (30%). The two companies had announced their final investment decision of more than USD 10bn for developing the Golden Pass LNG export project in February 2019.

Global LNG exports from the project are expected to begin in the second quarter of 2026. Our understanding is that most of the exports will go to Europe and Asia.

• Exports decrease 14% y/y to USD 6.5bn
• Imports rise 8% y/y to USD 3bn
• China remains main trading partner

Qatar's merchandise trade surplus decreased 26% y/y to QAR 13bn (USD 3.5bn) in February, according to the Qatar News Agency. The surplus increased 7% m/m.

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Total exports in February decreased 14% y/y to QAR 24.2 (USD 6.5bn) due to lower exports across all categories. Exports of petroleum gases and other gaseous hydrocarbons (including LNG, condensates, propane, and butane) fell 22% y/y to QAR 12.9bn. Crude petroleum oils decreased 23% y/y to QAR 3.5bn. Exports of non-crude petroleum oils dropped 7% y/y to roughly QAR 2.1bn.

Conversely, the category of other exports jumped 75% y/y to QAR 5.7bn. However, our understanding is that the category of re-exports is now included in the other exports category, so this is distorting the numbers.

China remained the top destination for Qatari exports (18.6%), followed by India (15.3%) and the United Arab Emirates (8.9%)

Imports

Merchandise imports rose 8% y/y to QAR 11.2bn (USD 3bn) in February. The top import categories were as follows:

• Motor Vehicles: Increased by nearly 32% y/y to QAR 1.2bn.
• Telecommunications Equipment: Grew by 39% to QAR 0.3bn.
• Jet Engines/Gas Turbines: Declined sharply by 59.5% to QAR 0.4bn.

China was the main source of Qatar's imports with a share of 18%, followed by the United States (11%), and the UAE (7%).

Outlook

The current data aligns with previous projections that Qatar's trade surplus would narrow in the January and February 2026 due to softened hydrocarbon valuations and increased import requirements for major national projects.

The industrial base remains heavily reliant on high-value Western engineering and technology - particularly from the US and Europe - to facilitate its energy infrastructure.

However, the ongoing US and Israeli strikes against Iran, which began on Feb 28, are complicating Qatar's trade outlook for March and April. State-owned QatarEnergy stopped LNG production and declared force majeure on shipments of LNG following Iranian drone attacks in early March. 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.

This suggests that exports will fall sharply in March and likely April as well. The declaration of force majeure and the logistical paralysis caused by the closure of the Strait of Hormuz will likely result in a historic contraction of export revenues in March and April, as Qatar is physically unable to move its product.

Similarly, imports are likely to decrease as foreigners and tourists leave or avoid Qatar and the war in Iran disrupts supply chains and logistics.

• Large remittance outflows are structural feature of kingdom's Current Account
• Remittance outflows rose by sharp 11% y/y to USD 63bn in 2025
• Slowdown in giga-projects likely to contain increase in remittance outflows in 2026

The personal transfer payments fell by 5.8% m/m to USD 4.6bn in February, following a strong 8.2% m/m drop in the preceding month, according to figures released by SAMA. Unlike the decline in January, the latest drop was due to the fewer calendar days of February. When adjusted for the number of calendar days, remittances actually rose by 4% on the month. Remittances from expats living in Saudi Arabia account for two thirds of the payments, the rest are payments made by Saudi nationals. The large remittance outflows are a structural feature of Saudi Arabia's Current Account as the country relies heavily on foreign workers, especially in the construction sector. Saudi Arabia scaled down many of the giga-projects due to weaker oil revenues and the war in Iran is likely to drag on investments, so we think the growth in the remittance payments will be contained this year. Further, the government had deployed measures to encourage the employment of Saudis and to reduce the reliance of foreign workers, so we expect a gradual moderation in foreign employment in the coming years.

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We remind that remittance outflows rose by a strong 11% y/y to USD 62.9bn in 2025, which came on top of the 13% y/y growth recorded in 2024. Remittance outflows account for about 5% of GDP and 14% of SAMA's foreign reserves. The personal transfer payments account for about 45% of Saudi banks' sales of hard currency for specific purposes, with the remaining sales allocated to import financing (around 25%) and foreign contractors (around 30%). The share of personal transfer payments in the total sales of hard currency (including third parties such as foreign banks and other Saudi customers), is around 7%.

• Expansion of new mortgage financing has moderated since late 2024
• Slowdown in mortgage financing growth attributed to high prices, regional and global uncertainty
• Saudi Arabia opened its real estate market to foreigners in January, but war in Iran to drag on sector

The value of new residential mortgage finance provided by banks to individuals fell for the eighth month in a row in February, by strong 39.7% y/y to SAR 5.4bn (USD 1.4bn) following another strong drop of 40.9% y/y in the preceding month, according to data released by the central bank (SAMA). The total number of new mortgage contracts fell by similar 29.0% y/y in the month, pointing towards prolonged slowdown in the mortgage financing segment. Meanwhile, the new mortgage finance provided by finance companies rose by sharp 38% y/y, but at SAR 267mn it remains negligible when compared to the mortgage loans provided by the banks. New mortgage financing reached its peak in late 2024 and has slowed sharply since then. This slowdown could be related to global and regional uncertainty, tightening liquidity, and high real estate prices. House prices in the capital have almost doubled over the past five years for certain units, and incomes levels have not risen at the same pace. Saudi Arabia opened its real estate market to foreigners on Jan 22, but we think the Iran War will drag on foreign investments as Iranian missile attacks showed the kingdom and the GCC countries as a whole are much more exposed to regional conflicts than previously thought.

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We remind that the value of new residential mortgage finances provided by the banks to individuals fell by 11.7% y/y to SAR 80.4bn in 2025. Growth in new mortgage financing rebounded in 2024, which was one of the reasons for the soaring prices in the real estate market. Indeed, residential prices - house rentals in particular - remain a major driver of consumer inflation and they are likely to remain elevated at least over the medium term as they reflect the limited supply that is struggling to catch up to strong demand from Saudis and expats. The government has taken measures to ease the limited supply of land, but we think that strong demand for housing will keep real estate prices and rentals elevated.

• Iran war pushed away foreign investors as it revealed weakness in Saudi diversification plans
• Aramco's shares rallied as Saudi Arabia has alternative route for most of its crude oil
• Foreigner non-GCC investors held 4.7% of all shares on main market as of end-month
• Tadawul's total market capitalization rose by 11.8% ytd, local bourse outperforms regional peers in time of crisis

Foreign investors (excluding GCC funds) bought SAR 45.3bn worth of shares on Tadawul's main market in March and sold shares worth SAR 45.9bn, resulting in a net disposal of SAR 0.5bn (USD 140mn) worth of equity on the main market, according to data released by Tadawul. This is a relatively mild outflow when taking into account the severity of the regional crisis and the impact it has had on the GCC region and the global economy. Furthermore, the GCC funds were net buyers in the month, with a net inflow of SAR 0.4bn. One of the reasons for the relatively mild net outflow is that Saudi Arabia - unlike most of its GCC peers - has an alternative route for most of its crude oil exports via the Red Sea terminals. Consequently, Aramco's shares rallied in the month, which provided an overall boost to Tadawul's main market and masked the weakness in the other segments. It should be noted, though, that the Iranian attacks revealed the weakness in Saudi Arabia's economic diversification program, which was focused on real estate and tourism projects, as well as investments in advanced tech, such as AI data centers. These investments are based on manageable geopolitical risks and reliable security guarantees by the US.

