• Transit volume fell 54% y/y in Jan-Oct, regional insecurity escalates
• We estimate Egypt lost USD 3.7bn Suez revenue to insecurity during Jan-Oct

The number of ships - consisting of tankers and cargo ships - passing through the Suez Canal fell by marginal 1% m/m to 886 in October following a sharp 12% m/m drop in September, according to IMF's PortWatch platform. It should be noted that October has 31 days, so adjusting for the days of the month, the m/m drop would have been closer to 4% m/m. In y/y terms, the number of ships fell by sharp 63% and the 7-day moving average fell to 30 ships on October 31 from 74 recorded on the same day of 2023. In cumulative terms, the number of ships fell by a strong 54% y/y to 10.5k in Jan-Oct. According to our estimates, Egypt lost USD 3.7bn in Suez Canal revenues during the first ten months of the year. Considering the sharp deterioration of the regional security and the growing possibility of a direct confrontation between Israel and Iran, we don't expect Suez Canal revenues to recover this year.

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Houthi attacks prompted shipping companies to re-route traffic away from the Red Sea, which accounts for 11% of global maritime trade volume estimated at USD 1tn annually. According to the PortWatch platform, the top three industries traded through this sea corridor include petroleum, chemical and non-metallic mineral products, mining and quarrying, and agriculture. Transit calls through the Bab el-Mandeb Strait have also fallen since October 2023, reflecting the security challenges.

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Question:

I have an issue with Egypt's monthly reports published by the MoF - the reports for May, June, and July only show the July-May FY24 numbers. Do you know where or if there are reports for July-June FY24 and July of FY25?

The question was asked in relation to the following story: Budget deficit falls by 21% y/y to EGP 362bn in Jul-Sep, equals -2.1% of GDP

Answer:

We have the same issues, and our experience shows that you will not find the actual July 2023 - June 2024 figures in these reports this year. We don't know why they don't publish them, even if these were provisional data. What usually happens is that the finance minister will give the main FY 2023/24 figures (e.g., budget deficit/GDP, primary balance, revenue and expenditure) at a press conference in July. Meanwhile, the finance ministry will keep publishing the monthly reports basically omitting the actual 2023/24 figures until they publish them at some point during the next calendar year. The revision mostly reflects the nominal GDP figure (so it mostly affects the GDP ratios), and there is usually a footnote in the monthly reports that will say something like the "2023/24 budget figures have been updated, approved and are now final".

We hope this makes sense. As far as FY 2023/24 is concerned, the finance minister said in July 2024 the budget deficit was EGP 505bn, equal to about 3.6% of GDP. He added that Egypt recorded a primary surplus of EGP 857bn, rising sharply from an EGP 164bn surplus in the preceding FY.

• Inflation to quicken on back of higher education costs and a fuel price increase
• Egypt has hiked fuel and electricity prices ahead of IMF's review

Consumer inflation is projected to quicken to 27.0% y/y in October from 26.4% y/y previously on the back of higher education costs and a fuel price increase, according to the median forecast of 17 analysts polled by Reuters between Oct 31 and Nov 6. This will be the third month with accelerating price growth reflecting the fuel and electricity prices hikes ahead of the fourth IMF review, weaker FX rate, supply line disruptions, and robust monetary expansion.

The MPC expects inflation to remain near current levels until end-2024 but sees a significant easing in H1 2025 due to monetary policy tightening and favourable base effects. The MPC, however, noted that the persistence of regional tensions, elevated international commodity prices, and higher than anticipated pass-through of fiscal measures pose risks to disinflation path.

Click here for our comprehensive database of macro forecasts.

• Tourism minister says average hotel occupancy rate is above 75%
• Egypt expects more tourists from China, Scandinavia in coming years

The number of tourists visiting Egypt this year is expected to increase by 5% to 15.3mn from 14.9mn arrivals in 2023, according to tourism minister Fathy. According to Fathy, the key sector remains resilient and is expected to continue its upward trajectory, despite regional security challenges. Fathy said the hotel occupancy rate averaged 75% this year, with some places recording rates as high as 90%. He added that the tourism ministry will launch a series of targeted promotional campaigns that will utilize social media and AI tools to reach wider audiences, adding that new low-cost flight routes from China and Scandinavian countries are expected to drive a further increase in arrivals. Meanwhile, the head of the cultural tourism marketing committee said the average tourist spends around USD 140 per tourist night, rising from USD 120 last season.

The tourism, which is a major provider of jobs and generates directly about 5% of GDP, has been steadily recovering from the COVID shock and the war in Ukraine, shored up by the weaker pound and the improved security situation in the country. The sector has been - somewhat surprisingly - resilient to the war in the Middle East and is on a track to record another record-high number of tourist arrivals in 2024. The government wants to boost annual tourism revenues from USD 14bn in 2023 to USD 30bn within the next three years.

Four-priority fiscal plan (Ahram)

El-Sisi reiterates to Trump Egypt's interest in strengthening ties in upcoming term (Ahram)

Egypt net int'l reserves increase to USD 46.9bn by end-October: CBE (Ahram)

Egypt budget deficit drops to 2.1% in Q1 FY2024/2025 (Ahram)

Egypt to establish pharmaceutical industry zone in Suez Canal Economic Zone (Ahram)

Egypt's Petroleum Minister, Schneider Electric Discuss Enhancing Digital Transformation in Industry (Sada Elbalad)

IMF Delegation's visit to Egypt Extends Two Weeks (Sada Elbalad)

Madbouly: Egypt not to give up on its water rights; supports development in Nile basin states (Egypt Today)

Egypt's external debt decreases by 89% | Prime Minister (Egypt Today)

Minister of Tourism expects Egypt to receive over 15.3mn tourists by end of 2024 (Egypt Today)

Egypt's Petroleum Minister discusses drilling new wells with BP (Egypt Today)

Communications sector contributes 5.8% to GDP in FY 2023/24: Talaat (Daily News Egypt)

3 European markets fuel the growth of Egypt's tourism sector (Egypt Business)

• PM gave no details, but Egypt is expected to re-evaluate sectors and sizes of stakes in offered companies

The government will present a revamped privatization program later this month, PM Madbouly told journalists at press conference at the new administrative capital. Madbouly did not give any details, but government officials have already said Egypt plans to re-evaluate the sectors and the size of the stakes in state-owned companies slated for divestment. Madbouly said that Egypt is on the right track in terms of its economic reforms. Madbouly also addressed the recent pound's depreciations, saying the will stabilize as investors and the private sector are confident in the current flexible FX rate regime. He said that the FX rate is driven by market forces, adding the government has not intervened in the FX market.

