• Authorities want to increase Egypt's natural gas production

The cabinet approved five oil and gas exploration commitment agreements with Egyptian General Petroleum Corporation (EGPC), the Egyptian Natural Gas Holding Company (EGAS), South Valley Egyptian Petroleum Holding Company (Ganope), and several global companies to drill 40 wells with minimum investments of USD 225mn in the Merneith and North Sinai marine areas, and the Western and Eastern deserts, according to news reports.

Meanwhile, BP made a new oil and gas discovery in the King Mariout region on the Mediterranean Sea.

Elsewhere, ExxonMobil plans to explore two natural gas wells in two concession areas on the Mediterranean Sea during Q1 2026 at a cost of USD 240mn. The company is conducting the final seismic surveys in these areas, with indications of natural gas reserves.

EGPC plans to increase its crude oil production by 18% y/y in FY 2024/25 to 565,000 barrels per day (bpd). The companies operating under the Ministry of Petroleum are planning to add 90,000 bpd in FY 2024/25.

As a reminder, Fitch Solutions projects a 2.5% increase in gas production in 2025, followed by an additional 1.0% increase in 2026.

• Passenger cars sold rise to highest level in 30 months
• Passenger car sales recovered in 2024 due to improved FX liquidity, growing confidence
• Customs reportedly began in January clearing ports backlog of 30k passenger cars
• Egypt has announced a series of international deals to localize auto production

The number of passenger cars sold rose for the second month in a row in December, by sharp 24.7% m/m to 10.6k units following a 14.9% m/m increase in November, according to local newspapers citing data from the Automotive Information Council (AMIC). It should be noted that AMIC is an industry association, which only reports data submitted by its member car dealerships. This is the highest number of passenger cars sold in 30 months, suggesting sales have bottomed out. Total auto sales - which include buses and trucks - rose by 24.5% y/y to 13.0k units, which was underpinned by strong 19.9% m/m growth that was mostly due to rising passenger car sales. That category expanded by strong 26.6% y/y, following a 7.4% y/y increase previously, and truck sales rose as well.

The passenger car sales have been on a path of strong recovery last year as FX liquidity and consumer confidence improved and FX uncertainty eased since the major currency reform from March. Further, the CBE started to clear the FX backlogs that had dragged on imports for a couple of years, and we expect that the import of vehicles will continue to recover in 2025 and may actually return to the 2021 levels (an average of 11k passenger cars sold every month). Meanwhile, Egypt has over the past two months announced a series of international deals to localize the production of automobiles, including e-vehicles.

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Following new rules and regulations, the customs authority began in January clearing the backlog of passenger cars that have accumulated at the ports, according to one of the automotive dealer associations. The backlog is estimated at around 30,000 vehicles. We haven't seen details of the new clearing rules, but the local press reported that the new criteria will address many of the clearing issues and also include a fine of no more than EGP 10,000 (USD 200) per stranded vehicle.

UAE eyes airport management opportunities in Egypt (Ahram Online)

Egypt-Saudi Arabia trade volume grows by 18% in 2024 (Ahram Online)

Egypt signs USD 1.6bn deal with ITFC to finance work programs for 2025 (Ahram Online)

Egypt and EBRD establish EUR 10mn fund to boost private sector involvement in infrastructure (Egypt Today)

Egypt and Spain sign EUR 1.4mn grant agreement for Cairo Metro expansion feasibility study (Egypt Today)

Egypt and EBRD sign agreements to boost Public-Private Partnerships (Daily News Egypt)

• Egypt received USD 24bn in fresh funds from UAE; IMF disbursed USD 2.4bn since March
• IMF has concluded fourth review of its loan program, analysts expect USD 1.2bn tranche in February
• Egypt has secured USD 57bn external financing for 2024-27, which bolstered investor confidence
• Foreign funds have been buying T-bills through local bourse and from local banks
• CBE's FX deposits in domestic banks, which are available as a source of FX liquidity, rise to USD 10.2bn

Egypt's net international reserves edged up by USD 160mn m/m to USD 47.3bn as of end-January, creeping up to the highest level in more than two decades, according to the central bank. The m/m increase was driven by Foreign currency reserves with other central banks, BIS and IMF (+USD 113mn) as well as rising value of gold reserves (+USD 772mn), which offset a USD 793mn m/m drop in Other reserve assets (other than derivatives and loans to non-residents). FX reserves have surged since March 2024 as Egypt received USD 24bn in fresh funds from the UAE, while the UAE converted another USD 11bn of deposits at the CBE into direct investments. The securing of this major deal allowed Egypt to implement the long-delayed float of the pound, which was accompanied by a 600bps interest rate hike. Following the reform, the IMF promised USD 8bn in augmented financing and a separate USD 1.2bn climate-related financing. Egypt received the first three tranches of the IMF program (each of USD 820mn) last year and expects USD 1.2bn tranche in February 2025.

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IMF's program is centered on a liberalized foreign exchange system in the context of a flexible FX rate regime, a significant tightening of the policy mix, reducing public investment, and delivering on structural reforms to allow the private sector to become the engine of economic growth. The FX reform eliminated the black FX market and has boosted liquidity in the official banking system. Further, CBE is committed to clearing the FX backlog and FX arrears that have accumulated over the past couple of years and will stop providing direct financing to the government, which has put pressure on the pound. Further, the CBE has not intervened in the FX market since March 2024. In addition to the UAE deal and the augmented IMF program, Egypt has also secured USD 8bn soft loans and grants from the EU for 2024-27 and USD 6bn loan from the World Bank.

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The securing of the massive USD 57bn financing and the FX currency reform bolstered investors' confidence and foreign investors rushed to buy short-term debt. Foreign funds bought around USD 18bn worth of T-bills and bonds on EGX's secondary market and another USD 8bn directly from the banks, the latter boosting the foreign assets of the commercial banks and resulting in a surplus of the banks' NFAs for the first time in two years. Meanwhile, CBE's FX deposits in domestic banks, which are available as a source of FX liquidity, edged up to USD 10.2bn as of end-January. The pound has come under pressure in August during the global sell-off and then again in December on the back of seasonal demand pressures as well as global and regional factors. The CBE allowed the pound to weaken, which we think was a healthy indicator of the CBE's commitment to the new flexible FX rate regime.

• Commercial banks' foreign assets rebound in December, but rising liabilities push their NFAs deeper into deficit
• Sharp declines in banks' NFAs are usually result of capital outflows
• Foreign funds bought USD 2.3bn worth of T-bills/bonds through local bourse in December
• NFAs turned to surplus in May - first in two years - due to USD 35bn UAE deal, surging portfolio inflows

The Net Foreign Assets (NFA) of the banking system (banks + CBE) fell by EGP 30bn or 10.1% m/m to EGP 266bn (USD 5.3bn) as of end-December following a sharp 34.4% m/m drop in November, according to data released by the central bank. The drop was due to a system-wide increase in foreign liabilities exceeding the rising stock of foreign assets at the banks and the CBE. We remind the bank's foreign assets fell by sharp EGP 289bn m/m in November, and such sharp movements are usually the result of portfolio outflows. However, the banks' foreign assets recovered by EGP 110bn m/m in December, which we attribute to portfolio inflows and external financing, as the bank's foreign liabilities rose by EGP 146bn on the month. As a result, the NFAs of the banks fell deeper into negative territory, reaching net liability of EGP 327bn as of end-December. We note that the stock market recorded a net acquisition of T-bills/bonds by foreign funds worth USD 2.3bn and we thought the banks' foreign assets should have risen by more. The drop in banks' foreign assets could be related to increased seasonal demand for imported goods and larger gas imports. Meanwhile, the central bank's NFAs held relatively stable m/m at EGP 592bn asset position.

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We remind the system-wide NFAs stood at USD 22bn net liability as of end-February 2024 and their sharp improvement was due to USD 35bn UAE deal and a surge of portfolio inflows that followed the pound's float and the securing of massive external financing. In fact, the NFAs recorded their first surplus in more than two years in May. While Egypt has managed to improve its resilience to external shocks thanks to recent reforms and relatively large external reserves, the massive inflow of hot money has raised the risks related to capital outflows and roll over risks. On a positive note, it seems the foreign funds started to return to the local debt market in early January.

• Sectors include AI, financial services, digital technologies and logistics

The UAE and India plan to extend their 10-year Comprehensive Economic Partnership Agreement (CEPA) to eight new sectors to expand their annual bilateral trade beyond USD 100bn, according to Arabian Gulf Business Insight. These sectors include artificial intelligence, financial services, digital technologies and logistics.

The two countries signed the CEPA in 2022. The CEPA removes most duties on goods from both countries, with the aim to eventually eliminate all tariffs within 10 years. Additionally, under the CEPA, the UAE and India have agreed to transact in local currencies.

• Banking environment to remain positive in 2025

UAE banks recorded their highest profitability in 2024, with a sector average operating profit estimated at 3.4% of risk weighted assets, up from 3.2% in 2023, according to Fitch Ratings.

The improvement was driven by a still healthy net interest margin (NIM), coupled with reduced loan impairment charges (LICs) due to a limited inflow of new impaired exposures, and reasonable coverage of already crystallised Stage 3 loans at most banks.