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The daily average value of shares traded during March was SAR 5.8bn, rising by sharp 25.9% on the month. Meanwhile, the daily average number of trades rose by 10.4% to 452k, while daily average traded volumes rose to 268mn shares. As usual, bank shares topped the list for most value traded during the month, accounting for 22%, followed by Materials (18%), and Energy (10%). Total equity market capitalization rose by strong 11.8% year-to-date to SAR 9.86tn as of end-month, with foreign non-GCC investors holding 4.7% of all equities issued on the main market and 12.5% of free float. GCC's ownership was modest 0.8% and Saudi investors held 94.3% of all shares.

Saudi defences intercept, destroy four drones in past hours (Zawya)

US, Saudi firms sign USD 1bn deal to develop 50 business hotels in Saudi Arabia (Zawya)

How Saudi Arabia maintained growth and stability amid rising regional tensions in March (Zawya)

Saudi Stock Exchange Listed Companies' Profits to Reach SAR 500 Billion in Profits in a Year; 11 Companies Achieve Over 100% Growth (Maaal)

Saudi Central Bank Assets Reach SAR 1.9tn (Maaal)

Saudi Banks Earn SAR 8.3 Billion in February - Details Revealed (Maaal)

Saudi Central Bank: Banks' claims on the public sector rise to SAR 910bn (Maaal)

Jubail Port container terminal begins operations with investments exceeding USD 532mn (Arab News)

Initiative to connect Gulf companies with approved transport providers in Saudi Arabia (Arab News)

Saudi women's private sector jobs surpass 1mn for first time (Arab News)

• Oil export revenues - main FX earner - rebounds 4% y/y as kingdom raised oil production more aggressively in 2025
• War in Iran may boost Goods accounts if Saudi Arabia maintains stable oil exports via Red Sea ports
• Goods imports rise by 3% y/y as economy expanded driven by consumption and investments, which feeds into higher imports
• Large remittance payments, which are structural feature of BoP, rise by strong 20% y/y
• Both FDI and Portfolio inflows rose sharply y/y in Q4, but outlook has deteriorated sharply

The Current Account recorded a strong deficit of USD 8.2bn in Q4 compared to a similar deficit of USD 8.2bn in Q3 and a USD 12.7bn deficit in Q4 2024, according to preliminary data published by the central bank (SAMA). The y/y moderation in the deficit is due to a steady recovery in oil export revenues (up by USD 2bn or 3% y/y) and higher non-oil exports and service receipts (e.g. travel services). We remind that Saudi Arabia hiked oil production more aggressively last year, but the CA remained in deficit throughout the year dragged down by strong imports (linked to the strong non-oil economic growth) and sizable remittance outflows. The overall CA deficit came in at 2.6% of GDP in 2025, according to our estimates, but the 2026 outlook has become too uncertain. On one hand, Saudi Arabia is reaping the benefits of soaring crude oil prices as the kingdom has rerouted its crude to the Red Sea ports. On the other hand, the oil infrastructure remains vulnerable to Iranian missile and drone attacks, so it remains to be seen how and at what terms the war will end.

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Perhaps one of the most significant implications for Saudi Arabia and the GCC countries is that the war revealed how vulnerable their economic models are to security escalations and high geopolitical risks. Saudi Arabia's economic diversification program eyed investments in advanced technologies such as AI and data centres and massive residential and commercial real estate projects. The unprecedented nature of the Iranian strikes on data centers and energy facilities across the region exposed the vulnerability of these economic plans. On a positive note, SAMA's foreign reserves are enough to cover around 16 months of merchandise imports and service payments, according to our calculations, which puts the external position in a very healthy position.

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Breakdown

As noted, oil exports rose by 3% y/y to USD 54bn on the back of larger exported volumes. Further, the non-oil exports rose by sizeable 16% y/y to USD 25bn, and they have been steadily rising on the back of exported chemicals, electrical equipment and parts. The effective closure of the Hormuz Strait and the supply line disruptions have already forced some companies to halt operations, which will drag on non-oil exports in Q1 2026. Imports, meanwhile, rose by 3% y/y, which we attribute to Saudi Arabia's non-oil economy that is expanding robustly, driven by private consumption, investments, and looser fiscal policy. According to the statistics office, imports are driven by machinery and electrical equipment as well as transport equipment and parts, but we expect renewed pressure from food imports in 2026.

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Meanwhile, the deficit in the Service Account narrowed by 19% y/y to USD 14bn, as receipts rebounded by 17% y/y, while payments fell slightly on the year. Freight transport payments remain a major drag on the account, together with construction services and travel. Importantly, the receipts in the travel account have been improving steadily since the pandemic as the kingdom wants to transform into a major tourism destination for secular and religious tourism. Saudi Arabia's tourist sector hosted nearly 116mn people in 2024 (of which 30mn were foreigners) and the government upgraded its 2030 tourism sector target to 150mn (of which 70mn are foreigners). Needless to say, the Iran War may derail the ambitions of the kingdom to emerge as a major aviation hub and destination for secular tourism.

The Primary Account, which is traditionally an important source of forex inflows, posted a relatively strong surplus of USD 2.9bn in the quarter, down 5% on the year. The primary account has been falling in recent years due to Saudi Arabia's increased reliance on loans and the kingdom's focus on investments in the local non-oil economy as part of the ambitious diversification program Vision 2030.

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The deficit in the Secondary Account widened by strong 20% y/y to USD 17.5bn in the quarter, driven by а 20% y/y growth in personal transfers (workers' remittances) to USD 15.5bn. The non-oil economy relies heavily on expatriate workers, especially in the construction sector, but also in high-skill areas, so the deficit in the secondary income has become structural. The government had deployed measures to encourage the employment of Saudis and to reduce the reliance on foreign workers, and eventually froze and cancelled some of the giga-projects during Q4 and Q1 2026, which may ease some of the pressures in the labour market over the medium term.

The Financial Account

The Financial Account recorded a net liability position of USD 15.7bn in Q4 compared to a net liability of USD 18.1bn in the same period of 2024. The financial account recorded strong FDI and Other investment inflows, coupled with relatively strong portfolio inflows and an overall slowdown in the accumulation of financial assets.

FDI inflows rose by 90% y/y to USD 12.9bn, which is a welcomed news for the government and its ambitious plans to diversify the economy away from oil. Saudi Arabia's massive spending plans have not resonated with foreign investors, at least not at the extent the kingdom had anticipated. Many of the giga-projects have been actively seeking foreign investors as they push to meet ambitious targets but were ultimately scaled down, cancelled, or put on hold over the past 5-6 months. The kingdom recorded USD 32bn FDI inflows in 2025, falling below the USD 37bn target set for that year (the target for 2026 is USD 47bn) and the government will have to find ways to attract foreign investments after the war ends. Meanwhile, FDI outflows fell by 62% y/y to USD 5.0bn. FDI outflows have become more erratic over the past few years, which we think reflects Saudi Aramco's investments in hydrogen and oil refinement outside the kingdom as well as real estate investments in North Africa.

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Portfolio inflows rose by 38% y/y USD 8.0bn, reflecting a sharp increase in debt securities and equity, the latter reflecting the relaxed rules on the local stock exchange. As the sovereign fund PIF is now more focused on the local market to compensate for the lower-than-projected foreign investments, we think that portfolio outflows will slow in the coming years. Other investments recorded net financial lability of USD 14.2bn in the quarter compared to a net liability of USD 3.0bn a year ago. Saudi residents obtained USD 12.3bn worth of foreign loans, which we think is due to a USD 10bn financing that the government obtained from a syndicate of international banks. Consequently, the Reserve Assets of Saudi Arabia's central bank recorded a USD 9.7bn increase during the quarter.