Commenting on the ongoing negotiations with the IMF as part of the fourth review of the USD 8bn loan program, PM Madbouly said the government will not make decisions that would impose additional financial burdens on the population. He confirmed that the "IMF understands and shares this perspective".

Highlights of PM Madbouly's press conference:

• Commitment to Privatization Despite Challenges. Egypt is pushing forward with its privatization program even in the face of economic and regional disruptions. The government remains steadfast, with plans for an updated roadmap to be unveiled by the Investment Minister by the end of November 2024.
• Coordination with the International Monetary Fund (IMF). Egypt's privatization plan is closely tied to its ongoing economic reform program, which has the backing of the IMF. The government is in active discussions with the IMF to realign some of its economic targets given the recent economic and geopolitical hurdles.
• Adjustments to Avoid Additional Burdens on Citizens.PM Madbouly noted that the government is negotiating with the IMF to make necessary adjustments to avoid placing extra strain on the Egyptian population. As global conditions have shifted, the focus is on sustainable growth that minimizes economic pressure on citizens.
• Objectives of the Privatization Program.Egypt's privatization strategy is designed to stimulate the economy through reducing public debt and attracting foreign capital. By divesting stakes in state-owned enterprises, the government aims to inject fresh capital into these companies, boost market efficiency, and spur competition within key sectors.
• Expanding Private Sector Participation. A significant goal of the privatization efforts is to expand the role of the private sector in the Egyptian economy. By increasing private ownership and investment in state-run industries, the government hopes to create a more dynamic and competitive marketplace.
• Potential Challenges and Regional Influences. PM Madbouly has acknowledged that the regional crisis, among other recent challenges, may impact the speed or scale of the privatization program. However, the government remains flexible and is exploring ways to address these obstacles while staying on track with economic reforms.
• Enhanced Market Efficiency and Long-term Growth.A core aim of privatization is to drive long-term economic growth by enhancing efficiency in state-owned companies and encouraging innovation. By involving private players, the government anticipates better performance and competitiveness in both domestic and global markets.

• Pre-tax profit rises 5% y/y to USD 2.8bn

The Emirates Group posted a record profit before tax of AED 10.4bn (USD 2.8bn) for the first six months of 2024-25, the state-owned company said. This is the first financial year that the UAE corporate income tax, enacted in 2023, is applied to the Emirates Group. After accounting for the 9% tax charge, the Group's profit after tax is AED 9.3bn (USD 2.5bn).

Group revenue increased 5% y/y to AED 70.8bn (USD 19.3bn) for the first six months of 2024-25.

The Group closed the first half year of 2024-25 with a cash position of AED 43.7bn (USD 11.9bn) on Sep 30, 2024. The Group also paid AED 2bn in dividend to its owner, as declared at the end of its 2023-24 financial year.

Looking at just the airline, Emirates' profit before tax for the first half of 2024-25 hit a new record of AED 9.7bn (USD 2.6bn), up 2% y/y. Emirates posted a profit after tax of AED 8.7bn (USD 2.4bn).

Similarly, revenue increased 5% y/y to AED 62.2bn (USD 16.9bn).

Finally, Emirates flies passengers and cargo to 148 airports in 80 countries.

• Contract to focus on identifying oil and gas resources in onshore fields

The Abu Dhabi National Oil Company (ADNOC) announced the award of a contract to BGP Inc., a subsidiary of China National Petroleum Company (CNPC), worth up to USD 490mn, to expand the scope of the world's largest combined three-dimensional (3D) onshore and offshore seismic survey currently underway in the emirate of Abu Dhabi.

The contract will focus on identifying additional oil and gas resources in ADNOC's producing onshore fields. ADNOC and BGP will leverage advanced artificial intelligence tools to accelerate interpretation of the seismic data, maximize resource recovery and the use of existing infrastructure in producing fields to enhance efficiencies.

Over 70% of the award value will flow back into the UAE's economy under ADNOC's In-Country Value program.

• Agreement is with a subsidiary of Germany's SEFE Securing Energy for Europe

The Abu Dhabi National Oil Company (ADNOC) announced it has signed the first long-term sales and purchase agreement (SPA) for the Ruwais LNG project, which is currently under development in Al Ruwais Industrial City, Abu Dhabi. The SPA is with SEFE Marketing & Trading Singapore, a subsidiary of Germany's SEFE Securing Energy for Europe.

The 15-year, 1mn tonnes per annum (mtpa) SPA converts the previous Heads of Agreement between ADNOC and SEFE announced in March into a definitive agreement. The LNG will primarily be sourced from the Ruwais LNG project, with deliveries expected to start in 2028 upon commencement of its commercial operations.

To date, over 7 mtpa of Ruwais LNG project's production capacity has been committed to international customers through long-term agreements.

This LNG supply agreement reinforces the Energy Security and Industry Accelerator (ESIA) agreement, signed by the UAE and Germany in 2022, further strengthening bilateral cooperation in energy security, decarbonization and climate action. It builds upon ADNOC's delivery of the first LNG cargo from the Middle East to Germany in 2023.

The Ruwais LNG project, which consists of two 4.8 mtpa LNG liquefaction trains with a total capacity of 9.6 mtpa, will more than double ADNOC's LNG production capacity to around 15 mtpa, to help meet increased global demand for natural gas.