The banking sector's average NIM was 3.1% in during the first nine months of 2024, down from a peak of 3.2% in 2023 due to lower interest rates in the first half of 2024 and market expectations of further cuts in 2025.

Meanwhile, LICs consumed only 7% of pre-impairment operating profit during the first nine months of 2024, compared with 15% in 2023. The agency expects the sector's average NIM to decline 10bps - 20bps in 2025 and LICs to rise moderately relative to 2024 averages.

The favourable operating environment also supports asset-quality metrics, with the banking sector's average Stage 3 loans ratio declining to 4.4% at end-Q3 2024 from 5.1% at end-2023 and 6% at end-2022. The sector's Stage 2 loans ratio also fell, to 4.9% at end-Q3 2024 from 5.7% at end-2023 and 6% at end-2022.

Fitch Ratings expects the banking sector's Stage 3 loans to decrease further in 2025 to 4%, barring macro-economic shocks.

• Inflow of USD 45mn during week
• Outflow of USD 3mn during all of January

Foreign investors purchased shares worth AED 1.7n (USD 461mn) on the Dubai Financial Market (DFM) during the week ended Jan 31 and sold shares worth AED 1.5bn (USD 416mn), according to DFM data. This means that net foreign investment was an inflow of AED 164mn (USD 45mn) during the week.

Data Download

The total value of equity deals was AED 3.2bn during the review week. Thus, the value of shares bought and sold by foreign investors accounted for 51% and 46% of the total value of shares traded during the week, respectively. Institutional investors bought and sold shares accounting for 61% and 69% of the total value of equity purchases during the week, with individual investors accounting for the balance.

Let's look at what happened during all of January. Foreign investors purchased shares worth AED 7.7bn (USD 2.1bn) and sold shares worth AED 7.7bn (USD 2.1bn). That means there was an outflow of AED 12mn (USD 3mn) during the January.

• CBN will suspend licenses of BDCs or authorized dealer banks that divert funds or violate guidelines
• BDCs must purchase weekly FX from only one preferred bank, capped at USD 25,000

The CBN announced on Wednesday (Feb 5) that it will suspend the licenses of any bureau de change (BDC) or authorized dealer banks that divert funds or violate the newly introduced foreign exchange trade guidelines. In a circular signed by the acting director of the trade and exchange department, W. J. Kanya, the CBN outlined specific rules for the purchase and sale of FX, including that BDCs must procure their weekly FX allocation from only one preferred bank. These guidelines allow BDCs temporary access to purchase foreign exchange from authorized dealer banks, subject to a weekly limit of USD 25,000. The CBN has also set a cap of USD 5,000 per transaction per BDC on foreign exchange purchases, with strict compliance requirements including daily reporting on purchases and sales. In the guidelines, BDCs are instructed to sell the foreign exchange to end-users with a margin of no more than 1% above the buying rate. The funds purchased can only be used for eligible transactions such as business travel allowance, personal travel allowance, overseas school fees and medical fees.

• NGN 1tn is allocated for solid minerals development, NGN 1.5tn for Bank of Agriculture recapitalization
• NGN 500bn is earmarked for Bank of Industry, NGN 1.5tn directed to key infrastructure projects
• An additional NGN 120bn is set for military aviation

President Bola Tinubu's decision to raise the 2025 budget from NGN 49.7tn to NGN 54.2tn is aimed at boosting funding for agriculture, industry and solid minerals. Budget minister Atiku Bagudu said the additional funds would be used to support the government's diversification program, enhancing economic resilience by investing in non-oil sectors. The proposed allocations include NGN 1tn for the ministry of solid minerals development to unlock potential in the solid minerals sector, NGN 1.5tn for the recapitalization of the Bank of Agriculture and NGN 500bn for the Bank of Industry. Other allocations include NGN 1.5tn for critical infrastructure projects and NGN 120bn for military aviation. The increases are driven by over NGN 4.5tn in additional revenue generated by federal agencies, including the Federal Inland Revenue Service, the Nigeria Customs Service and other government-owned enterprises.

While some analysts express concerns about the fiscal impact of the increased spending, others welcome the move. Critics like economist Marcel Okeke argue that the timing of the adjustment, less than two months before the new year, creates uncertainty. They suggest that a supplementary budget would have been more appropriate. Furthermore, concerns were raised about the potential inflationary effects, with experts like Paul Alaje noting that the increased expenditure might jeopardize the government's inflation target of 15%. Despite the criticism, many members of the national assembly expressed their support for the increase. The national assembly has pledged to pass the Appropriation Bill by the end of February.

• Refinery now supplies 2/3 of Nigeria's aviation fuel and nearly 50% of West Africa's demand
• Nigeria's reliance on jet fuel imports dropped from 13,000 b/d in 2023 to 5,000 b/d in 2024
• Oando Plc announced a reward of 1.28bn additional shares to shareholders, at NGN 97.6bn

The Dangote Refinery has expanded its presence in the petroleum sector by exporting two cargoes of aviation fuel to Saudi Aramco. The refinery now supplies at least two-thirds of Nigeria's aviation fuel and nearly half of West Africa's consumption. Since its launch, the Dangote Refinery has supplied JET A1 fuel to the domestic aviation industry and begun exporting to international markets, including Iceland and London. Its aviation fuel is now recommended for use at major airports, including Heathrow in the UK. The refinery's notable transactions include a first-time jet fuel purchase by British Petroleum and a low-sulfur straight-run fuel oil shipment to Singapore. Reports say Nigeria's reliance on jet fuel imports has decreased from 13,000 b/d in 2023 to 5,000 b/d in 2024.

Meanwhile, Oando Plc, Nigeria's leading integrated oil and gas company, announced it will reward shareholders by offering 1.28bn additional shares, valued at NGN 97.6bn. This move comes after a record revenue of NGN 4.1tn for 2024, marking a 45% growth from the previous year. Oando's stock dividend distribution is seen as a way to maintain financial stability while providing shareholders with the option to hold onto shares for future growth, rather than paying cash dividends. This announcement follows Oando's acquisition of Nigerian Agip Oil Company (NAOC) in Aug 2024.

Dangote refinery, FCCPC differ as NNPCL insists on fuel import (Punch)

Foreign investors eye Nigeria's lithium reserves amid rising global demand (Punch)

Crude production cost rises to $40/barrel - Report (Punch)

Oil operators' indebtedness to FG hits $6.1bn - NEITI (Punch)

N54tn budget: Experts divided over raise, FG adds N4.5tn agric, infrastructure funds (Punch)

History As Dangote Refinery Exports Two Cargoes Of Jet Fuel To Saudi Aramco (ThisDay)

Shettima: Nigeria Must Utilise Public Debt For Infrastructure Devt (ThisDay)

House Directs NCC To Investigate Illegal Linking Of NIN By Telecom Operators (ThisDay)

Excess government spending poses biggest challenge to monetary policy in Nigeria - MPC member (Nairametrics)

ICPC recovers N20 billion in 'ghost workers' pension deductions in 2024 (Nairametrics)

• NEITI reported that operators owe outstanding royalties, taxes and rents as of Aug 2024
• Sector revenues declined by 13.7% from USD 35.78bn in 2022 to USD 30.86bn in 2023
• Crude losses dropped from 36.6mn barrels in 2022 to 7.68mn barrels in 2023, due to improved security

The Nigeria Extractive Industries Transparency Initiative (NEITI) revealed that as of Aug 2024, oil and gas operators owe the federal government a total of USD 6.1bn in outstanding royalties, taxes, rents and other collectible revenues. NEITI advised the government to prioritize recovering these funds to support the 2025 budget. The agency's executive secretary Ogbonnaya Orji made this recommendation on Wednesday (Feb 5) while briefing the senate committee on public accounts on the findings of NEITI's industry reports covering the oil, gas and mining sectors for 2021, 2022 and 2023.

Despite some improvements in the oil and gas sector, NEITI reported a 13.7% decline in sector revenues, dropping from USD 35.78bn in 2022 to USD 30.86bn in 2023. However, crude oil losses fell significantly by 78%, from 36.6mn barrels in 2022 to 7.68mn barrels in 2023. Orji attributed this progress to enhanced pipeline surveillance by the office of the national security adviser, the armed forces and security agencies. He also emphasized the need for host communities to take greater ownership in preventing crude oil theft and cautioned against the indiscriminate dismissal of skilled workers, which could lead to increased vandalism of oil infrastructure.

NEITI's reports further highlighted a continued decline in the sector's contribution to GDP, falling from 7.24% in 2021 to 5.48% in 2023. Gas production also saw a slight drop from 2.52bn scf in 2022 to 2.49bn scf in 2023. Orji called for stronger alignment between Nigeria's gas commercialization policies, energy transition plans and the Climate Change Act to support clean energy development. Meanwhile, he expressed concern over the poor performance of the solid minerals sector, noting that it does not reflect the country's vast mineral resources.