• Investment targets improved water access and irrigation resilience across Tunisia
• Projects to create over 17,000 jobs and benefit more than 2 million people

The World Bank has approved USD 332.5mn in financing to support major water security initiatives in Tunisia, marking the first phase of a broader long-term programme aimed at addressing both rural and urban water challenges. The investments are designed to improve access to potable water, modernize irrigation systems, and strengthen resilience against climate-related water scarcity. The programme is expected to generate significant economic benefits, including more than 4,000 permanent jobs and over 13,000 temporary jobs.

The USD 124mn Irrigation Water Security, Resilience and Value-Addition Project, which focuses on improving irrigation services and boosting agricultural productivity. The project will rehabilitate infrastructure in key agricultural regions and support farmers in adopting climate-smart technologies. Nearly 4,000 farmers are expected to benefit directly from improved irrigation services, with an additional 9,000 receiving support through agricultural extension programmes. The initiative is also projected to create thousands of jobs, particularly in construction and farming.

The second major project, valued at USD 208.5mn, targets potable water services through system upgrades and expansion. It includes the scaling up of the Zarat desalination plant in Gabes, deployment of smart water meters, and rehabilitation of distribution networks to reduce water losses. This will improve water quality and reliability for approximately 2.3 million people.

The two initiatives form part of the Tunisia Water Security and Resilience Programme, a multi-phase effort with a total planned investment of USD 700mn over the next decade. The first phase prioritizes urgent needs in potable water and irrigation, while future phases will expand into sanitation and wastewater management, reinforcing Tunisia's long-term water security strategy.

• External debt increases to USD 49.6bn, led by multilateral lending and Eurobond expansion
• Domestic debt edges slightly lower q/q to USD 18.6bn, as sharp fall in contractual debt offsets continued expansion in T-bonds
• Public debt composition remains heavily external at around 72%, keeping FX and refinancing risks central to debt dynamics

Total public debt increased to USD 68.2bn at end-2025, up USD 2.3bn (3.5% q/q), reflecting a broad-based rise in external liabilities alongside a more modest and mixed domestic debt profile.

The total government external debt stock rose to USD 47.4bn (+5.2% q/q), driven mainly by multilateral inflows (+8%) and a strong rebound in commercial exposure (+2.8%), while bilateral debt continued to decline modestly, including a further reduction in exposure to China (-0.8% q/q). Eurobonds increased sharply to USD 10.3bn (+12.8%), reflecting renewed market issuance and favourable investor demand conditions. Within commercial lenders, JP Morgan exposure rose notably (+50%), alongside gains from European banking partners such as UniCredit and Caixa Geral de Depósitos. As recalled in late 2025 the finance ministry extended its USD 1bn debt facility with JPMorgan by three years and secured access to an additional USD 500mn in financing. In contrast, China Development Bank exposure fell further (-9.1%), extending a multi-quarter deleveraging trend, while ICBC and Standard Chartered exposures showed mixed but generally stabilising dynamics. Debt from suppliers and lease-related obligations continued to decline, reinforcing gradual cleanup in trade-credit liabilities.

Domestic debt remained broadly stable at USD 18.6bn (-0.3% q/q), but underlying composition shifted. T-bonds rose strongly (+13.2% q/q), reflecting continued preference for longer-dated domestic instruments, while T-bills increased modestly. This was offset by a sharp contraction in contractual debt (-72%), suggesting reduced short-term bilateral or project-linked financing.

State-owned enterprise debt remained unchanged at USD 2.15bn, with Sonangol and TAAG liabilities stable.

Overall, the data points to a renewed reliance on external market access in Q4, particularly via Eurobonds and multilateral financing, while domestic debt is increasingly being used as a cost and maturity management tool rather than a primary funding source. Angola went to the international capital markets in March 2026 to issue USD 2.5 bn in Eurobonds at favourable rates, with strong investor demand far exceeding the original target, underscoring improved borrowing conditions and confidence in the country's macroeconomic outlook. Despite consolidation efforts in some segments (notably bilateral and contractual debt), total debt continues to trend upward, reflecting persistent fiscal financing needs and refinancing cycles. Debt dynamics suggest Angola is entering a phase of more active external market engagement, supported by improving investor sentiment and ongoing reform credibility. However, rising Eurobond exposure and still-high external share keep refinancing and FX sensitivity elevated, particularly under tighter global financial conditions.

• Concessionaire expected to raise annual rail freight from current 200,000 tons to about 5mn tons within ten years

The government has extended by one month until Jun 4 the international tender to select a concessionaire to operate, manage, and maintain the Moçâmedes Railway for 30 years. The contract includes a concession fee split 60% to the transport ministry and 40% to the finance ministry.Eligibility requires at least three years of infrastructure or rail-freight experience, minimum annual turnover of USD 50mn, and net profit of USD 12mn in the last fiscal year. The delay comes as the government wants to address some of the concerns expressed by competitors.

Authorities highlight strong corridor fundamentals, including the recently modernised Port of Namibe and refurbished airports in Namibe and Huíla, alongside a resource-rich hinterland spanning minerals, agriculture, livestock and fisheries. The government expects the concessionaire to unlock major productivity gains, aiming to raise annual rail freight from the current 200,000 tons to about 5mn tons within ten years, while boosting jobs and lowering logistics costs. The 855-km line runs from the Port of Namibe through Lubango to Menongue, with a ready connection at Santa Clara on the Namibian border, facilitating future regional integration.

• Placement of 3y and 5y will happen through BODIVA

The finance ministry has approved issuance of government bonds of up to AOA 170bn (USD 18mn) to be used to capitalize national air carrier TAAG, Novo Journal reported. The decree mandates book-entry T-bonds issued at par with 3y-5y maturities, with no discount. Instruments will be priced at prevailing market rates, and redeemed at face value. Administrative execution, including issuance registration, interest payments, and redemption, will run through BODIVA's auction and settlement infrastructure, with advance coordination by the finance ministry.

TAAG closed 2024 with a net loss of AOA 134.2bn (USD 145.1mn), reflecting mounting operating and financial pressures, partly due to a 12% depreciation of the kwanza, which inflated third-party and fuel-related expenses. In July 2025, the Export-Import Bank of the United States (EXIM) approved a USD 297mn financing deal to support the export of Boeing 787-10 aircraft and General Electric Aerospace spare engines to TAAG. TAAG earlier said it would aim to double its fleet to 40 aircraft from the current 21 aircraft in 2025. The state carrier has reportedly accumulated losses of more than USD 600mn due to the Covid-19 pandemic. The government plans to sell part of its shares in TAAG, however, no timeframe for privatization has been decided yet.

• White diesel up 16.6% to ETB 163.1/litre, gasoline up 7.4% to ETB 142.0/litre, kerosene up 3.3% to ETB 151.0/litre
• Global diesel prices jumped from USD 80 to USD 230 per barrel, while gasoline rose from USD 70 to USD 150
• Govt continues to spend ETB 15bn-20bn monthly on subsidies and has introduced prioritisation measures after a 180,000 tonne shipment failed to arrive
• Sharp white diesel hike and supply disruption set to lift inflation and strain transport, agriculture and industry

Government raised retail fuel prices effective Apr 1, according to a letter from the Ministry of Trade and Regional Cooperation, marking the third price hike since December 2025. White diesel recorded the steepest increase, rising to ETB 163.09/litre from ETB 139.84/litre in March (+16.6%), while gasoline increased to ETB 142/litre from ETB 132.18/litre (+7.4%). Kerosene rose to ETB 151/litre from ETB 146.14/litre (+3.3%), and jet fuel increased to ETB 150/litre from ETB 145.23/litre (+3.3%). The latest adjustment comes after a delivery of 180,000 tonnes of fuel failed to arrive, forcing the federal government to adopt prioritisation measures to manage distribution. The move reflects a severe supply shock at a time when global diesel prices have climbed from USD 80 to USD 230 per barrel and gasoline from USD 70 to USD 150, while Russia's four-month gasoline export ban adds further upward pressure. Despite the higher prices, the government continues to spend ETB 15bn-20bn monthly on subsidies in an effort to cushion consumers.