It should be noted that global natural gas demand is increasing. Additionally, European countries are not purchasing Russian natural gas and looking for alternative suppliers. Natural gas accounts for over a quarter of Germany's energy supply.

We remind that the UAE wants to increase natural gas production and exports. Here is some additional information about how ADNOC is increasing its natural has capabilities:

In September, ADNOC entered a 15-year supply agreement with IndianOil for 1 mtpa of LNG.

In May, ADNOC purchased a 10% interest in the Area 4 concession of the Rovuma basin in Mozambique. The acquisition gives ADNOC a share of the LNG production from the concession, which has a combined production capacity exceeding 25 mtpa.

ADNOC also purchased a 11.7% stake in Phase 1 (Trains 1-3) of energy company NextDecade's Rio Grande LNG (RGLNG). RGLNG is an LNG export project located in Texas that is expected to produce a less carbon-intensive LNG.

Also in May, ADNOC signed a 15-year agreement with EnBW Energie Baden-Wurttemberg (EnBW), one of the largest energy companies in Germany, for the delivery of 0.6 mtpa of LNG. The LNG will primarily be sourced from ADNOC's Ruwais LNG project and deliveries will start in 2028.

In January 2024, ADNOC Gas, a subsidiary of ADNOC, signed a 10-year agreement to supply 0.5 mtpa of LNG to Indian natural gas company GAIL. Deliveries will begin in 2026.

In December 2023, ADNOC signed a 15-year agreement with ENN LNG (Singapore), a wholly-owned subsidiary of ENN Natural Gas Co. (ENN Natural Gas), for the delivery of LNG.

• Deal is expected boost non-oil bilateral trade to USD 15bn by 2032

The UAE and Australia signed the Comprehensive Economic Partnership Agreement (CEPA), according to a statement by the country's foreign trade minister. The CEPA agreement, which aims to boost the bilateral trade between the two countries to USD 15bn by 2032, removes or reduces tariffs and lifts barriers to trade. Notably, the deal is Australia's first trade agreement with a country from the MENA region.

We remind that the UAE's CEPA programme aims to increase the country's non-oil foreign trade to AED 4tn (USD 1.1tn) by 2031 and double the size of the wider economy to surpass USD 800 billion by 2030. Here is a brief overview of the UAE's efforts to sign CEPAs across the world:

The UAE concluded CEPA negotiations with Malaysia. Earlier in October, the UAE signed a CEPA with Serbia.

In September, the UAE and New Zealand signed a CEPA. The two countries began negotiations in May. Also in September, the UAE and Australia finalised negotiations on a CEPA. In July, the UAE signed CEPAs with Chile and Morocco.

The UAE signed a CEPA with South Korea in May. Additionally, the UAE finalised the terms of a CEPA with Ukraine in April and began negotiations with Ecuador. The UAE also recently signed similar agreements Costa Rica and Colombia.

Elsewhere, the UAE and Hungary signed a CEPA in March. UAE and Kenya concluded negotiations on a CEPA earlier in 2024.

The UAE has also concluded CEPAs with Cambodia, India, Israel, Indonesia, Turkey, the Philippines, Mauritius, and Congo.

The UAE is also in negotiations with Vietnam. We have reason to believe that the UAE is also in negotiations with Georgia.

• The scheme allows banks to trade uninvested foreign currencies
• Individuals can deposit dollars held outside the banking system without penalty
• Critics caution that the scheme could raise money laundering risks

The CBN has issued guidelines for the implementation of a free FX deposit window, following the federal government's recent announcement. Effective from November 7, the guidelines outline the participation of commercial, merchant and non-interest banks in the scheme, which allows these banks to trade deposited foreign currencies that are not immediately invested by participants. The federal government's program enables individuals to deposit dollar bills held outside the formal banking system without penalty or scrutiny. The CBN's regulations stipulate that banks must collect necessary identification details, conduct customer due diligence and ensure compliance with anti-money laundering laws.

Experts have generally supported the initiative, believing it will improve liquidity in the FX market. Some market analysts suggest that the policy could help stabilize the currency by increasing forex availability, while also discouraging dollar-denominated transactions within the country. However, critics warn that the scheme could potentially lead to money laundering, urging the government to strengthen its anti-money laundering measures. As the naira's performance continues to decline, analysts are watching how this scheme will affect the FX market in the coming months.

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• Nigeria's generation capacity is 13,610MW, while DisCos' distribution capacity is limited to 4,000MW
• DisCos rejected 1,400MW of the 5,313MW generated in September

The National Orientation Agency (NOA) has attributed the frequent collapse of Nigeria's national grid to the inability of electricity distribution companies (DisCos) to handle the generated power. The Transmission Company of Nigeria now has a wheeling capacity of over 8,100MW and can comfortably transmit 6,000MW of generated power. However, with a total generation capacity of 13,610MW, the distribution capacity of the 11 DisCos remains limited to around 4,000MW. This gap leads to grid instability, with significant load rejections. NOA revealed that in September, DisCos rejected 1,400MW of the 5,313MW generated.

NOA also pointed to the financial challenges faced by DisCos, particularly around cost recovery, which hinder their ability to upgrade infrastructure. The lack of sufficient investment in critical facilities contributes to the instability of the system. To address these issues, the current government administration is implementing measures such as the Presidential Metering Initiative, cost-reflective tariffs for Band A customers and a USD 800mn fund for power substations and distribution upgrades.

• The house confirmed that the public will be consulted through town hall sessions
• The four bills have phased opposition from governors and some tax experts Bottom of Form

The house of representatives has announced plans to consult tax experts on the implications of the proposed tax reform bills currently under review in the national assembly. In an interview with The Punch publication on Wednesday (Nov 6), deputy spokesman Philip Agbese said the house has committed to engaging the public through town hall sessions. Introduced by the Federal Executive Council, four the bills aim to streamline tax processes, create a unified revenue service and simplify financial obligations for businesses and individuals. These proposals follow months of review by a committee led by Taiwo Oyedele.