• Tinubu requested the national assembly to increase the 2025 budget to NGN 54.2tn
• Additional revenue from key agencies such as FIRS and NCS enabled the increase
• FIRS added additional NGN 1.4tn, NCS generated NGN 1.2tn and others raised NGN 1.8tn

President Bola Tinubu has requested the national assembly to increase the 2025 budget by NGN 4.5tn, raising the total from NGN 49.7tn to NGN 54.2tn. This request was formally presented in a letter read by senate president Godswill Akpabio and deputy speaker Benjamin Kalu during plenary on Wednesday (Feb 5). Tinubu said the budget increase was made possible by the additional revenue generated by government agencies in 2024, including the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS). Specifically, FIRS contributed an extra NGN 1.4tn, NCS generated an additional NGN 1.2tn and other agencies raised NGN 1.8tn. This revenue surge is expected to support the country's financial needs and development agenda.

Initially presented in Dec 2024, the 2025 budget of NGN 47.9tn projected a budget deficit of 3.89% of GDP, amounting to approximately NGN 13tn. The federal government said the spending plan was focused on macroeconomic stability, poverty reduction and human capital development. However, the national assembly has already raised concerns about financial mismanagement, extravagant spending and unaccounted funds during budget defence sessions. Despite these issues, Tinubu said the additional revenue will help prioritize Nigeria's most pressing needs. The senate has been directed to swiftly consider the budget increase. The national assembly is expected to pass it by the end of February for the president's approval.

• Nevertheless BoI keeps almost all instrument ready to use
• We think they might be soon deactivated if relative stability is sustained

It has passed already a full year since the Bank of Israel (BoI) used any of the war related instruments it launched with the start of the war in October 2023 as it remained inactive in January 2025 too, according to a press release. The last time the BoI used any of them was in February 2024 when it provided the last disbursements under the cheap credit programme that ended in the same month. The other programmes have not been deactivated but we think that this is just a matter of time with the relative stabilization of the regional tensions after a ceasefire was reached with Hamas too. It is true that the latter is still fragile but we think the pressure for keeping it is rather high so the chances for the truce to hold slightly prevail the possibility of returning to full-scale military activities for now, in our opinion. Currently, the only support from the BoI is the credit deferral programme for specific groups of residents significantly affected by the war, which will be valid by the end of March 2025.

• Revaluation effects push reserves up, government transfers have negative impact
• Reserves account for 41.4% of GDP, cover 28.5 months of imports at the end of January

The foreign exchange reserves of the Bank of Israel (BoI) rose by 0.7% m/m or USD 1.5bn to USD 216.1bn at the end of January, partially offsetting the decline in the previous month, according to latest data. The reserves are by 2.0% or by USD 4.3bn lower than the record high of USD 220.4bn reached at the end of September 2024. The BoI explained that the expansion in January was due to revaluation effects that pushed up the reserves by USD 2.2bn. This was partially offset by government activities that resulted in outflows of USD 713mn in the period. The BoI does not report any other significant flows in the period.

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Forex reserves accounted for 41.4% of GDP, higher than 41.1% at the end of 2024 and 39.5% of GDP at the end of 2023, the BoI said in the press release. The reserves secured 28.5 months of imports at the end of January, slightly down from end-2024 but still higher than 26.7 at the end of 2023, according to our calculations.

Trump Returns as the Israeli Right's Savior, but His Gaza Riviera Promises Are Unrealistic (Haaretz)

The Fate of Trump's Gaza Bombshell Will Be Decided in Saudi Arabia (Haaretz)

Poll: Netanyahu Coalition Falls Short of Majority; Bennett-led Party May Take Most Seats (Haaretz)

[Defence minister] Katz instructs IDF to prepare plan for Gazans wishing to leave Gaza voluntarily "The plan will include exit options through land crossings as well as special arrangements for departure by sea and air," Katz said. (Jerusalem Post)

Defense Secretary Hegseth to Netanyahu: Destroying Hamas, Hezbollah is 'very important' to us (Jerusalem Post)

Netanyahu offers support to Trump's plan to displace Palestinians in Gaza (Jerusalem Post)

Economic uncertainty has decreased and the celebration of bank dividends may increase (Calcalist)

Trump's performance lifted the stock market - Tel Aviv 90 jumped 2.3% (Calcalist)

No transfer, ladder: The threat to Netanyahu from the right has been removed. Now all he has to do is recruit Haredim (TheMarker)

Ministry of Defense: We have completed a series of experiments in drone interception technologies (TheMarker)

The stock exchange closed higher; trading volume was exceptionally high - 3.3 billion shekels (TheMarker)

Turkey vs. Cyprus: Gas drilling in the Mediterranean could lead to a regional explosion (Globes)

• Ben-Gvir makes this statement after Trump's remarks about Gaza
• Ben-Gvir says there are plans but did not elaborate

The leader of the far-right party Otzma Yehudit, Itamar Ben-Gvir, said that the chances of his party to return to the government have increased. His comments followed US President Trump's statement that Palestinians living in Gaza should be relocated permanently and that the US should take over the Gaza Strip and reconstruct it. Ben-Gvir also said that it was now up to PM Netanyahu to move forward and if he does, Ben-Gvir would fully support him. He said that he would not elaborate any further but added that there were plans. We note that Otzma left the government after the ruling coalition approved the ceasefire deal with Hamas on Jan 17. Ben-Gvir said back then that he might return to the ruling if the war with Hamas starts again. We note that the ruling coalition still has majority (62 MKs in the 120-seat Knesset) despite the leaving of Otzma Yehudit (6 MKs). Another far-right party, Religious Zionism Party (7 MKs), is also threatening to leave if the fighting does not resume after phase one of the current agreement, which is to end by the end of February. This party is also delighted by Trump's statement about Gaza. Moreover, Trump also said that he would make a statement regarding sovereignty of Israel over the West Bank in the coming weeks and those both parties have long called for annexation of the West Bank. We also note that the opposition has said that the government will have a safety net of support to conclude the entire deal with Hamas.

• No base effects as private consumption in Jan 2024 was already higher than pre-war level
• VAT rate hike, price increases might have affected figures in January
• Prints come as positive surprise as private consumption was expected to moderate in early 2025

Credit card purchases rose by 11% y/y to NIS 46.4bn in January, according to data by the bank services company SHVA (Automated Banking Services) quoted by local business daily Calcalist. While previous months have been affected by a low base effect as a result of the start of the war in October 2023, this can not be said for January as private consumption was already adapted to the war situation by Jan 2024 and credit card spending in the that month was already exceeding pre-war levels. Overall, the increase in January came as a surprise because of the austerity measures of the government that came into effect as of the start of 2025 and were supposed to press down households' spending. Yet, one of the measures was a 1pp VAT rate hike that should have pushed up inflation as well as price increases for some food items but these are not expected to explain entirely the surge in consumption in January.

Looking at components, food purchases with credit cards rose by 8.5%, purchases at cafes and restaurants rose by 20% y/y, purchases of clothing and shoes were up by the relatively weak 2.5% y/y so there could be a real decrease in the consumption of those items. The purchases of electronic and electrical products also faced a small rise of 2.3% y/y and this could reflect advanced purchases due to the VAT rate hike as of Jan 1 and indeed, purchases of those products jumped by 13% y/y in December. The hotel industry is enjoying a steep recovery and related spending surged by 87% y/y in January as well as the leisure and entertainment spending, which rose by 40% y/y. Spending on flight tickets continued posting strong growth of 42.6% y/y in January but it moderated from more than 80% in the previous months and with the return of foreign air carriers, the improvement should continue narrowing in the following months.

Cash withdrawal from ATMs were by 8.6% higher y/y to NIS 5.3bn in the period.

• Statement comes ahead of King Abdullah's visit to Washington
• Monarch met with Palestinian President and expressed unwavering support to Palestinians

King Abdullah reaffirmed his firm stance that Jordan rejects any attempt to annex land or displace Palestinians from the Gaza Strip. His statement comes in response to US President Trump's announcement that Washington should take over the Gaza Strip and displace the entire Palestinian population in the enclave. Trump has also previously said that Egypt and Jordan must take in all the Palestinian refugees from the enclave temporarily or for the long-term. Those proposals have been firmly rejected by Egypt and Jordan.

Overall, the monarch made his recent statement as he met with visiting Palestinian President Abbas. During the meeting, King Abdullah said that Amman continues supporting the two-state solution, which envisions the establishment of an independent Palestinian state with East Jerusalem as its capital. He also called for an increased humanitarian aid in the enclave and stressed the importance of maintaining the ceasefire. We remind that the monarch is scheduled to travel to Washington next week, where he will meet with US President Trump.

Furthermore, observers fear that such plans could lead to domestic unrest in Jordan as most of the kingdom's population is of Palestinian origin. The country is already a home to nearly 2.4mn Palestinian refugees as many pro-Palestinian demonstrations were held in the country in 2024. Therefore, Jordanian officials fear that such plan would destabilize the country and create risks to the economic growth.

• Similarly, reserves decrease 4% m/m

The total reserve assets held by the Central Bank of Kuwait decreased 6% y/y to KWD 13.7bn (USD 45bn) at the end of December 2024. Similarly, official reserves decreased 4% m/m. We remind that total reserves assets reached a record high of USD 52.8bn in February 2023.

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Total reserve assets do not include external assets held by Kuwait Investment Authority, the country's sovereign wealth fund. The central bank has more than enough money to defend the currency peg. The dinar is pegged to a basket of currencies dominated by the US dollar. The central bank allows some flexibility compared with a traditional currency peg.