The sharp increase in white diesel, a key input for transport, agriculture, exporters and vehicles carrying essential goods, is set to feed quickly into production and logistics costs. Diesel is the most important fuel for freight transport and farm machinery, so the ETB 23.25/litre jump will raise costs across the supply chain and place additional pressure on businesses that already rely on imported fuel. Gasoline's rise to ETB 142/litre will also affect urban transport and private mobility, while the increase in kerosene will hit households that depend on it for lighting and cooking. The new rationing arrangement, with a centralized unit overseeing distribution, underscores the severity of the supply squeeze and the government's attempt to protect the most critical sectors first. Ethiopia's full dependence on imported petroleum, with annual spending of more than USD 4.2bn, leaves the economy highly exposed to global price swings and foreign exchange pressures.

We note that National Bank of Ethiopia's Monetary Policy Committee held its 6th meeting and kept the policy rate at 15 % and the credit growth ceiling remains at 24% for FY2025/26, preserving a tight stance even as inflation has now stayed below 10% since December 2025. Headline inflation eased to 9.7% in February 2026, down sharply from a year earlier, with food inflation at 10.8%, non-food inflation at 8.1% and monthly inflation at 0.4%. Still, the Committee warned that tensions in the Middle East could lift global oil prices and disrupt supply chains, which would add fresh pressure to the domestic inflation outlook. White diesel, the engine of economic activity, will transmit cost pressures rapidly across the economy and raise the risk of second-round inflation effects. While the subsidy bill provides a partial buffer, the scale of the fuel shock means it can only soften pass-through rather than eliminate it. The enforcement response, including the detention of more than 650 people and the seizure of over 720,000 litres of fuel, points to growing distortions in the domestic market. With prices now being adjusted periodically under the market-linked framework introduced in December 2022, the latest hike signals that fuel volatility is likely to remain elevated in the near term, with implications for inflation, transport costs and overall economic stability. We expect these fuel price adjustments to push inflationary pressures to the upside in the coming months.

• MPC keeps a tight stance as inflation stays in single digits, but Middle East tensions have raised near-term upside risks
• Growth remains robust, led by industry, services and a much stronger gold contribution
• Money and credit continue to expand strongly, while interbank activity and fiscal financing deepen

The National Bank of Ethiopia's Monetary Policy Committee held its 6th meeting and kept its disinflationary bias firmly in place, with the Board later approving the maintenance of the policy rate and annual credit growth cap at their current levels. That means the National Bank Rate stays at 15 % and the credit growth ceiling remains at 24% for FY2025/26, preserving a tight stance even as inflation has now stayed below 10% since December 2025. Headline inflation eased to 9.7% in February 2026, down sharply from a year earlier, with food inflation at 10.8%, non-food inflation at 8.1% and monthly inflation at 0.4%. Still, the Committee warned that tensions in the Middle East could lift global oil prices and disrupt supply chains, which would add fresh pressure to the domestic inflation outlook.

On growth, the economy continued to show notable momentum. Real GDP expanded by 9.2% in FY2024/25, comfortably above the eight-year average of 7.5%, with the industrial sector's contribution rising to 3.7% from 2.7% a year earlier, helped by mining and quarrying. Gold was the standout, with its contribution jumping to 1.0% from 0.1% in FY 2023/24. Agriculture also improved slightly to 2.3 % from 2.2%, while the services sector remained a steady driver. High-frequency indicators in the CIEA point to continued strength in FY2025/26, supported by gains in cement, electricity and iron & steel output, as well as stronger tourist inflows and air transport activity. Some soft spots remained, however, particularly lower export volumes of coffee and oilseeds and weaker imports of raw materials.

Monetary conditions remained tight but active. Broad money growth accelerated to 39.3% year-on-year in February 2026, while base money rose 43.2%, with both measures also up strongly against June 2025 balances. Bank credit growth reached 45.3% year-on-year and was 33.3% higher than the June 2025 level, showing that credit expansion continues to be the main driver of broad money growth, even as sterilisation through FX auctions keeps base money growth more contained. Short-term rates also moved in different directions: the 91-day T-bill yield fell to 12.4 % from 15.2% a year earlier, while the 7-day interbank rate climbed to 17.9%, reflecting liquidity pressure in some private banks.

The banking system was still described as safe and sound, with low NPLs and adequate capital, though some institutions continue to face liquidity strains; the new inter-bank money market and Standing Lending Facility have helped ease that pressure. Fiscal policy remained prudent, with no direct advance from the NBE, a budget deficit of 1.1% of GDP in the first seven months of FY 2025/26, and net ETB 136.6bn raised through T-bills. External accounts also stayed in surplus, supported by stronger coffee and gold exports, higher private transfers and better net service trade, while the IMF's January 2026 outlook still sees global growth at around 3.3% this year and 3.2% in 2027, albeit with downside risks from elevated oil prices. The MPC will meet again by late April, or earlier if needed, to reassess whether further measures are warranted.

• Citizens are now classified as Gabonese by origin, adoption or affiliation
• This is expected to affect eligibility for public office
• Ordinance was adopted without parliamentary review
• Citizenship can be revoked for actions contrary to national interests
• Analysts highlight risks from vague wording and lack of consultation

A new nationality law in Gabon is being debated across the country after a presidential ordinance issued in February began circulating on social media in late March. The ordinance significantly revised the country's nationality code during a parliamentary recess. Adopted without parliamentary review, the reform establishes categories of citizenship statuses that could affect eligibility for public office. Citizens are now grouped into three categories: Gabonese "by origin", "by adoption" and "by affiliation." Critics say these provisions will have negative implications for national unity and democracy. The government defends the new framework on the grounds of sovereignty, while the opposition argues that the text is vague and potentially open to abuse.

The framework also outlines new conditions under which nationality can be revoked. Under Article 64, a citizen serving in a foreign army or institution that is "contrary to Gabon's interests" could automatically lose their nationality. Another provision goes further by allowing authorities to revoke nationality from any citizen who is considered to be destabilising the government, state institutions or national interests. Individuals who refuse to comply with official directives within a three-month period could also face the loss of their citizenship.

The reform tightens the rules for acquiring nationality through marriage. Foreign spouses must now complete six years of uninterrupted marriage with a Gabonese partner (up from three years) before applying. Political analysts have pointed out the lack of consultation on this framework, the vague wording around actions that may lead to revoked citizenship, and the risk of creating tiers of citizenship that divide "born" versus "paper" citizens.

• Communications minister announced phased restoration of platforms
• Suspension was initially imposed on Feb 17 by media regulator

Communications minister Germain Biahodjow announced on Wednesday (Apr 1) that the government will be gradually lifting the nationwide suspension of social media platforms. Speaking at a press conference, Biahodjow said the public should not expect the restoration of access to occur immediately. Telecommunications operators have reportedly begun adjusting their systems to facilitate what the government describes as a gradual "digital reopening" that allows platforms such as Facebook, WhatsApp and TikTok to come back online progressively. It will be implemented in phases to ensure network stability. Nearly seven weeks ago, the country's media regulator HAC ordered the suspension on Feb 17, citing the spread of harmful online content. Opposition figures and private citizens filed legal complaints over the decision but the cases made little progress.