However, the proposed reforms have faced opposition from various stakeholders. Last week, all 36 state governors called for the bills' withdrawal. They argued that additional consultation is needed to address regional concerns. This position follows an earlier statement from 19 northern governors, who opposed the reforms on the grounds of potential negative impacts on the North and state governments.

Meanwhile, Federal Inland Revenue Service (FIRS) chairman Zacch Adedeji clarified that the four tax reform bills pose no threat to any government revenue agency. He assured that renaming FIRS to the Nigeria Revenue Service would not lead to the merger of other agencies, as some have speculated. The reforms, he explained, aim to boost these agencies' sustainability by improving tax efficiency and easing compliance, allowing them to focus on their core functions. Adedeji stated that consolidating tax provisions would make Nigeria's regulatory framework more business-friendly for investors.

FG panel blames poor maintenance for grid collapses (Punch)

Tax bills not threat to revenue-collecting agencies - FIRS (Punch)

Marketers sue Dangote, insist on petrol import (Punch)

Lawyers demand rehabilitation, compensation for freed #EndBadGovernance minors (Punch)

Reps to engage experts on controversial tax reform bills (Punch)

LASG, China seek partnership in trade, investment (Punch)

Israeli Envoy Alleges Iran Behind Terrorism Globally, Including In Nigeria, Rest Of The Sahel (ThisDay)

Tinubu Directs National Flag Be Flown At Half Mast For Seven Days In Honour Of Late COAS (ThisDay)

FAAC revenue hits N6.28 trillion in Q2 2024 as VAT, import duties offset low oil earnings (Nairametrics)

Nigerian Governors call for urgent actions amid worsening rate of neonatal mortality, malnutrition (Nairametrics)

Nigeria has secured over $1 billion investment oil and gas sector- Olu Verheijen (Nairametrics)

Lagos invites companies to bid for construction of power plants to meet State electricity demand (Nairametrics)

Matrix, AA Rano, AYM Shafa respond to Dangote Refinery's N100 billion suit against their import licenses (Nairametrics)

FG blames frequent grid collapse on DisCos' inability to take generated electricity (Nairametrics)

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• Dangote's lawsuit claims the NMDPRA violated the Petroleum Industry Act by issuing import licenses
• Marketers argue that Dangote's push for monopoly control could drive up fuel prices

Three oil marketers have requested that the Federal High Court in Abuja dismiss a lawsuit filed by Dangote Refinery regarding the issuance of petroleum import licenses. The marketers (AYM Shafa Limited, A. A. Rano Limited, and Matrix Petroleum Services Limited) argued in a counter affidavit that granting Dangote Refinery's request for monopoly control over petroleum importation would harm Nigeria's oil sector. Dangote's lawsuit claimed that the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) breached its responsibilities under the Petroleum Industry Act by issuing petroleum import licenses.

In their filing, the marketers stated that Dangote Refinery does not currently produce enough petrol to meet Nigeria's daily needs and argued that there was no evidence to suggest otherwise. They argued that the import licenses issued to them by regulatory authorities are lawful and do not harm Dangote's business. According to the marketers, placing exclusive control of Nigeria's fuel supply in the hands of one entity would lead to unchecked price increases and could trigger an energy crisis if disruptions occur. Justice Inyang Ekwo has scheduled January 20 2025 for a report on settlement or service.

In October, Dangote issued a statement about the lawsuit and said proceedings are currently on hold, with plans to withdraw the case entirely by January 2025. The refinery described the lawsuit is as an old case, stemming from issues that began in June and culminating in a filing on September 6 2024.

• Investment agency EDB says investment commitment are in key sectors such as finances, ICT and tourism

Singapore-based companies have pledged USD 100mn investments in Bahrain since November 2023, the Bahrain's investment agency Economic Development Board (Bahrain EDB) said on the sidelines of Singapore Fintech Festival 2024. The investment commitments are in sectors such as financial services, ICT and tourism. The EDB CEO, who is also a sustainable development minister, Noor bint Ali Alkhulaif, said the registered commitments mark a milestone achievement and is the result of the successful investment promotion strategy. The financial services sector in Bahrain includes almost than 400 licensed financial institutions, as well as fintech and digital asset companies, and is considered the most developed one in the GCC region. It contributes more than 16% to GDP.

• However, Bahrain LNG regasification terminal has been idle since 2019

Bahrain may start importing liquefied natural gas next year or later in 2026, depending on the energy demands of the summer, according to state-run Bapco Energies' chief strategy officer Alexander van Veldhoven who spoke to Bloomberg. We remind that Bahrain has announced plans earlier this year to restart its dormant LNG regasification terminal, which has been idle since 2019. Furthermore, Bahrain has also vowed in 2022 to import five to six cargoes of LNG in 2025 as part of plans to meet the rising energy demands of the summer. Bapco Energies, which owns 30% of the shares in Bahrain LNG project, is yet to decide whether to buy LNG on long-term contracts or on the spot market.

• Some MPs have been calling for end of normalization agreement with Israel

21 Bahraini MPs have called for the introduction of a ban that would ban Israeli firms from participating in major events hosted by the kingdom. The MPs made the official request during a parliamentary session. The request, which was approved by the parliament, now awaits an approval by the government. If the government approves the ban, Israeli companies will not be able to participate in upcoming high-profile international gatherings, including Bahrain's International Airshow and the Jewelry Arabia Exhibition, which are scheduled for this month.

MP Abdulwahed Qarata, who spoke to the Daily Tribune local media, said that the move is in solidarity with the Palestinians living in the Gaza Strip.

We remind that Bahrain normalized ties with Israel in 2020 under the US-brokered Abraham Accords amid shared concerns of security threats in the region arising from Iran or Iran-aligned groups. However, Bahraini MPs have been pushing to end the normalization agreement following the start of the Gaza war around a year ago.