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• Ceasefire and election of new president have raised optimism among private sector firms
• Both output and new orders increased for first time in year and a half

Lebanon's Purchasing Managers' Index (PMI) increased to 50.6 points in January, up from 48.8 index points in the preceding month, according to the S&P Global PMI report published on Feb 5. The index registered its highest level since May 2013, signaling an expansion in the country's private sector economy for the first time in almost year-and-a-half. Overall, the increased optimism among private sector firms comes following the US and France-brokered Israel-Hezbollah ceasefire agreement and after the parliament elected a new president, ending a prolonged presidential crisis.

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Overall, both output and new orders posted above the neutral threshold of 50.0 points, indicating a renewed expansion of the business activity, according to the report. Notably, new orders have increased for the first time in year-and-a-half as sales went up in January supported by the influence of the Israel-Hamas ceasefire agreement. Moreover, the employment level remained mostly unchanged at the start of the year.

Looking forward, optimism among most private sector firms has been growing amid the election of a new president. Those developments have raised hopes that Lebanon could move towards an economic recovery programme.

• Strike protests controversial new strike law, pension reforms, rising living costs

The nationwide general strike, launched on Feb 5, 2025, by major unions (UMT, CDT, ODT, FSD), recorded an impressive 80% participation rate, the unions said in a statement. Key sectors like education, healthcare, public administration, and logistics experienced near-total shutdowns, with 100% participation reported in public education, healthcare (excluding emergency services), and government offices such as the Ministries of Agriculture and Finance. The strike was originally scheduled for Feb 5-6, but only Morocco Labour Union (UTC) said it will continue with the strike on the second day. The strike protests a controversial new strike law, pension reforms, rising living costs, and planned social security mergers, with unions condemning the government's economic policies and lack of social dialogue. The government has not come up with a comment on the strike, which is the first such massive labor action since 2016.

• Issue comprises two tranches - USD 75mn due in 2034, and USD 225 mn due in in 2054

The state phosphates and fertilizer giant OCP has successfully raised an additional USD 300mn through a tap issue linked to its May 2024 international bond issuance of USD 2bn, the company informed in a press release. Authorized by its Board of Directors and compliant with European Regulation (EU) 2017/1129, the issuance includes two tranches: USD 75mn maturing in 2034 with a 6.75% coupon and USD 225mn maturing in 2054 with a 7.50% coupon. The funds will support OCP's investment program and corporate activities. The bonds, listed on EURONEXT Dublin, carry ratings of BB+ (Fitch and S&P) and Baa3 (Moody's).

The OCP works on a USD 13bn investment plan for 2023-2027, focused on achieving carbon neutrality by 2040 through the use of renewable energy and desalinated water in its operations. The company's ambition is to increase fertilizer production from 12 to 20mn tons, produce 1mn tons of green ammonia, and generate 5 GW of clean energy by 2027.

• Morocco emerges as year-round destination, focusing on authentic experiences across all regions and seasons

Tourist arrivals surged 27% y/y in January to reach 1.2 mn visitors, Ministry of Tourism said in a press release. This milestone marks the first time Morocco has surpassed one million tourists in January, highlighting the effectiveness of recent strategic initiatives. Tourism Minister Fatim-Zahra Ammor emphasized that this growth solidifies Morocco's status as a year-round destination, focusing on authentic experiences across all regions and seasons.

Morocco achieved record-breaking tourism revenues exceeding MAD 110bn (USD 11bn) in 2024, with 17.4 million tourists visiting the country. Tourist arrivals have increased by 20% from 2023 and 35% from 2019. Tourism sector is expected to become a key driver of the economy in the next couple of years as Morocco braces to host the African Cup of Nations (AFCON) in 2025 and co-host the FIFA World Cup in 2030. The next government goal under the current tourism sector strategy is to achieve 26mn tourist arrivals by 2030.

Question:

I can see that official inflation in Morocco is very low, 0.7% yoy in Dec, but the unions are repeatedly referring to rising prices. Is there something wrong with the official data, or is just wage growth just that low?

Answer:

This issue largely stems from perception, following the inflation spike in 2022 and early 2023, particularly during Ramadan. Food prices saw a significant surge in early 2023, prompting government intervention to curb the rising costs of meat and vegetables. However, overall food price levels have remained higher than before.

According to the Q4 consumer confidence survey from the national statistics office, 97.5% of households reported price increases in 2024, and 83.3% expect further rises in 2025. With inflation expectations remaining elevated, trade unions have leveraged this narrative in their demands.

Regarding wage indexation, unions have accused the government of reneging on social dialogue agreements. While some wage increase agreements were reached last year, the government did not commit to a specific implementation timeframe. The most recent adjustment was a 5% increase in the guaranteed minimum wage for non-agricultural (SMIG) and agricultural (SMAG) workers, effective January 1, 2025. However, this measure is unlikely to have broader economic implications.The rising unemployment rate further exacerbates this situation.

The question was asked in relation to the following story: Five major trade unions prepare for nationwide strike on Feb 5-6

• Funds will support infrastructure development projects in line with Vision 2030 plan

Saudi-based asset manager Sedco Capital signed an agreement with Sumou Investment, a leading Saudi Arabian real estate enabler, to establish five real estate investment funds totaling more than SAR 8bn, according to local media reports. Overall, the funds aim to support major projects across the kingdom, including in Riyadh, Jeddah, Makkah, and Madinah. The projects mostly envision infrastructure development, mixed-use tower construction, and multi-purpose real estate developments in several cities. Furthermore, those projects are expected to support the government's Vision 2030 economic transformation plan.

Both sides praised the agreement as Sedco Capital's CEO Abdulwahab Abed said that the deal would help with the rapid developments in the Saudi real estate investment sector in line with Vision 2030. For his part, the CEO of Sumou Investment, Abdulrahman Al-Qahtani said that the firm remains committed on developing value-added real estate projects that create integrated residential and commercial communities.

• Inflation continues to decelerate due to services and clothing and footwear prices
• However, the central bank is concerned about the upside risks surrounding the outlook
• Food inflation eased only marginally to 7.1% y/y in January

Consumer price inflation eased further to 6.0% y/y in January from 6.2% y/y in the preceding month, according to data released by the stats office INS on Thursday (Feb 6). Inflation remained on a steady deceleration path since the peak in Feb 2023 at 10.4% y/y and is expected to average about 6.0-6.5% this year from an average rate of 7.0% in 2024. Nonetheless, the central bank cited the persisting upside inflationary risks surrounding the inflation outlook for its decision to maintain the base policy rate at 8.0% in February.

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In the breakdown for January, the disinflationary impact was accounted for by the lower contribution of transport, communication and leisure and culture prices. Clothing and footwear prices also helped the downside in January. Meanwhile, food inflation eased only marginally to 7.1% y/y in January from 7.2% y/y in the preceding month. The upside drivers for food inflation included lamb (22.7% y/y), fresh vegetable prices (18% y/y), dried fruit (15.1% y/y), fresh fruit (13.7% y/y) and poultry (11.2% y/y), the INS reported. On the other hand, edible oil recorded a drop of 13.4% y/y. The central bank indicated that the decline in olive oil prices over the course of last year was a main factor behind food disinflation.

The INS said that core inflation (excluding food and energy prices) dropped to 6.0% y/y in January from 6.3% y/y in December. This reflected 6.6% y/y increase in non-regulated product prices and 3.8% y/y increase in regulated prices. Among foods, non-regulated price inflation was reported at 8.0% y/y, while the regulated price inflation was only 1.3% y/y in January.

• Unlike her predecessor, newly appointed minister lacks appropriate background

President Kais Saied announced in a surprise statement on Wednesday (Feb 5) night that the finance minister Sihem Boughdiri Nemsia is dismissed and is replaced by Mechket Slama Khaldi who is a magistrate of the third grade judicial order. Nemsia served more than three years at the finance minister post since her appointment in Oct 2021. She was one of the longer-serving ministers in Saied's government. Meanwhile, the new minister Khaldi has served as the chair of the National Commission for Criminal Conciliation whose role is to recover the funds embezzled during the time of former dictator Ben Ali.

As with previous dismissals and reshuffles carried out by the president, it is not immediately clear why the finance minister was replaced. However, the reason for Khaldi's appointment is clearly not based on better competences as she lacks any background in finance and economics. According to local Kapitalis daily, the 2025 budget drafted by Nemsia has been criticised as not sufficiently revolutionary and lacking new vision.

• Inflation moderated to 7.0% in 2024 from 9.3% in 2023
• BCT says inflation outlook remains surrounded by upside risks
• CA deficit narrows to 1.7% of GDP in 2024 from 2.3% in 2023

The central bank announced its decision to hold the main policy rate unchanged at 8.0% at its board meeting on Wednesday (Feb 5), despite inflation remaining on a downward trend. The BCT said the inflation outlook remained surrounded with upside risks and it needs to continue to support the disinflation process. The main policy rate remained stable for 27 months since the BCT hiked it by 75bps in Dec 2022. The central bank implemented a cumulative rate hike of 175bps since May 2022 in response to the rise in inflationary pressures. The disinflation process has been slow and the materialisation of external geopolitical risks may prevent the start of an easing cycle anytime soon. The IMF and the World Bank have projected a moderation of inflation to 6.7% and 6.0% respectively this year.