Gov't welcomes Burkina Faso's move to resume tomato exports to Ghana (Joy FM)

Govt secures GH¢3.1bn in 7-year bond auction (Joy FM)

DDEP forced banks to rethink strategies - GCB Bank MD (Citi Newsroom)

ECG installs 40 transformers to stabilise power supply in Accra East (Daily Graphic)

Mahama welcomes Zimbabwean President for 3-Day state visit (Starr FM)

Star Oil records 90.4 million litres in monthly sales milestone (Class FM)

• Bids totalled GHS 3.1bn, bonds sold at 12.5%
• This is first domestic bond issuance since 2022
• Sources have said govt plans to sell GHS 20.2bn domestic bonds this year

The government sold GHS 2.8bn in 7-year bonds in its first issuance of domestic in years. The total bids amounted to GHS 3.1bn and the bonds were sold at 12.5%. This is the first domestic bond sale since July 2022 as the government ran into financial difficulties and suspended most debt payments later that year. It then imposed a three-year restriction on domestic bond issuance and launched a debt restructuring process in 2023.

The restriction was lifted recently, and Bloomberg cited sources as saying that the government plans to issue GHS 20.2bn in 7-year and 10-year bonds this year starting in late March. Of this, GHS 15.2bn is planned to be raised between March and end-June, and GHS 5bn in H2 although the amount could be increased depending on investor appetite.

The proceeds will be used to finance infrastructure projects included in the budget for which road tolls can be charged to recoup the investment. Earlier, other sources said that the government plans to raise GHS 10bn through an infrastructure bond to fund roads and interchanges, while a parliamentary finance committee member said last month that the government plans to raise GHS 30bn through a domestic bond to support Ghana Cocoa Board's (Cocobod) operations.

• Slowdown due to lower price growth in recreation and culture, food
• Transport prices continue falling in y/y terms, but data does not reflect latest fuel price hikes
• Full effect of higher fuel prices, which have risen by 14-44%, to be felt in April CPI data
• Central bank has signalled it can adjust pace of policy normalisation if price pressure threaten inflation target materially

CPI inflation slowed down further to 3.2% y/y in March from 3.3% y/y in February, according to the latest CPI data released by the statistical office. The main downward contribution came from the recreation, sport and culture where prices grew at a slower pace of 6.4% y/y compared to 10.3% y/y in February. The slowdown was largely due to base effects as prices in the category still rose in m/m terms. Food inflation also eased to 2.3% y/y from 2.4% y/y as prices in the category fell by 0.3% m/m, mainly due to lower prices of some vegetables and fruit, as well as fish. More notable slowdown was recorded also in clothing and footwear, housing and utilities, household maintenance and health.

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At the same time, price growth picked up in education due to higher school fees and transport prices continued decreasing, albeit at a slower pace in March. The annual drop in transport was largely due to base effects as petrol and diesel prices rose by 3.1% m/m and 1.4% m/m, respectively. In addition, tax and bus fares remained flat m/m but still fell in y/y terms. It should be noted also that the recent rise in fuel prices in response to the Middle East situation has not been reflected in the CPI for March as the data is collected in the first week of the month when the impact was not fully felt. Fuel prices have since increased by 14-23% for petrol and 24-44% for diesel at major fuel retailers. This should have an upward effect of about 0.3pp on the headline CPI print alone. However, a passthrough to other prices, as well as a potential rise in transport fares, which unions are currently discussing, could further push up inflation.

The potential reversal of the disinflation trend, depending on its extent, could lead the central bank to keep the rate unchanged at its next MPC meeting in May. It announced a cut of 250bps to 15.5% in March but later signalled it could change the pace of policy normalisation if price pressures persist and threaten materially the inflation target. However, it said it did not expect inflation to move outside of the medium-term target range of 6-10% over the near term, or at least this was their stance last week. If fuel prices continue rising, the picture might change, as the government has not signalled any plans to intervene.

• Programme aims to put end to power cuts in Abidjan within weeks
• Over longer term, govt plans to rehabilitate power distribution infrastructure
• Recent blackouts have been attributed to increased consumption amid heat wave

The government announced emergency measures to address the blackouts occurring in several parts of the country over the past several weeks. Speaking after the cabinet meeting on Apr 1, government spokesperson Amadou Coulibaly said that a XOF 32bn (USD 57mn) emergency programme is being implemented in the short term to put an end to power cuts in Abidjan district within a few weeks. No details were revealed about it.

Over the longer term, the government plans a national programme to rehabilitate the power distribution network to stabilize power supply across the country. The government attributed to outages to the overuse of the power lines, at approximately 80% capacity, and to transformers exceeding their capacity limits. The mines and energy ministry also attributed the blackouts to the significant increase in power demand amid the heat wave which is more intense than normal for the season.

• Demand stronger for the 15-year bond, the 25-year bond ends undersubscribed
• Accepted yields settled just below market averages for both tenors

The Central Bank accepted a total of KES 50.2bn of reopened 15- and 25-year T-bonds in the auction, held on Wednesday (1 Apr) with demand mixed across the two tenors. The 15-year bond received bids worth KES 41.4bn, while the 25-year bond attracted bids worth KES 33.bn. Total bids thus came in at KES 74.9bn, well above the KES 40bn pre-announced target, though expensive bids were rejected.

CBK accepted KES 36.5bn for the 15-year bond and KES 13.7bn for the 25-year bond. The bid-to-cover ratio stood at 1.14 for the 15-year bond and 2.44 for the 25-year bond. The weighted average accepted yield came in at 12.19% for the 15-year bond and 12.99% for the 25-year bond, compared with market weighted average rates of 12.27% and 13.18%, respectively.

According to the results, there are no redemptions falling due, meaning the proceeds will be applied toward budgetary support. In our calculations, gross bond issuance since the start of the FY reached KES 961bn with this auction, and net issuance - KES 737bn. In government's latest projections, net domestic financing is projected at about KES 890bn (4.7% of GDP) in the current fiscal year, ending June, though it may have to be raised further following additional spending hike recommended by the parliamentary budget committee.

• Revenue fell short by KES 155.2bn by end-Feb, driven by income tax, VAT and excise misses
• Committee warned revenue gap raises concerns but still upped further Treasury proposed spending hikes

The budget committee said revenue collection, including AIA, amounted to KES 1.98tn by the end of February, falling short of the target by KES 155.2bn, reflecting weaker performance in key tax heads. Income tax underperformed by KES 103.5bn, VAT by KES 40.5bn and excise duty by KES 18.6bn, according to the committee report on the supplementary budget. The figure seems aligned with the February exchequer data, indicating ordinary (tax and non-tax revenues, excluding AIA) of KES 1,607bn by February, remaining some 13% below the pro-rated target in the initial budget.

The committee said actual expenditure by the end of February amounted to KES 2.72tn, below the target by KES 103.6bn. Recurrent expenditure was above target by KES 12bn, while development spending fell short of the target by KES 36.3bn and transfers to counties were below target by KES 79.3bn.

The committee warned that the revenue gap raises concerns about the sustainability of the proposed expenditure increases but nonetheless proposed further increases, upping the deficit to 6.6% of GDP vs. 6.1% in the initial Treasury proposal.

• Conille previously served as UN resident coordinator in Burundi and Jamaica
• Move comes as Kenya role in Haiti security mission scales down

The United Nations has appointed former Haiti prime minister Garry Conille as resident coordinator in Kenya. The UN said Conille assumed office on April 1 and brings more than two decades of experience in international development and humanitarian operations, including previous roles as UN resident coordinator in Burundi and Jamaica and most recently as UNICEF regional director for Latin America and the Caribbean.

Conille previously served as Haiti's prime minister, most recently in 2024, during a period of security and governance crisis, and had engaged with Kenyan authorities on security cooperation related to the Kenya-led multinational security support mission to Haiti. The appointment comes as the Kenya-led security mission in Haiti is being restructured, with some Kenyan police officers returning home and other countries expected to take a larger role in the mission.