• Bonds were sold at 5.50% amid high demand

The central bank sold 3-year development bonds worth BHD 185mn at an auction held by the institution on Nov 6. The issue was strongly oversubscribed by 305% as the total amount of bids reached BHD 564.6mn. The bonds were sold at 5.50%. The last time, the government sold bonds was in March, when it issued two-year development bonds. The last time it sold 3-year bonds was in August, at 5.875%.

We recall that Bahrain's CPI inflation has slowed down to 0.4% y/y in September, down from 0.9% y/y in the preceding month. Furthermore, Bahrain's central bank has recently cut its overnight deposit rate by 50bps to 5.50% in line with the US Federal Reserve. Bahrain typically follows the Fed's moves as the local currency is pegged to the US dollar.

• Deterioration should be due to expansion in fighting in the north, we think

The future expectations among all sectors deteriorated in October, which means that the companies expect worsening in November compared to October, according to the latest business confidence survey of the stat office. All components of future expectations in industry with the exception of employment turned negative in October, the expectations in construction and hotels remained negative and further declines, those in retail also turned negative, and expectations in services were negative too. We think that the deterioration might be due to the expansion of the fighting in the north, which has affected economic activity by reducing the number of available working force as the number of reservists increased, and also because of potential closing of some businesses in the north because of the escalation. The CBS also said that the current economic situation was with a positive balance in all sectors with the exception of hotels, where the value declines sharply and switched to a negative value because of the expansion of the fighting in the north. As for the past situation, the level was positive only in the retail sector.

• BoI last provided cheap credits in February

October was the eighth consecutive month that saw no activity in the programmes, which the BoI launched at the start of the war in October 2023 to stabilise the financial markets and to support economic activity, according to a press release. The BoI last used one of the programmes in February when it distributed loans to local lenders to provide cheaper financing to SMEs. The other three programmes have not been used since January when the last allocations regarding repo transactions were made. As for forex sales, the BoI intervened in Oct-Nov 2023 only when it sold total of USD 8.5bn and despite speculation at the backdrop of weakening shekel, it has not used this tool for almost a year already.

• Revaluation effects are reason for change in forex reserves again
• Import coverage ratio remains stronger compared to end-2023

The foreign exchange reserves of the Bank of Israel (BoI) fell by 2.0% m/m or USD 4.3bn to USD 216.1bn at the end of October from the historic high of USD 220.4bn at the end of September, according to latest data. The contraction follows increases in the previous three months over strong positive revaluation effects. The latter were the reason for the decline in October too with the negative effect estimated at USD 4.3bn, according to the BoI report. This was partially offset by government activities, which pushed up the forex reserves by USD 668mn in October. The BoI does not report any other significant flows in the period.

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Forex reserves have increased by USD 11.4bn or 5.6% since the year started. They accounted for 42% of GDP at the end of the month, down by 0.8pps during the month but higher than 39.5% of GDP at the end of 2023, the BoI said in the press release. The reserves secured 29.7 months of imports at the end of the month, increasing from 26.7 at the end of 2023, according to our calculations.

• Attorney General recommends to High Court petitions against Gallant firing to be rejected
• Bennett-led party to be second largest after Likud
• Opposition parties still win majority according to most polls

A total of 55% in a Channel 12 poll said that they oppose the firing of defence minister Yoav Gallant, 56% think that Gallant should remain in the position and only 17% were in favour of replacing Gallant with Yisrael Katz. Another poll, of i24NEWS, revealed a similar picture with 52% of the respondents considering the dismissal unjustified while 32% support it. The survey found out that 49% of the Israelis think that the decision was not due to professional differences but disagreements over the army conscription bills and the stability of the ruling coalition. Total of 53% deem Katz unsuitable for the position while 21% approve of him, and 48% think that the move will negatively impact Israel's conduct of the war while 23% see it as a beneficial move. Total of 52% of the respondents in a Kan poll answered they do not support Gallant's dismissal while 27% supported it; 55% said the move harms the country's security, 56% said the main consideration behind the sacking of Gallant was the stability of the coalition.

Recall that PM Netanyahu fired defence minister Gallant in a move, which was not surprising as Netanyahu has signalled such intentions in the past as well and even fired him once in early 2023 but changed his opinion and restored Gallant on the position. In September, there were rumours that Netanyahu will dismiss Gallant to allow for the entry of New Hope into the coalition but the move was thwarted by the start of the war with Hezbollah. Now with the many military achievements, Netanyahu apparently believes that replacing the defence minister would not harm the country's security. The dismissal of Gallant was met with large criticism on the part of the opposition parties, apparent discontent on the part of the US and large-scale protests in the country. Moreover, the Israel Democracy Guard and the Movement for Quality Government filed petitions with the High Court against the dismissal. However, attorney general Gali Beharev Miara stated today that those petitions should be rejected arguing that the premier has the right to replace ministers.

Back to the surveys, if former PM Naftali Bennett establishes a new party, it would take second position, according to two of the polls. In the Kan survey, Bennett's party will gain 21 MKs mainly at the expense of the National Unity (which will fall from 21 mandates to 13) and Likud will continue to top the ranking with 22 MKs (down by 2 MKs). The Channel 12 also puts a Bennett-led party on the second place with 21 MKs and says it would take 4 MKs from the Netanyahu bloc. If the political landscape does not change, Likud remains the largest party but opposition parties win majority of 62-65 MKs, according to the different pollsters. The only exception that gives majority to the coalition parties is the Channel 14 surveys but we note that that media has always been biased in favour of Netanyahu and far-right parties in general.

• Price of deal is USD 5.2bn, to be funded by US military aid

The defence ministry announced that it has signed a deal to purchase 25 F-15 fighter jets from Boeing. The cost of the aircraft is at USD 5.2bn and will be covered by the US military aid package approved earlier this year, which includes an option for the procurement of another 25 fighter jets in the future. Deliveries will start in 2031 and 4-6 aircraft to be supplied each year. The ministry said that the agreement was significant milestone in deepening US-Israel security cooperation and demonstrated mutual commitment to maintaining regional security. We note that the US is Israel's largest defence equipment supplier accounting for 69% of arms imports to Israel in 2019-2023, according to the latest report of the Stockholm International Peace Research Institute.