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Inflation eased to 6.2% y/y in December from 6.6% in the preceding month and from 8.1% a year ago, the BCT noted. In the whole of 2024, inflation averaged 7.0% (in line with BCT forecasts), easing from 9.3% in 2023. Significantly, underlying pressures subsided with the core inflation measure (excluding fresh food and administered prices) down to 5.5% y/y in December from 5.8% in November and from 8.5% a year prior. The easing reflected mostly the lower inflation for unregulated processed food prices to 1.1% y/y in December from 2.4% in November and 14.5% a year prior. The central bank said the drop is due to the wide decline in international food prices for basic products such as olive oil which dropped by 9.8% y/y in December from -3.1% y/y in November. Meanwhile, fresh food inflation eased slightly in December but remained in the double digits at 12.6% y/y.

The central bank reported that the current account deficit narrowed to TND 2,748mn (USD 865mn), comprising 1.7% of GDP at the end of 2024 from TND 3,484mn (2.3% of GDP) at the end of 2023. The widening of the foreign trade deficit in 2024 was offset by the strong performance on the services (tourism) account and remittances inflows. Excluding the energy balance, the current account recorded a surplus of TND 8,122mn in 2024, widening from TND 6,182mn in 2023. The central bank said the improvement on the current account helped the recovery of net foreign reserves to TND 27,332mn at the end of 2024 (121 days of imports). The stock of reserves declined to TND 23,266mn (or 103 days of import) as of Feb 4 after the government drew on reserves to pay USD 1bn Eurobond maturity.

• Key areas of cooperation include groundwater exploration, wastewater treatment, and solar power projects
• Israel to assist in capacity building and technology transfer for Ethiopian water and energy development

Ethiopia and Israel signed an agreement on mutual cooperation in the water and energy sectors, aiming to enhance both countries' development efforts. The signing ceremony took place in Addis Ababa, where Ethiopia's Minister of Water and Energy, Habtamu Ittefa, and Israel's Minister of Energy and Infrastructure, Eli Cohen, formalized the partnership. Habtamu Ittefa identified groundwater exploration and extraction, as well as wastewater treatment technologies, as primary areas for collaboration. These sectors offer significant potential for joint efforts in addressing Ethiopia's water scarcity and improving wastewater management across the country. The partnership will also focus on the implementation of solar power generation projects, particularly aimed at rural areas to support off-grid electricity solutions. Under the new agreement, Ethiopia and Israel will collaborate on expanding renewable energy projects. A key component of the agreement is the push for solar power generation in rural areas, where energy access remains limited. This initiative aligns with Ethiopia's goal to increase renewable energy use and reduce reliance on conventional energy sources.

We note that WHO estimates that approximately 43% of Ethiopia's population lacks access to an improved water source, while UNICEF says that unsafe water supply and inadequate sanitation contribute to 60% to 80% of health problems in Ethiopia, leading to widespread communicable diseases. On the energy front, the WB estimates that despite recent progress such as the GERD, around 60mn Ethiopians remain without electricity access, highlighting the need for infrastructure expansion. This agreement will help address to a certain degree these legacy issues in these 2 key sectors.

Question:

Have the debt arrears pertaining to Gabon been fully cleared yet? If not, do we know what the total size of arrears position is now and what loans / external debt obligations these pertain too? Lastly, did the arrears accumulated on World Bank loans trigger any X-Default clauses and Events of default?

The question was asked in relation to the following story: Govt discloses XAF 17bn debt arrears amid World Bank suspension

Answer:

As of Feb, Gabon's arrears to the World Bank remain unresolved with XAF 17bn still outstanding. Media reports indicate that discussions between Gabonese authorities and the World Bank are ongoing, but no formal resolution has been announced. It's unclear whether arrears remain on other external debt obligations, as detailed loan information has not been publicly disclosed.

There's also no indication that the World Bank arrears triggered cross-default clauses or events of default. Following the suspension of disbursements, the government announced its commitment to clearing arrears "as quickly as possible" and noted that it had made significant debt payments, including XAF 1.21tn in November 2024.

Minority, not Speaker, halted vetting chaos probe - Bedzrah clarifies (Joy FM)

Current Gold-for-Oil programme will be discontinued - Energy Minister (Joy FM)

Former Hajj Board denies leaving over $5m debt (Citi Newsroom)

Mahama to reinstate Republic Day, introduce new Public Holiday for Eid (Citi Newsroom)

Government reduces 2025 Hajj fare and increases quota by 1,000 pilgrims (Daily Graphic)

Appointments Committee chaos: Speaker Bagbin lifts suspension of 4 MPs (Class FM)

• GHS says logistics company that supplies medicine was ordered to stop operations funded by USAID
• Regional health management hold emergency meeting, decides to hire same logistics company to continue supplies
• This is interim measures while long-term solution is found

The Ghana Health Service (GHS) warned that the suspension of US aid for 90 days announced recently by President Donald Trump would threaten medicine distribution, procurement and the public health programme. In a note to regional managers, the GHS said the USAID suspended support for the Global Procurement Supply Chain programme, including the Last Mile Distribution (LMD), and as a result the logistics company SkyNet Express was directed to cease operations for 90 days. This is expected to cause severe shortages of essential health commodities, weaken procurement and supply chain management, and impact public health programs, including maternal health, malaria treatment, and HIV/AIDS services in the northern regions of the country, the GHS said.

In response, the Regional Health Management Team (RHMT) held an emergency meeting with stakeholders to explore mitigation strategies and agreed that SkyNet Express would serve as an interim provider to temporarily handle LMD deliveries for the rest of 2025 while long-term solutions are sought. The GHS also called for urgent government intervention to bridge supply chain gaps and ensure continued access to critical health supplies.

Ghana received a total of USD 199mn US aid in 2024, according to US data. According to Ghanaian government sources, the USAID support provided last year was USD 150mn and the government applied for USD 138.7mn for this year, which will now not be available, at least not in full. The projects are in the areas such as healthcare, agriculture, education and governance. Healthcare accounts for the biggest chunk of the requested aid, USD 69.2mn, with the funds were to be used to fight malaria and HIV/AIDS, improve health security and nutrition, reduce maternal and child death, and strengthen family planning and reproductive health. The authorities have not addressed the issue officially but there have been calls for them to look for alternative sources of financing to sustain the progress achieved so far.

• Newly appointed minister Jinapor says programme is non-transparent and will be replaced
• He says this will not happen overnight as new system should be put in place
• Government plans to set up Gold Board to handle all gold purchases and use of proceeds

Newly appointed energy minister John Jinapor said he would end the gold-for-oil programme launched by the previous administration. Speaking to Joy FM, he said the programme was deeply flawed and non-transparent and would be replaced with a more accountable framework. However, he also underlined that a sudden shift in policy was not feasible as an alternative system should be put in place before the existing one is discontinued. He pointed to the fact that setting up the Gold Board, which was recently announced by finance minister Cassiel Ato Forson, needs to first be approved by the parliament. The Gold Board is planned to handle all gold purchases domestically, increase earnings and reduce smuggling. It will account for all revenue generated from gold and store these forex proceeds in a dedicated account to be then used to procure oil and other essential goods. While this new institution is set up, Jinapor said the government would try to improve the current system, reduce losses, and make it more transparent.

We note that the NDC had said in is election manifesto that it would probe the gold-for-oil and the gold purchase programmes of the previous government. Both initiatives aimed to boost reserves and support the cedi. The gold-for-oil programme was launched in late 2022 and envisaged selling the gold purchased under the gold purchase programme for forex and thus provide financing for fuel imports. In the 2024 budget statement, the then finance minister said that the imported fuel under the gold-for-oil programme accounted for 30% of total domestic fuel consumption. This helped support and stabilise the cedi and lower the price of diesel, and the government planned to expand the programme to cover 50% of national consumption. , it was not clear how the programme performed in 2024.

• Result so far suggests full-season target of 650,000 tonnes is within reach
• Last season's production was affected by dry weather, pests and diseases, and smuggling

Cocoa arrivals (graded and sealed) increased to 542,223 tonnes in the period between Sep 11, when the season started and Jan 30, Reuters reported citing a source from the cocoa regulator Cocobod. The arrivals thus increased by more than 48% from 366,075 as of Dec 12. The result so far suggests that the regulator's full-season target of 650,000 tonnes will be met. It also means that the pessimistic ICCO projections of up to 500,000 tonnes will not be realised. Cocoa output will mark an increase from 480,000 tonnes in 2023/24, when arrivals were affected by the dry weather, pests and diseases, as well as smuggling and illegal mining. Cocobod targets an increase in cocoa arrivals to 650,000 tonnes in 2024/25 but a report in October 2024 suggested the ICCO expects the crop at up to 500,000 tonnes as a result of the continued illegal mining and the prevalence of swollen shoot diseases affecting about 40% of plantations.

• Nominations include deputies at key ministries of finance, defence, justice, agriculture
• Nominations are subject to approval by parliament
• Mahama has already 42 ministers approved, to name five more deputy ministers

President John Mahama nominated his first 13 deputy ministers, and they are now subject to vetting and approval by parliament. The nominations include deputy ministers for finance; interior; defence; justice; food and agriculture; works, housing and water resources; roads and highways; education; local government; lands and natural resources; trade, agribusiness and industry; tourism; and energy and green transition.