• Proposal is 4% higher than Treasury's draft on the back of recurrent spending

Parliament's finance committee has proposed a KES 364bn increase to the current financial year budget under Supplementary Appropriations I for 2025/26, a figure higher than the increase proposed by the finance ministry in the draft supplementary budget by about 4% (+KES 77bn). The proposed additional increase is higher on the development side (+KES 45bn), although that still leaves recurrent expenditure accounting for the bulk of the adjustment.

The largest increases proposed by parliament are concentrated in wages and security-related spending. In the breakdown, security spending would increase by KES 53bn on top of Treasury's proposal for a total of KES 419bn; the Teachers' Service Commission allocation would go up by KES 24bn above the proposal to a total of KES 411bn to cover salary shortfalls and health insurance contributions for teachers; and the health sector allocation would rise by KES 27bn to KES 165bn. Additional allocations are also proposed for university lecturers' salary arrears, disaster response spending related to drought and floods, and funding for the electoral commission to settle pending bills ahead of the 2027 elections.

According to the report, measures on the revenue side should up budget revenues by KES 29bn, which is fully offset by a similar rise in consolidated fund spending, driven by higher interest payments on domestic debt. If the committee report sails through, the budget deficit should print at about KES 1,265bn or 6.6% of GDP, or 0.5pps of GDP higher than Treasury's proposal.

Like the initial proposal, the budget committee report did not provide details on how the planned financing changes vs. the initial budget. The govt's medium term budget plan showed increased reliance on domestic financing with the target upped to KES 890bn from KES 614bn whereas the external financing target was revised slightly downwards to KES 255bn. Recently, finmin Mbadi outlined the external financing the govt expects by the end of the FY, including a budget support loan from the World Bank, a loan from the African Development Bank and a Samurai bond.

The proposed revisions now go to the National Assembly for consideration and approval as part of the supplementary budget process.

• Council to be chaired by finance minister Mbadi
• Fund designed to mobilise private capital and reduce reliance on debt
• Targets KES 5tn for infrastructure over next decade

President Ruto has appointed a governing council to oversee the newly established national infrastructure fund, with finance minister John Mbadi named as chair. The council will oversee the operationalisation of the fund, including supervising the recruitment of the board of directors, which will in turn appoint a chief executive officer to manage the fund's day-to-day operations.

The national infrastructure fund was established under the recently endorsed National Infrastructure Fund Act, 2026, with the aim of mobilising private capital for major projects and reducing reliance on debt-financed infrastructure. The fund is expected to finance projects in transport, energy, ports and agribusiness infrastructure.

The legislation envisages the fund mobilising roughly KES 5tn over the next decade from a mix of government allocations, private investment, privatisation proceeds, grants and loans, with lawmakers having introduced oversight provisions requiring parliamentary approval of the fund's investment policy.

• Says bribery, procurement practices disadvantage U.S. firms in tenders
• Issues cited in customs, licensing and both national and county procurement

The United States has identified corruption as a major barrier to trade and investment, noting that bribery and procurement practices continue to disadvantage American firms seeking to do business, according to local news reports flagging the latest National Trade Estimate Report on Foreign Trade Barriers. The report states that corruption affects customs clearance, licensing procedures and public procurement at both national and county levels, creating an uneven playing field where firms willing to engage in bribery gain an advantage in government tenders. The United States added that corruption increases the cost of doing business, discourages investment and can undermine the benefits of trade agreements and broader economic cooperation if not addressed.

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From bribes to opaque tender deals: Why Trump has flagged Kenya as corruption haven (The Standard)

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KRA targets more taxpayers with a Whatsapp tax filing solution (The Star)

Police Refute Reports Of DCI Amin Exit, Term Them Misleading (Capital News)

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Alarm as School Shutdowns Loom While Govt Prioritises Upgrades to Select Senior Institutions (Kenyans.co.ke)

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• Investment to support gas operations over next three years
• Temane project central to Mozambique's energy supply

South African oil company, Sasol announced plans to invest EUR 307mn in Mozambique's Temane gas project over the next three years, reinforcing the country's position as a key regional energy supplier. The investment, disclosed by Mozambique's ambassador to South Africa, will focus on expanding operational capacity in Inhambane province, where the Temane gas fields are a critical component of domestic and regional energy supply. The funding is expected to enhance gas production and improve utilisation of existing resources, supporting both industrial activity and electricity generation. The project underscores Mozambique's continued reliance on natural gas as a transition fuel, complementing longer-term liquefied natural gas (LNG) developments that have faced delays in recent years. Sasol's commitment also highlights the importance of foreign direct investment in sustaining the country's energy sector. The company has invested over EUR 4bn in Mozambique over the past two decades and remains one of the country's largest taxpayers, reflecting its significant economic footprint.

Beyond energy, the investment aligns with broader regional integration efforts, particularly through transport linkages such as road and rail connections to the Port of Maputo, which facilitate exports and cross-border trade. Mozambique continues to position itself as an attractive investment destination across energy, mining and infrastructure, although structural risks including security challenges and external shocks persist. The Temane investment provides near-term support to gas output and fiscal revenues, while reinforcing Mozambique's role in regional energy markets, even as larger-scale LNG projects remain critical to long-term growth. The EUR 307mn Temane investment supports near‑term gas output, but Mozambique's LNG future hinges on larger projects. TotalEnergies' restart is mobilising over 4,000 workers and USD 4bn in local contracts, with first LNG due in 2029. Yet the IMF in its latest Article IV staff report projects just 2.0% GDP growth in 2026 under its reform scenario (World Bank sees growth at 1.1%), while gas and mining expanded only 6.0% in 2025 according to the latest GDP results underscoring that fiscal strains and climate shocks continue to cap the sector's broader economic lift. The World Bank has also noted that delayed LNG exports and persistent security risks in Cabo Delgado remain key downside threats to the country's medium‑term outlook.

• National Institute of Statistics says Middle East tensions drive surge in price expectations
• Business sentiment weakens, led by trade and construction

Mozambique's consumer confidence declined further in March, reaching its lowest level since December 2023, as rising global uncertainties and inflation concerns weigh on household sentiment, according to the National Institute of Statistics (INE) cited by local media. The decline reflects mounting pressure from escalating geopolitical tensions in the Middle East, which have driven up price expectations and heightened concerns over the cost of living. INE data shows that inflation expectations rose sharply, reaching their highest level since March 2022, one of the largest increases in the series. Households are becoming increasingly pessimistic about both current and future financial conditions, with expectations of worsening economic prospects and reduced purchasing power driving the downturn. Notably, intentions to make major purchases have declined, signaling growing consumer caution. The broader economic sentiment indicator also deteriorated, falling to levels last seen a year ago, highlighting a more widespread weakening across the economy.

On the business side, confidence declined in March after a modest recovery in February, with the trade and construction sectors recording the sharpest drops. This suggests slowing demand and rising cost pressures in key domestic sectors. However, manufacturing and services showed relative resilience. In manufacturing, improved demand conditions and better inventory assessments supported a slight uptick in sentiment, partially offsetting the broader decline. Rising expectations for selling prices across businesses further point to building inflationary pressures, likely linked to higher energy and input costs. Overall, the data underscores how external shocks particularly through energy prices are feeding into domestic inflation expectations, weakening consumer sentiment and potentially dampening consumption and investment in the near term.