The ministry said that it has signed deals valued at some NIS 150bn (USD 40bn) since the war started in October 2023 and part of the deals are for increasing the long-term capabilities. The defence ministry was promoting deals to strengthen all branches of the army - in the air, at sea, on land, in intelligence and beyond, defense ministry director-general Eyal Zamir said.

With Trump in and Gallant Out, Netanyahu Is Left With Few Constraints (Haaretz)

Israeli Gov't Neglected to Build Shelters in Arab Towns. Now Deaths Are Rising (Haaretz)

Netanyahu Gambled on a Trump Presidency. Will It Pay Off? (Haaretz)

ANALYSIS Trump's victory throws diplomatic bombshell into Israel's multi-front war (Jerusalem Post)

Knesset approves law to expel terrorist family members (Jerusalem Post)

ANALYSIS Does Yoav Gallant's firing come at the cost of hostages, Iran conflict? (Jerusalem Post)

"It is not certain that the government understands the depth of the crisis in the construction industry" (Calcalist)

The Law to Promote Evasion: Sanctions will be imposed against Knesset members who rebel from the Likud (Calcalist)

Maybe this time? The ministries of transport and finance agreed on the establishment of high-speed bus systems (TheMarker)

The closing of Terminal 1 for international flights keeps the low-cost companies away (Globes)

• New Hope to receive veto power on judicial reform bills

PM Benjamin Netanyahu and New Hope leader Gideon Sa'ar signed a coalition agreement, which means that the New Hope 4 MKs, who re-joined the government in September, should be now committed to coalition discipline. The agreement says that Sa'ar will become foreign minister, senior New Hope member Ze'ev Elkin will become a minister within the Finance Ministry, and another New Hope MK Sharren Haskel will become deputy foreign minister. Elkin will have responsibilities for rehabilitating the North and South and will join the team responsible for deciding the day-after the war in Gaza. The foreign ministry will receive an addition of NIS 545mn for public diplomacy, which will go to media campaigns abroad, in the foreign press, and on social media, Sa'ar has said. The New Hope party will receive veto power over bills related to the judicial reform and issues of religion and state. It is not clear what the stance of New Hope would be regarding the bill initiatives to exempt Haredi from military service. Media said Sa'ar has said he would oppose those bills. The addition of the 4 MKs from New Hope expands the support of the ruling coalition to 68 MKs in the 120-seat Knesset.

• Adaptive Shield was established at end-2019 and is based in Tel Aviv

US cybersecurity CrowdStrike has acquired local cloud security company Adaptive Shield, media reported. The price of the acquisition has not been disclosed but media reported it was likely at about USD 300mn. CrowdStrike has a development centre in Israel is in Ramat Gan and has previously bought also Flow Security for USD 200mn, Bionic for USD 350mn and Reposify and Preempt Security for smaller undisclosed amounts. Adaptive Shield is based in Tel Aviv and has 100 employees. It was established at the end of 2019 and has raised USD 44mn thus far.

• Teva raises revenue guidance for full 2024 again

The revenues of Teva Pharmaceutical Industries, one of the country's largest producers and exporters, increased by 12.3% to USD 4.33bn in Q3 and by 8.1% y/y to USD 12.3bn in Jan-Sep, according to its latest quarterly financial report. In local currency terms, revenues were up by higher 15% y/y. This was the seventh quarter, in which the company's revenues marked an increase. As a result, Teva raised further its revenue guidance to USD 16.1-16.5bn for the full 2024, up from USD 16-16.4bn in the previous quarter when the revenue forecast was also upgraded.

The company reported a loss of USD 437mn in Q3 though as compared to a profit of USD 70mn a year earlier. The drugmaker recorded provisions of USD 1.2bn, including USD 450mn for the fine imposed by the EU. However, Teva managed to improve gross profitability with operating profit rate reaching 28% of revenues compared to 26% of revenues a year ago, so the 30% target set by Teva for 2027 already seems achievable. Teva also narrowed the net profit forecast to USD 2.4-2.5 per share compared to a wider range of USD 2.3-2.5 per share and the operating profit is expected to range between USD 4.2bn and USD 4.5bn.

• Data affected by standstill in activity in Oct 2023, lower number of working days in Oct 2024

Credit card purchases rose by 22.6% to NIS 40.6bn in October but were down by 11.8% m/m from NIS 46.1bn in September, according to data by the bank services company SHVA (Automated Banking Services) quoted by local business daily Calcalist. The strong annual growth was partially due to the start of the war in that month of the year when large parts of the economy were paralysed. As for the decline in m/m terms, it should be partially reflecting the autumn Jewish holidays, which mostly fell in October this year resulting in fewer working days. The changes in ATM cash withdrawals were in similar directions and affected by the same factors - an increase of 4% y/y and a decrease of 14.2% m/m to NIS 4.98bn in October. It is not worth comparing credit card purchase by branches as those which faced significant ramifications from the start of the war saw steep recovery y/y and data are also affected by the holidays in October. SHVA vice president Tali Hollenberg commented on the data that the activity in October indicates that the Israeli economy has recovered compared to the beginning of the war. She explained the monthly decline with the lower number of working days in October because of the holidays.

• Research concludes regime achieved its target over time

The Bank of Israel (BoI) said in a press release that it has finalised a professional in-depth process of re-examining the inflation target and has concluded that it was correct to maintain the existing price stability target. The 1-3% target range was adopted in 2000 and its application started in 2003. The target has not been changed since then. The BoI argues that the regime has achieved its goal of price stability over time. Price growth has deviated from the target in both directions for large periods since the target was adopted but long-term expectations were anchored within the target in the entire period. The average annual inflation in 2003-2023 was at 1.5%, average expectations for the medium term of 3-5 years are close to the 2% middle point and inflation expectations for a 10-year term remain anchored between 1-3%. BoI governor Amir Yaron commented that the BoI would continue to manage monetary policy with the aim of maintaining price stability, while supporting sustainable economic growth and maintaining financial stability.