The naming of deputy ministers follows the recent approval of all 42 ministers nominated by Mahama. The 42 appointments include 23 sector ministers, 3 ministers of state (who are appointed as part the office of the president) and 16 regional ministers. The president has said he will stick to his promise of no more than 60 ministers in total (incl. deputy ministers) which means some ministers will not have deputies. With the nomination of 13 deputies now, Mahama is left with five more he can name.

• Meeting to be held on Feb 8 in Yopougon, a large commune and a suburb of Abidjan
• Billon is the main opponent of PDCI leader Thiam for the presidential ticket of the party

The supporters of opposition PDCI's prominent member Jean Louis Billon have said they would hold a big meeting on Feb 8 in Yopougon to express their support for his presidential candidacy. Billion has been backed by some PDCI members and civil society associations who prefer him as the party's presidential candidate to the party leader Tidjane Thiam. The issue has divided the party. The initiative in support of Billon comes as some have raised question about the eligibility of Thiam who is of French-Ivorian nationality. It will be held in Yopougon which is the biggest commune in the country where the voter turnout was just 27% in the local elections in 2023, which Billon's supporters see as an opportunity to attract voters. The final decision on who will be the PDCI's candidate for the October election will be determined at congress of the party the date for which is yet to be determined.

• Funds to be used to finance his plan for run for president
• Gbagbo is not eligible to run because of previous prison sentence
• Still, his party PPA-CI has launched efforts to restore his civil rights

Former president Laurent Gbagbo launched a fundraising campaign to support his candidacy for the 2025 presidential election on the website www.mondonpourgbagbo.com. The funds to be collected will be used to finance Gbagbo's presidential bid although he has been stripped of his civil rights and is not allowed to run for office or even vote. This is because of his 20-year prison sentence handed in 2018 for his involvement in the robbery of the BCEAO in 2011. He was later pardoned but not a by President Alassane Ouattara and thus remained stripped of his civil rights. His party African Peoples Party-Côte d'Ivoire (PPA-CI) has named Gbagbo their candidate and has insisted he should be allowed to run in 2025. The party has been in talks with different institutions, but there has been no resolution as of yet. The issue could potentially create tensions ahead of the presidential vote which should be held this October.

• Total social contributions rise by 2% while paid benefits decrease by 15.5%
• Total investment assets grow to XOF 1.4tn at end-2024
• Investment income reaches 33% of paid benefits, govt target to raise this to 100% by 2050

The National Social Insurance Fund or Caisse Nationale de Prevoyance Sociale (CNPS) announced a surplus XOF 225bn (USD 357mn) for 2024, the Fund's general director Denis Charles Kouassi. The surplus is 12.5% higher than the XOF 200bn recorded in 2023. The Fund collected XOF 466bn social contributions in 2024, up 2% from XOF 457bn in 2023, and paid XOF 169bn benefits, down 15.5% from XOF 200bn in 2023. The total asset portfolio of CNPS, which includes monetary, financial, real estate and land assets, reached XOF 1,438bn at end-2024, Kouassi said. Investment income was XOF 56bn in 2024, covering 33% of paid benefits, and the CNPS targets to increase this to 50% by 2030 and 100% by 2050. Kouassi said that several reforms are planned to include an unemployment insurance, a supplementary pension scheme, and a housing and retirement programme that would allow beneficiaries to obtain homes from the age of 60.

• Sees two factors potentially exerting pressure on shilling - decline in remittance, or rise in oil prices
• None of these expected to materialize in 2025

CBK governor Thugge expressed confidence that the recent freeze on US foreign aid will have limited impact on the country's currency, the shilling, and it will remain stable. Thugge was responding to a question during the post MPC press conference held earlier today. Thugge further clarified that he sees two factors, potentially putting the shilling under pressure - a significant drop in diaspora remittances or a sharp increase in oil prices - but underlined that none of these scenarios is expected to materialize in 2025. On the contrary, CBK sees remittances increasing by 7% y/y to record USD 5.27bn with the slower growth reflecting a very high base (growth stood at 22% y/y in 2024).

Even in case of negative developments, CBK's forex reserves are currently strong, at USD 9.1bn, providing a solid buffer against any short-term shocks in the forex market, Thugge noted. The shilling has held steady at around KES 129-130 vis-à-vis the USD since June 2024.

• It has raised concerns with proposals for shifting bill and bond issuance to debt management office, creation of new securities trading platform
• Final debt strategy document should be submitted to Parliament mid-February

CBK governor Thugge at the post MPC press conference said he expects that the Treasury will revise its draft debt management strategy, which proposes shifting the primary responsibility of issuing government debt from the CBK to the Public Debt Management Office (PDMO). Thugge emphasized the good cooperation between the two entities, and noted that the final draft should be submitted to Parliament mid-February.

We recall in the document, the govt announced plan to consolidate the domestic borrowing process under PDMO, allowing it to issue government securities directly, which the Treasury believes would enhance accountability and streamline debt issuance. This would also reduce CBK's involvement, which is currently responsible for the primary T-bill and bond aucitons on behalf of the government. CBK has raised concerns about the potential implications of the strategy, especially regarding market dynamics. It is also opposed to the supported by the Treasury creation of a new trading platform for government securities, the East African Bond Exchange (EABX), as it believes this could lead to pricing distortions with multiple platforms for bond trading.

• Reflecting improvement in industry and services, stable performance of agriculture
• Full year growth seen picking up to 5.4%

The Central Bank projected growth will reach 5.0% y/y in Q1, picking up from an estimated 4.8% in Q4 2024, and unchanged vs. the same quarter a year earlier, governor Thugge said during the post MPC meeting press conference. Growth will be supported by improvement in industrial activities and stable performance of the agriculture sector, Thugge said.

CBK projects the full year growth increasing to 5.4% in 2025, up from 4.6% in 2024. Again, stable performance of agriculture and services, along with stronger performance of the construction sector, underpinned by more development spending, should support growth going forward, Thugge said.

Thugge further re-iterated projections, released in the MPC statement on Wednesday, of stable CA balance going forward, which should be fully financed by capital and financial inflows, which along with IMF's disbursement, should support a further build up of reserves.

Click here for our comprehensive database of macro forecasts.

• Recent reports questioned the future of the mission
• Its discontinuation would be a setback for president Ruto

Kenya has assured that the pause in US funding to the Multinational Security Support (MSS) mission in Haiti will not significantly affect the operation, local media reported citing govt officials. Notably, foreign affairs deputy minister Korir Sing'oei stated that the mission remains a priority, despite the temporary suspension of USD 15mn contribution to the UN Trust Fund that supports the mission. He emphasized that other international donors, including Canada, France, and Italy, had already pledged a total of USD 110mn, ensuring the continuation of the mission through September 2025.

The clarification came after recent reports questioned the future of the mission. We recall a scenario in which the mission is discontinued would be a setback for president Ruto, who has been a vocal advocate for the country's engagement in Haiti despite criticism, both domestically and abroad.

• Decision follows the scrapping of Adani deals under public pressure
• World Bank has cautioned govt against unsolicited PPP deals

The treasury has launched a tender for advisory services to support the reassessment of the public-private partnership (PPP) framework, according to a report by the local Business Daily. The move comes following the scrapping of govt's deals with Adani in November over public concerns with job losses and transparency. Kenya's multilateral partners, including the World Bank, have since warned against unsolicited PPP agreements, arguing they can undermine public trust and lead to social unrest.

With limited fiscal space due to high public wage expenditures and debt payments, Kenya has increasingly relied on PPPs to finance infrastructure projects. However, concerns have been raised about the opacity of privately initiated deals, such as those involving Adani, which were submitted directly to the ministries of transport and energy. The current PPP portfolio includes five projects worth USD 1bn under implementation, such as the Nairobi Expressway and the Menengai Geothermal Power Plant, and 32 projects at earlier stages.

• Govt has been working to develop regulatory framework for sustainable financing, carbon trading
• Country's credit market has been already active with KenGen recently securing USD 32mn from sale of emission reduction

The government plans to set limits on the volume of carbon credits that can be traded in the country, aiming to align carbon market transactions with national greenhouse gas reduction targets, according to a report by the local Business Daily, citing new draft regulations from the Ministry of Environment, currently undergoing public participation. Under the draft rules, the National Climate Change Council will determine a carbon budget for trading within each nationally determined contribution (NDC) implementation period.

The move is part of govt's efforts to develop a regulatory framework for sustainable financing and carbon credit markets. The Capital Markets Authority, working with regional regulators, is working on guidelines for sustainability-linked securities and carbon credit trading. Kenya has yet to establish a formal carbon exchange, which would serve as a regulated marketplace for buying and selling carbon credits.

Despite the regulatory gaps, Kenya's carbon credit market is already active. KenGen, the state electricity producer, recently secured USD 32mn from the sale of 4.6mn tonnes of certified emission reductions. Additionally, the government is in talks with a consultancy firm on a USD 3.5mn agreement to develop a carbon trading platform linked to its 15bn tree-planting initiative.