We note that the deterioration in March sentiment aligns with actual price developments and the central bank's latest policy stance. In February inflation edged up to 3.2% y/y from January's 3.0% print, driven by lingering flood‑related supply chain disruptions and sharp monthly increases in charcoal, lettuce and cabbage, although the monthly pace slowed to 0.68%. The MPC in March held the MIMO rate at 9.25% citing upwardly revised inflation forecasts due to the Middle East conflict, which has pushed global oil prices above USD 100 per barrel and threatens fuel imports, 80% of which transit the Strait of Hormuz. Despite the broadly stable metical and the government's fuel stocks sufficient until late April, flood‑damaged infrastructure (estimated repair cost USD 3.5bn) and persistent fiscal pressures, with public debt at 91.4% of GDP and delayed state payments dampening demand for government securities, continue to weigh on interbank conditions.

• Tour to gather input from universities and feed into reform strategy
• Higher education ministry tasked with preparing structure and logistics

PM Ousmane Sonko has announced plans to conduct a nationwide tour of universities, with the aim of holding consultations across the higher education system. The higher education ministry, in coordination with his office, was tasked to prepare the technical and logistical arrangements for the tour, define a national framework for consultations, and organise a strategic review at the end of the process that will include operational recommendations and a monitoring plan.

The announcement comes after more than a year of tensions in the higher education sector, including student protests, campus disruptions and clashes linked to scholarship delays, overcrowding, infrastructure shortages and disputes over reforms to the university system, which have periodically forced authorities to suspend classes at some institutions.

Question:

Can you assess the net impact of the current global energy price shock on the country? Its emergence as a net hydrocarbon exporter provides partial insulation, but it still relies on refined petroleum product imports. I understand that the state-owned refiner advances plans to build a new refinery: where does this stand in terms of financing and construction timeline?

The question was asked in relation to the following story: GDP expands by 4.2% y/y in Q4 2025

Answer:

With regards to the impact of the global energy shock: indeed Senegal turned out net hydrocarbon exporter in 2025, and we can thus expect some initial insulation from the primary energy price shock. The second-round effects are more uncertain. For example, Senegal remains a net food importer by a sizably wider margin, so a sustained shock, pushing upward food prices, would weigh on the downside. With gold emerging as the country's second-largest export in 2025, movements in gold prices may also play a role in terms of trade changes.

With regards to growth, higher hydrocarbon prices support extractive sector activity and exports, but - particularly if coupled with prolonged supply chain disruptions and depressed demand - weigh down on non-oil sectors.

The fiscal impact of higher global energy prices is also uncertain and will depend largely on the extent of pass-through to domestic prices. In our view, it is unlikely that the government allows full, and even partial, pass-through - given the politically sensitive environment, so there is a significant risk that incremental revenue will be used to finance energy subsidies to prevent increases in pump prices and electricity tariffs. In addition, if food prices rise significantly, the government may also face pressure to subsidise essential food products or reduce import duties, which would create additional fiscal costs. This risk is significant because energy subsidies have historically been large, previously peaking at around 4-5% of GDP, including roughly XOF 500-525bn in fuel subsidies and XOF 280-300bn in transfers to the electricity company.

As to the state-owned refinery SAR, it currently has a refining capacity of around 1.2-1.5 million tons per year, which is significantly below production from the Sangomar. The refinery successfully carried out a trial processing of Sangomar crude in February 2025, demonstrating technical capability, but there have been no indications of continued processing, indicating other feasibility constraints.

The authorities have on the other hand prioritised the SAR 2.0 project, which involves the construction of a new refinery that would significantly expand refining capacity and allow domestically produced crude to be processed locally. The project is currently at the financing and structuring stage, with PPP structure being among the options on the table. Reported financing needs have been cited in the wide range of USD 2-5bn with discussions reportedly involving lenders such as Afreximbank and potential industrial and financial partners from China, Turkey, South Korea and the United Arab Emirates. Construction is expected to begin once financing is secured, with commissioning generally expected around the end of the decade, meaning the project is unlikely to materially reduce refined fuel imports in the near term.

The government is also advancing a gas-to-power strategy aimed at replacing fuel oil and diesel used in electricity generation with domestically produced natural gas. The strategy however depends on the development of a national gas pipeline network linking offshore gas fields to major power plants and industrial users, a project led by the state-owned Réseau Gazier du Sénégal and estimated to cost around XOF 650bn in total (EUR 1bn), including a first segment valued at roughly XOF 200bn. Media reporting had indicated plans for construction of this segment to begin in late 2025, and more recently - in H1 2026, with commissioning targeted around 2027, but there has been no clear financing plan to our knowledge, meaning financing challenges may extend timelines.

Question:

Provide an update on the identification and management by the authorities of arrears owed to the domestic private sector, particularly in the construction and energy sectors.

The question was asked in relation to the following story: Cement, mining sectors warn of slowdown amid contract reviews

Answer:

There is still no single official figure publicly reported for the total stock of arrears owed to the domestic private sector, or formal clearance schedule. What the authorities have communicated so far is mainly through the budget financing lines. The revised 2025 budgets include an allocation of about XOF 501bn for arrears clearance, and the 2026 budget includes a further XOF 300bn, suggesting that they planned to clear some XOF 800bn over 2025-2026.

However, in terms of actual payments, the only budget execution report that explicitly mentions arrears clearance is Q2 2025, stating XOF 139bn in arrears payments on externally financed projects in H1 2025. The Q3 report does not provide a similar line, and the Q4 report has not yet been published, so it is not possible at this stage to determine how much of the programmed arrears clearance was actually executed in 2025. As a result, while significant clearance amounts were programmed in the budgets, the actual pace of clearance remains unclear, and private sector complaints about slow payments appear consistent with the limited execution data available so far.

In addition, the authorities have been carrying out audits of permits, contracts and licenses in the construction sector, resulting in a number of private and public projects being paused. In combination with slower development spending and the slow arrears clearance, this has been weighing down on activity, and sector organisations have repeatedly stated this over the past year or so. They estimate the state owes them between XOF 300bn and XOF 400bn for unpaid works, according to the local media, with some broader industry estimates reportedly putting the total exposure, including halted projects and related claims, as high as around XOF 650bn.

In the energy sector, the situation appears to be somewhat different in nature. The main issue is not so much arrears to private suppliers, but rather accumulated state obligations to the electricity sector, particularly tariff compensation and other transfers owed to Senelec. These obligations create financial strain for the utility, which is likely managed through expensive short-term borrowing, delayed payments, and netting of reciprocal obligations.

• Tax revenues rose 8.4% (vs 8.2% estimated in Budget 2026), outperforming nominal GDP growth of 5.4%
• Administrative efficiency and compliance gains supported revenue despite a weak macro backdrop

Net tax revenues collected in 2025/26 reached ZAR 2.01tn, exceeding the ZAR 2.0tn estimate in the 2026 Budget Review, according to the South African Revenue Service (SARS) annual report. The outturn represents an increase of 8.4%, slightly above the 8.2% growth assumption underpinning the budget, and reflects a tax buoyancy ratio of 1.70.

The stronger-than-expected outcome was underpinned by improved compliance, administrative efficiencies, and targeted enforcement measures. Compliance-related activities contributed approximately 15.7% of total revenue, with SARS also reporting significant progress in limiting revenue leakages through audits and verification processes.

Across tax categories, domestic VAT collections outperformed earlier projections, rising by 7.6%, supported by improved consumer conditions, lower interest rates, and compliance interventions, including around ZAR 37bn collected through targeted actions. PAYE revenues increased by 8.5% (ZAR 59.9bn), reflecting modest wage growth and fiscal drag, while corporate income tax grew by 9.9% but fell short of revised estimates by approximately ZAR 1.3bn, suggesting that profitability was not uniform across sectors. Import VAT rose by 2.2% (ZAR 5.6bn), while import duties increased by 6.6% (ZAR 1.0bn), broadly in line with subdued import growth.