• Departures decrease in sa terms m/m but are higher compared to October 2023

The number of foreign tourists arriving to Israel declined m/m in October and also compared to the low reached in August, according to latest data of the stat office. The number of visits reached 67,400 in October and this was the lowest since January. It was also down compared to last year, by 31.6% y/y and the pace eased from more than 70% contractions in the previous months as low base effects have started to kick in. The deterioration was the result of the war, due to increased caution but also affected by the cancellation of many flights, which raised prices significantly. We expect the war to have significant and prolonged negative effects on the tourism sector, which did not manage to recover to pre-coronavirus levels in the pre-war period. Departures of Israeli tourists reached 542,600 in October, up by 19.5% y/y due to the low base last year since this was the first month of the war. In seasonally-adjusted terms, the number of domestic travels abroad fell by 11.1% after increasing in the previous month and declining in Jul-Aug. Lower travels abroad y/y are one of the factors supporting private consumption in the past months.

• Attacks around Baalbek kill 40 people
• Hezbollah leader says no talks possible unless Israeli attacks stop

The health ministry said that Israeli strikes have killed 70 people in Lebanon since Tuesday, Nov 5, including 40 around the city of Baalbek in the east of the country. Attacks were carried out in parts of Beirut too on Wednesday and Thursday, but no estimates have been provided about casualties. Israel has not commented but its military warned residents in the southern suburbs of the Lebanese capital to evacuate before launching two bomb raids. The secretary-general of Hezbollah Naim Qassem commented that there is a possibility to indirect talks with Israel through the Lebanese state but only after the attacks stop. It is yet to see what the US election outcome means for the international diplomatic efforts in the Middle East.

• Decrease is mainly driven by sharp drop in other assets

Central bank's total assets decreased by 11.5% y/y and stood at USD 94.1bn at end-October, according to the institution's balance sheet as cited by Blominvest bank. The decline was mainly due to a 96.7% y/y drop in other assets, which fell to just USD 243mn. At the same time, the gold reserve, which consist 27.2% of the institution's total assets, increased by 39.1% y/y to stand at USD 25.6bn at end-October. Meanwhile, the central bank's foreign assets, which represent 10.9% of the total assets, also rose by 10.5% y/y to reach USD 10.3bn at the end of the month.

We recall that Lebanon's central bank has adopted a new official exchange rate of LBP 89,500 against the US dollar as of Feb 1. The decision was part of efforts to move the country towards a more unified exchange rate system, which is among the IMF requirements that would unlock a USD 3bn bailout programme.

• There is unexplored potential for expatriate investments which currently represent only 10% of private investments

King Mohammed VI, in a speech marking the 49th anniversary of the Green March, outlined a comprehensive reform plan aimed at bolstering institutional support for Moroccans abroad and providing a renewed, structured approach to diaspora engagement. The reforms include the establishment of two primary institutions: the Council of the Moroccan Community Abroad, which will serve as a representative body for strategic planning, and the Mohammadia Foundation for Moroccans Residing Abroad, focused on executing diaspora-related policies and centralizing efforts across multiple agencies.

The King underscored the importance of tapping into the expertise of Moroccan professionals living abroad, referencing the National Mechanism for Mobilizing Moroccan Skills Abroad, which connects skilled expatriates to projects within the country. He also advocated for streamlined administrative processes, digital services, and simplified access to cultural, linguistic, and religious resources to better serve the diaspora. Noting that expatriate investments currently represent only 10% of private investments in Morocco, the King urged increased diaspora involvement in Morocco's economic landscape, describing the current level as insufficient.

Although the diaspora is not investing actively in the country it continues to provide significant support to its families and is an important source of fx income for the country. The latest data showed that remittance income remained solid at MAD 91.5bn in Jan-Sep, up by 5.2% y/y. The central bank projects that remittances will grow further by 3% y/y in 2025, reaching MAD 121.8bn (USD in 2025. 2.4bn).

• Capacity utilization rate rises by 2pps to 79% in Sep

Industry firms anticipate growth across most sectors over the next three months, according to the Bank Al-Maghrib monthly economic survey. Most industries expect production and sales to rise in Q4, particularly in sectors like chemicals, electronics, mechanical and metallurgy. However, the agri-food sector foresees continued stagnation, with no anticipated increase in production or sales. In some areas, a portion of companies report uncertainty regarding future performance. For example, in textiles and leather, 25% of firms are unsure about production prospects, and 47% are uncertain about sales.

The survey showed that in September production increased across most sectors, with the exception of agri-food and textiles and leather, where production stagnated. This raised the capacity utilization rate by 2pps to 79%. Sales, both domestic and foreign ones, grew in all sectors except textiles and leather, where they remained unchanged. Orders rose in most sectors, except for chemicals and parachemicals, which saw stagnation. Order backlogs were at normal levels but varied by sector, being above average in chemicals and electronics and below average in ari-food, textiles and leather,and mechanical and metallurgy.

The survey was conducted from October 1 to October 30, 2024. The results are based on a response rate of 63%.

• That is an increase of 26% y/y

The number of international visitors by the end of October increased 26% y/y to 4mn, according to The Peninsula Qatar. Visitors from the other five countries of the Gulf Cooperation Council (GCC) were 42% of the total.

The top 10 visitor markets include Saudi Arabia, India, UK, Bahrain, USA, Kuwait, Oman, Germany, UAE, and China. To date, 56% of visitors arrived by air, 38% by land, and the remaining 6% by sea.

Meanwhile, Qatar's hospitality sector has grown, surpassing 40,053 hotel keys (as of September 2024).