Banks face CBK fines for not cutting lending rates (Business Daily)

Only 3.1m Kenyans have taken means test for subsidised SHIF scheme (Business Daily)

Kenya puts on brave face after Trump's Haiti budget cuts (Nation)

Ouster petition: JSC now seeks Koome's reply (The Standard)

Why US Secretary of State will not attend G20 summit in South Africa (The Star)

Low client demand slowed January industry production - survey Most businesses kept staffing levels unchanged. (The Star)

Kenya strengthens efforts to close Malaria funding gap (Kenya Broadcasting Corporation)

Ekuru Aukot: If the gov't could punish those looting public money, Kenya would not need USAID (Citizen)

Mudavadi Blasts Kalonzo for Dragging Ruto Into DRC Crisis (Kenyans.co.ke)

Mbadi Reveals Plans for New IMF Loan (Kenyans.co.ke)

• Also cuts cash reserve ration by 100bps to 3.25% to support activity and encourage lower lending rates
• Cautions banks of penalties in case benefits are not passed to consumers
• Inflation remains below the mid-point of target range, expected to stay there in near term
• Banking sector remains stable and resilient
• Private sector lending contracts y/y in December

The Monetary Policy Committee (MPC) opted to lower the benchmark rate, the CBR, by another 50bps to 10.75% at its rate-setting meeting held on Wednesday (5 February), it said in a statement following the meeting. The MPC also reduced the Cash Reserve Ratio by 100bps to 3.25%, aiming to support economic activity and encourage banks to lower lending rates. While the rate cut had been anticipated, the CRR revision was a new move, signaling a stronger push to boost liquidity and private sector credit growth.

Data Download

In addition, in a sharper than its usual tone, the MPC noted that despite previous rate cuts, banks have been slow to lower lending rates. It therefore announced on-site inspections to ensure banks are implementing the Risk-Based Credit Pricing Model (RBCPM) and warned of penalties for institutions failing to pass on the benefits of reduced borrowing costs. The next MPC meeting is set to take place in April.

Explaining its decision, the MPC noted the improved global growth outlook and the low inflation in the country. Despite edging marginally up, inflation remained below the mid-point of government's target range (5.0%) for an eighth month in a row, while core inflation declined in January. Inflation is expected to remain subdued in the short term supported by low and stable core inflation, stable exchange rate, and easing energy prices. At the same time growth slowed by 1pp to 4.6% in 2024 from 5.6% in 2023, and is projected to pick up going forward, reaching 5.4% in 2025.

On the external front, the CA balance is seen remaining stable at about 3.8% of GDP in 2025, only marginally up from estimated 3.7% in 2024. Furthermore, in 2024 the deficit was fully financed by capital and financial inflows, resulting in a BoP surplus of USD 1.5bn, which, along with IMF's disbursement, supported a build up of reserves to the tune of USD 2.7bn. The trend is expected to continue this year, with CBK projecting a BOP surplus of USD 591mn, and further accumulation of reserves amounting to USD 1.5bn.

The banking sector remains resilient, the MPC noted further, with strong liquidity and capital adequacy ratios. The gross NPLs / gross loans ratio remained elevated, albeit inching down to 16.4% in December from 16.5% in October and 16.7% in August. Decreases were observed across several sectors, including manufacturing, trade, building and constriction, real estate, and energy and water. Furthermore, banks continued to make adequate provisioning for bad loans, CBK said.

As to private lending, in December it contracted by 1.4% y/y. This was partly on the back of exchange rate changes affecting foreign currency loans, and a decrease in demand due to high lending interest rates. Loans denominated in local currency grew by 2.1% y/y, while foreign currency loans, which make up roughly 26% of total loans, decreased by 11.4% y/y in December.

• Statement marks first official indication that the government may be leaning toward another funded program
• Previously, govt officials had indicated the govt had been weighing a shift away from IMF dependency
• Mbadi further says USD 1.5bn loan from UAE is still on the table, but govt also considering other options, including Eurobond
• Govt must reallocate domestic resources to mitigate the impact of US aid freeze

Kenya has begun discussions with the IMF to secure a new lending program, finmin John Mbadi said cited by Reuters. Reportedly, the government hopes the talks may be completed before the current arrangement expires in April, Mbadi said, adding the country needs the Fund's continued support.

Mbadi further noted that while a USD 1.5bn commercial loan from the United Arab Emirates, at an 8.25% interest rate, remains an option to finance the current fiscal year's budget, the government is also exploring other sources, including issuing a Eurobond. Meanwhile, the recent freeze on US foreign aid presents an additional challenge, as the country lacks the fiscal capacity to replace the lost funding and can only reallocate domestic resources to mitigate the impact, Mbadi said. He added the govt hoped that Washington might reconsider its decision.

We note Mbadi's remarks align with earlier reports on Kenya's future engagement with the IMF, though it marks the first official indication that the government may be leaning toward another funded program, possibly influenced by the US aid freeze. Previously, a senior presidential advisor suggested that the administration was considering reducing its reliance on IMF support.

We recall end-October the IMF Board approved the seventh and eighth reviews under the country's EFF/ECF program and the second review under its RSF program, endorsing a much awaited USD 606mn combined tranche. The ninth EFF/ECF review should unlock the disbursement of USD 490mn under that arrangement before April 2025 when the program expires. With regards to the RSF, there are USD 360mn remaining to be disbursed, pegged to 6 reform measures yet to be completed, however the continuation of that program is pegged to the country's continued engagement with the Fund under another facility. It remains to be seen whether this will be a precautionary arrangement or a funded program. The country has also requested the IMF to carry out assessment of corruption and governance issues.

• Dakar-Tambacounda corridor linking the country with Mali

To prioritize Senegal's national railway company, SN-CFS, has announced plans to build 2,000 km of new standard-gauge railway lines as part of the country's long-term infrastructure strategy, Senegal 2050, according to local news reports. The initiative aims to modernize the transport network and enhance regional connectivity.

The first phase of the project will prioritize the Dakar-Tambacounda corridor, a key trade route linking Senegal to Mali. SN-CFS Director General Ibrahima Ba said that feasibility studies are being updated to accelerate implementation. The expansion is expected to improve commercial transport, address infrastructure gaps, and boost economic integration in the region.

• Govt to reassess funding sources towards reducing reliance on foreign assistance

The suspension of USAID funding by the United States is expected to have a significant impact on Senegal's education sector, particularly on programs promoting national languages in schools, education minister Moustapha Guirassy said, cited by the local media. Many initiatives in this area are heavily dependent on USAID support, Guirassy said. While stressing the urgency of reassessing funding sources to reduce reliance on foreign assistance, Guirassy also acknowledged continued support from other partners, including the World Bank.

Earlier this week PM Ousmane Sonko downplayed the immediate impact of the US aid freeze while acknowledging the scale of the funding involved, citing a blocked USD 500mn program. He emphasized the need for Senegal to strengthen its financial independence by improving domestic resource mobilization. The government sees this moment as an opportunity to advance economic self-sufficiency and reduce vulnerability to external funding decisions, Sonko said.

• Program aims to address funding challenges hindering business growth
• It involves collaboration with local banks, single financing window to simplify funding access

The authorities are aiming to mobilize XOF 1,000bn in financing to support SMEs and SMIs (small and medium-sized industries), local media reported citing announcements made during a preparatory meeting for a SME Forum, scheduled for 18-20 February. The initiative, led by the state secretariat for SME-SMI Development and the Agency for the Development and Supervision of SMEs (ADEPME), aims to address financing challenges that hinder business growth, bringing together public administration structures and financial institutions.

The program, launched in 2022, last year targeted XOF 600bn in financing. The target is expected to increase to XOF 3,000bn by 2028, which the authorities see as being within reach, backed by nine strategic reforms. The program involves collaboration with local banks, and about 20 financial institutions were said to have already expressed commitment. A single financing window has reportedly been established to simplify funding access and provide standardized financial solutions. Authorities see this initiative as a major step toward strengthening competitiveness, fostering innovation, and creating jobs in Senegal's SME sector.

• Current rural electrification rate reported at 66%
• PM Sonko launches XOF 64bn water supply project
• Efforts align with Vision 2050, aiming to reduce inequalities and improve living

Senegal is working to expand rural electrification as over 8,400 localities remain without access to electricity, the Rural Electrification Agency (ASER) said, cited by the local media. The rural electrification rate has reportedly reached close to 66% with an estimated 86% access level, while 5,660 localities are currently in the process of being electrified.

To address the shortfall, ASER is advocating for closer collaboration among stakeholders to improve project efficiency and remove external obstacles. The agency is also prioritizing local industrialization, aiming to produce essential electrical infrastructure components, such as line accessories and transformers, within Senegal. Partnerships with institutions like the Sovereign Strategic Investment Fund (FONSIS) and the National Bank for Economic Development (BNDE) are underway to mobilize domestic financing for expanding the rural electricity network.

In the meantime, the government has also launched the second phase of a major water supply project, aiming to provide clean drinking water to 2mn rural residents. Speaking at the launch, PM Sonko emphasized the importance of equity in access to water between urban and rural populations. The XOF 64bn project is expected to install 85 forages, 89 water towers, and expand 1,450 km of pipelines, ensuring broader coverage outside the capital Dakar. The project aligns with Senegal's 2050 National Transformation Agenda and broader commitments to sustainable development, aiming to reduce inequalities and improve living conditions in underserved regions.