Despite the positive outturn, structural risks remain, including the illicit economy which continues to weigh on revenue performance, with estimated losses exceeding ZAR 100bn annually, the SARS warned. It indicated that ongoing modernisation efforts, including the use of data science, artificial intelligence, and digital systems, are expected to further strengthen compliance and support revenue collection over the medium term.

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• Growth strengthens from 11.4% y/y in February, marking strongest March since 2007
• Broad-based gains across passenger and commercial segments signal resilient demand
• Exports remain under pressure, declining 5.3% y/y amid persistent global headwinds
• Rising fuel costs and geopolitical tensions introduce near-term inflation risks

New domestic vehicle sales increased 17.3% y/y to 58,060 units in March, extending the strong upward momentum from February, according to data published by naamsa|The Automotive Business Council on Wednesday (Apr 1). This represents the strongest March performance since 2007, underscoring sustained resilience in domestic demand, naamsa said in the statement. Dealer sales accounted for 88.7% of volumes, with rentals at 5.5%, government 3.2% and corporate fleets 2.6%, indicating continued strength in retail demand and stable fleet activity.

Data Download

Passenger car sales increased 18.2% y/y to 39,370 units, while light commercial vehicle sales rose 15.7% y/y to 15,557 units. Medium commercial vehicle sales climbed 14.0% y/y to 823 units, and heavy trucks and buses increased 14.5% y/y to 2,310 units, which is linked to infrastructure spending, freight volumes, electricity costs, and business confidence, the industry body said.

Exports, however, declined 5.3% y/y to 37,388 units, reflecting continued pressure from geopolitical tensions, rising protectionism, and structural shifts linked to decarbonisation in key export markets. While less severe than the contraction recorded in February, export performance remains weak on a three-month basis.

According to naamsa, the domestic macroeconomic environment remained supportive in early 2026, aided by earlier interest rate cuts, improved consumer and business confidence, and previously moderating inflation. However, the outlook has deteriorated more recently due to rising global oil prices linked to geopolitical tensions in the Middle East, which have driven a sharp increase in domestic fuel prices. The resulting increase in transport and logistics costs is expected to generate an inflationary impulse, raising the total cost of vehicle ownership and potentially weighing on consumer purchasing power in the short to medium term. While temporary fuel levy relief provides some offset, it is unlikely to fully neutralise the underlying energy price shock.

• Total budget envelope is raised by 7.7% to UGX 88.3tn
• Govt plans increased investment in key infrastructure projects
• On revenue side, it envisages tax measures amounting to UGX 1.7tn

Junior finance minister Henry Musasizi presented the draft 2026/27 budget to parliament on Apr 1. The total budget envelope was proposed at UGX 84.29tn, up 7.7% from the UGX 78.25tn in the second budget call circular published in February. The minister said that the budget is prepared in line with the Fourth National Development Plan (NDP) covering the period 2025/26-2029/30 and the Tenfold Growth Strategy, and prioritises investments in agro-industrialization, tourism development, mineral-based industrial development, ICT and creative arts industry.

On the expenditure side, the budget envisages increased investments in flagship projects such as the Standard Gauge Railway, the Meter Gauge Railway, the Kampala Jinja Express highway, construction and maintenance of critical roads, and electricity for industrial parks. The budget will also support preparations for AFCON27 and increased salaries for primary school teachers and arts teachers. On the revenue side, the minister said they proposed tax policy measures amounting to UGX 1.74tn to boost domestic revenue to UGX 44.5tn, up 11.0% from the second budget circular and 19.6% from 2025/26.

The parliament is now to debate and pass the budget which will be presented to the public in a budget speech on Jun 11.

• Funding to be provided by IDA over six years
• Programme to improve municipal management, expand access to climate-smart infrastructure
• It should benefit 5.6mn people and create 40,000 direct jobs

The World Bank Board approved a six-year urban development programme which it will support with USD 540mn from the International Development Association (IDA). The financing includes a USD 460mn loan and a USD 80bn grant. The disbursements are expected to start in 2027 when about USD 119mn should be released.

The programme aims to improve the management of cities and municipalities and expand access to climate-smart infrastructure, services, and jobs for urban residents and displaced populations in refugee-hosting areas. It will support 10 cities, 26 municipalities, and 13 refugee-hosting districts and directly benefit 5.6mn people, including 600,000 refugees by improving their access to essential urban infrastructure and services such as all-weather roads, stormwater drainage, street lighting, public markets, and other urban amenities. The programme is also expected to create at least 40,000 direct jobs, including 20,000 permanent ones in operations and services and an equal number through short-term work during construction.

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• Government introduces regulatory reforms and efficiency programmes
• Transmission and distribution losses at 12.75% exceed global benchmarks

Government is intensifying efforts to reduce electricity transmission and distribution losses, which currently stand at 12.75%, well above the global benchmark of 7-10%, as authorities seek to improve energy efficiency and stabilise supply. Energy Minister Makozo Chikote noted that high grid losses are undermining the financial viability of state utility ZESCO and limiting electricity availability, particularly in underserved areas. The government is implementing a range of measures under the National Energy Policy, including reforms to the Electricity Act and Energy Regulation Act, alongside new energy-efficiency regulations aimed at enforcing best practices across the sector. These efforts are being supported by initiatives such as the European Union-backed Zambia Energy Efficiency Sustainable Transformation project, which aims to reduce energy costs and enhance industrial productivity. Structurally, Zambia faces unique challenges due to its large geographic size and the long distances over which electricity is transmitted from generation sites, contributing significantly to technical losses. At the continental level, grid inefficiencies remain a widespread issue. The African Energy Commission (AFREC) estimates that power losses exceed 20% in many African countries, compared to 5-10% in developed markets. Authorities view loss reduction as a cost-effective strategy to boost available electricity without requiring substantial new generation capacity, effectively unlocking hidden capacity within the existing system. Improving grid efficiency could ease pressure on tariffs, strengthen utility balance sheets and support broader economic activity.

• GCF and AfDB back 100MW of solar capacity, aims to reduce 90% dependence on hydropower
• Blended financing structure to crowd in private investment

Zambia secured a USD 154mn renewable energy financing package from the Green Climate Fund (GCF) and the African Development Bank (AfDB), aimed at accelerating diversification away from hydropower and strengthening climate resilience. The programme will support the development of approximately 100MW of renewable energy capacity, primarily through small-scale solar projects, as the country seeks to address persistent electricity deficits linked to climate-induced droughts. Zambia's energy system remains heavily reliant on hydropower, which accounts for around 90% of generation. However, recurring droughts have significantly reduced water levels in key reservoirs, exposing structural vulnerabilities in electricity supply. Under the financing framework, the GCF will provide USD 50mn in debt financing alongside a USD 2.5mn grant, with additional co-financing expected from the AfDB, commercial lenders and private investors. The blended structure is designed to de-risk investments and catalyse broader private sector participation in the energy sector. Beyond generation, the initiative includes technical assistance to strengthen rural electrification policies and build capacity within domestic financial institutions, supporting long-term sector development. The investment aligns with Zambia's strategy to transition toward a more diversified and low-carbon energy mix, while improving resilience to climate shocks. However, while the scale of investment is meaningful, it remains modest relative to the country's growing energy demand and structural deficits, suggesting that sustained capital mobilisation will be required to fully stabilise power supply and support industrial expansion. Currently, the country's power deficit appears contained with both residential and industrial users receiving 24/7 power supply due to improved hydrogeneration capacity, new solar plants such as the Chisamba 100MW which is now connected to the grid and imports, but extreme weather events such as droughts continue to pose serious risks to hydro generation.