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Question:

Do you have data on USAID funding by country for SSA names? Which would be the most vulnerable to it ending?

The question was asked in relation to the following story: Govt plans development spending cuts to sustain programmes after US aid freeze

Answer:

The full dataset on US foreign assistance by country and agency (incl. USAID) may be downloaded here. Looking at the total disbursements in 2024 (partial data), the top five beneficiaries in absolute terms among the countries we cover are:

• Ethiopia (USD 1.22bn)
• Nigeria (USD 782.7mn)
• Kenya (USD 647.2mn)
• Uganda (USD 440.8mn)
• Zambia (USD 380.6mn)

Below is a table with the US foreign assistance disbursements for all countries we cover, including also the GDP ratios.

It is evident that some countries are more dependent on US aid than others. In those that receive relatedly little financing (in terms of ratio to GDP), such as Gabon, Angola, and South Africa, there is not much talk/concern about it. For example, South Africa's President Cyril Ramaphosa said that the country receives funds under PEPFAR (USAID is one of the implementing agencies of this programme), which comprise just 17% of South Africa's HIV/AIDS programme, with the government providing the majority of the financing. Hence, there are no significant worries that the program is overly reliant on US aid.

As to others, a freeze in U.S. aid would significantly impact humanitarian and health programs in these countries, leaving governments struggling to secure alternative financing. Ethiopia appears particularly vulnerable due to its multiple humanitarian crises, including past and ongoing conflicts, drought, and floods, as well as very limited financing options amid debt restructuring efforts.

Consequently, in most of them, the governments have been working to assess the impact and explore alternative funding sources to mitigate the impact of the aid freeze. The Kenyan government for example said it will reallocate funds from development projects to sustain key programmes, while the health ministry said it is "actively engaging with other development partners, international agencies, and private sector stakeholders to secure alternative resources and fill gaps in the supply of essential medicines". In Zambia, the government said it is engaging with the US government to clarify the specifics of the health support package and ensure that the already ordered medicines will not be affected by the aid suspension. In Uganda, President Yoweri Museveni met the US envoy shortly after the measure was announced and legislators have called for urgent response, but the government is yet to make its plans clear going forward. In Nigeria, a multi-ministerial committee was set up this week to develop a sustainability plan for essential health programs.

Other governments have not announced concrete plans to address the issue, but it is possibly because of the lack of clarity on the future of US international aid. While the USAID might be dismantled, some aid is expected to remain in place but how much and under which programmes is yet unclear as the Trump administration is yet to clarify their future plans.

You may access our latest coverage of this topic in specific countries through the following links:

• Ghana
• Uganda
• Zambia
• Ethiopia
• Nigeria
• Kenya

• Health minister says two more positive cases identified and are hospitalised
• One person died of Ebola in first outbreak since 2023
• Government has started vaccination campaign with doses donated by WHO

Health minister Ruth Aceng reassured the public that the Ebola outbreak announced last week in eastern Uganda is under control as the government has stepped up measures with the support of development partners, in particular the World Health Organization. One person, who was the first identified Ebola case, died, and over 200 of his contacts were traced and isolated, and two of them tested positive and were hospitalised. Aceng assured that there are no more infections detected, and the spread is contained, adding that Uganda is safe for international guests and tourists. She voiced confidence that with collective efforts the outbreak would end in a few months. As part of response efforts, authorities launched a vaccination campaign earlier this week, prioritizing the family of the diseased patient and health workers at Mulago National Referral Hospital and Mbale Regional Referral Hospital. The WHO provided USD 1mn support to Uganda and donated 2,160 doses of the Ebola trial vaccine to Uganda to evaluate the efficacy of the vaccine in combating the virus.

The last Ebola outbreak in the country started in October 2022, leading the government to declare lockdown in the two most affected districts. The outbreak ended in January 2023 with a total of 164 cases (of which 142 confirmed) and 55 fatalities. The restrictions affected economic activity, especially in the areas where there were restrictions, and although no estimate has been made about the size of the economic impact, it was one of the factors behind the slowdown in Uganda's GDP growth from 8.8% y/y in Q3 2022 to 4.3% y/y in Q4 2022 and 2.2% in Q1 2023.

• ZMW78.6bn to be borrowed in 2025 approximately 11.97% of GDP, with annual increases
• Continued focus on dismantling domestic arrears through debt swaps and PPPs
• Domestic debt fell marginally to ZMW 225.3bn at end-September while external debt increased to USD 15.33bn at end-December 2024, up 5.2% y/y

Government projected a total domestic borrowing of ZMW280.7bn from 2025 to 2027 to bridge the fiscal gap between revenues and expenditures. According to the Ministry of Finance and National Planning's Medium-Term Budget Plan paper (2025-2027), ZMW78.6bn will be borrowed in 2025, ZMW97.6bn in 2026, and ZMW104.5bn in 2027. In addition to the borrowing, domestic financing is projected at ZMW15.4bn for 2025, ZMW16.0bn for 2026, and ZMW18.1bn for 2027. This funding is intended to complement the borrowing strategy and help meet the country's development objectives. The government has reiterated its commitment to managing domestic public debt responsibly. As part of the Dismantling of Domestic Arrears Strategy (2022-2026), the government plans to continue using debt swaps, securitisation, and other mechanisms to reduce public debt. Government further stated that Public-Private Partnerships (PPPs) will remain a key financing tool for the government's developmental projects over the medium term. The Ministry of Finance plans to strengthen public institutions' ability to efficiently design and implement PPP projects, ensuring value for money and the success of feasible projects.

We note that the stock of domestic government debt declined by 0.09% q/q to ZMW 225.3bn (USD 8.51bn) at end-September, according to finance ministry. The decline was due to the shift in issuance method of government bonds from a discount to a par value basis, which impacted the recorded stock position. External debt data, which is reported quarterly, showed that total government external liabilities increased to USD 15.3bn at end-December 2024, up 5.2% y/y from USD 14.6bn a year earlier. The rise reflected continued reliance on multilateral financing despite the debt service standstill on commercial loans since 2020. Given this, Zambia's total public debt stood at around 107.3%% of GDP in our estimates. However, this figure excludes SOE debt, which amounted to USD 1.4bn (about 6.2% of GDP) at end-September 2024.

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Tropical storm to reduce rainfall (Zambia Daily Mail)

• Government through Zambia Correctional Service (ZCS) are constructing the milling plant
• 200 tonnes per day capacity plant aims to reduce mealie meal prices and will process over 8,000 25kg bags of mealie meal daily once operational

The Zambia Correctional Service (ZCS) milling plant in Petauke, Eastern Province, is on track to be completed by the end of 2025, according to Minister of Home Affairs and Internal Security, Jack Mwiimbu. He confirmed that USD 19.5mn is being invested to complete the project, which will have a capacity to produce 200 tonnes of mealie meal daily, meeting the needs of the local market and stabilizing prices. After a series of setbacks in 2022, the construction process has now resumed, with Saltech Enterprises Limited, the contractor, fully equipped to finish the plant by year-end. The milling plant is expected to produce over 8,000 25kg bags of mealie meal daily, providing a steady supply of affordable mealie meal in Petauke and surrounding areas. Mwiimbu reiterated that this project is a key part of the government's efforts to ease the high cost of mealie meal in the region. The facility's completion is in line with President Hakainde Hichilema's commitment to deliver on promises made during his first term. Additionally, five staff houses will be built on-site, with USD 6.5mn already disbursed to kick-start the project.

Zambia's inflation rate remained steady at 16.7% y/y in January 2025, unchanged from December 2024, according to the Zambia Statistics Agency. Despite stability in the headline rate, food inflation increased to 19.2% y/y from 18.6% y/y driven mostly by continued rise in prices of staple foods such as mealie meal due to the drought. This milling plant will be key to stabilizing local maize meal food prices.

• Nowcasting technology aims to improve short-term, localized weather forecasts using advanced weather forecasting technology for disaster preparedness
• New system key to enhancing weather predictability in sectors like agriculture, water resource management, and disaster response

The government officially launched the Weather and Climate Information Services Early Warning (WISER) Testbed II and Nowcasting Weather Forecast system to provide timely and accurate weather forecasts to improve the country's preparedness for extreme weather events such as floods, droughts, and severe storms. Acting Permanent Secretary for the Ministry of Green Economy and Environment, Ranford Simumbwe, emphasized that nowcasting technology enhances Zambia's capacity to deliver real-time, localized weather information and benefit various sectors, including agriculture, where farmers can make informed planting and harvesting decisions, and water resource management, enabling efficient allocation and conservation. The system will also aid disaster preparedness and response, especially for extreme weather events such as flash floods and prolonged droughts. Department of Meteorology Director, Edson Nkonde, highlighted that the launch of nowcasting is a significant step in modernizing Zambia's early warning systems and ensuring timely, effective responses to climate challenges.

We note that prior to the launch of the nowcasting weather forecast system, Zambia relied on traditional meteorological methods, which often provided generalized and less timely weather information. This enhancement is particularly beneficial for sectors like agriculture, where timely and precise weather information enables farmers to make informed decisions about planting and harvesting, thereby mitigating the adverse effects of droughts and other climate-related challenges. We believe that Zambia could have been better prepared for the current drought situation if the country had access to advanced weather prediction models.