• Debt issuance underlines growing ties between China and kingdom
• China is Saudi Arabia's most important trade partner, buying 16% of its exports and supplying 23% of its imports

China will sell up to USD 2bn dollar bonds in Saudi Arabia next week (most likely on Nov 11), according to the international press. China, which last sold USD-denominated bond in Oct 2021, usually choses Hong Kong for these issuances. The Saudi sale underlines the growing ties between the OPEC's top oil producer and Chia. The East Asian country is one of Saudi Arabia's main trading partners, buying 16% of its exports and account for about 23% of the kingdom's imports.

Question:

Are there any regular reports, data to help keeping track of the BNA's sales of fx reserves since the start of 2024?

Answer:

Overall, the BNA is not that often present on the fx market and usually communicates such fx sales with a press release. I'm not aware of a way to easily track those.

They are usually captured in the BNA Evolution of the Foreign Exchange Market Reports, however those are published only twice a year. The last one confirms in H1 BNA has on a one-time basis, supplied the market with resources amounting to USD 289.6mn. Afterwards, in October, the BNA said in a press release that made available USD 250mn on the fx market which would bring the ytd sales to USD 539.6mn.

You can find fx reserves monthly stats in this file if this is helpful but they are published with a lag so latest data are for end September. There is a daily reserves stats here as well.

The question was asked in relation to the following story: BNA sells USD 170mn on fx market since start of month

Question:

What is the projected primary surplus for 2025 please, and is there an exchange rate assumption? Are 2025 budget documents available in English?

Answer:

Indeed, the 2025 budget documents are not available in English. We have just published a story which provides more details into the 2025 budget plan. There is also a forecast table with key macroeconomic indicators, but the finance ministry does not publish a forecast for the exchange rate. The document only states they expect 8.5% kwanza depreciation in 2024, but I was not able to find any references to their 2025 exchange rate assumptions.
As for the primary fiscal balance, my calculations put it at AOA 2.9tn (fiscal balance of - AOA 1.5tn and interest spending of AOA 4.4tn).

The question was asked in relation to the following story: Gross financing needs to increase to AOA14.79tn in 2025

• Intense fighting & drone strikes in West Gojjam Zone kill civilians and militants alike
• Ongoing conflict threatens regional stability, heightening public anxiety

In a deadly escalation of violence, a drone strike and intense clashes were reported in Durbete, a town in the West Gojjam Zone of Ethiopia's Amhara region, on Nov 5, 2024. The strike claimed the lives of at least 30 people, including militants and innocent civilians. The attack took place amidst ongoing conflict between Ethiopian government forces and non-state Fano militias, which has plagued the region for over a year. The drone strikes targeted areas where Fano fighters were undergoing training. According to a local resident, at least 16 Fano fighters were killed during the airstrikes. However, the strikes also claimed the lives of innocent civilians. The strikes have caused widespread fear among the population, with clashes continuing to escalate throughout the town. The recent escalation follows intensified violence since October 2024, when the Ethiopian National Defense Force (ENDF) and the Amhara regional government announced they would continue "law enforcement operations" until peace is fully restored. The conflict has disrupted both urban and rural areas of the region, particularly the East and West Gojjam zones. Reports from the town of Finote Selam and surrounding districts, including Bure and Jiga, indicate significant military confrontations between government forces and Fano militants.

We note that since April 2023, the Amhara region has been embroiled in a widespread militarized conflict, with part of the regional army defecting to the paramilitary Fano group to fight against the federal army. By mid-2023, the government declared a state of emergency, dissolved the local administration, and set up command posts. Rumors suggest that dissatisfaction with the government's handling of the conflict may have contributed to the replacement of long-serving Deputy Prime Minister and Foreign Minister Demeke Mekonnen with spy chief Temesgen Tiruneff in January. Shortly after, Parliament extended the state of emergency for four months, which is set to expire, though another extension is expected soon.

• Investment to improve 29 weather stations nationwide & strengthen early warning systems and support agriculture
• Project is being done in collaboration with UNDP, World Meteorological Organization, and Norwegian Institute

Ethiopia has officially launched a USD 9.9mn Systematic Observation Financing Facility (SOFF) project aimed at upgrading 16 existing weather stations and building 13 new ones across the country. The project was inaugurated by the Ethiopian Meteorological Institute (EMI) in partnership with international donors, including the World Meteorological Organization (WMO), United Nations Development Program (UNDP), and Norwegian Meteorological Institute. The new meteorological stations will significantly bolster Ethiopia's capacity to gather critical weather data, a key priority for the nation given its dependence on rain-fed agriculture. Water and Energy Minister, Habtamu Itefa, emphasized that the initiative will improve scientific forecasting and early warning systems to combat climate extremes, which have increasingly disrupted agricultural productivity.

The Ethiopian government has made substantial investments in climate adaptation, such as the Green Legacy Initiative and expanded irrigation infrastructure. Itefa highlighted that these efforts, combined with the new project, will build a foundation for climate-resilient agriculture, ensuring Ethiopia is better prepared to handle environmental shocks. Currently, Ethiopia's diverse climate zones face limitations in weather data coverage. With this project, the number of meteorological stations will increase to 30, enabling enhanced data generation and calibration. The initiative is part of a broader effort to strengthen Ethiopia's climate resilience, which has been supported by international organizations committed to sustainable development and environmental resilience. The SOFF project will provide long-term financial and technical support to fill gaps in weather and climate observation, contributing to global public good while ensuring better climate adaptation strategies for Ethiopia.

• The constitutional referendum campaign officially began ahead of the Nov 16 vote
• Key political figures in parliament support the campaign for a "Yes" vote
• Critics of the draft constitution say it is undemocratic

The campaign for the constitutional referendum was officially launched on Wednesday (Nov 6). In Libreville, prime minister Raymond Ndong Sima inaugurated the "National Coordination for the Vote Yes to the Constitution" to rally support for the adoption of the new constitutional text in the referendum set for Nov 16. Key political figures, including presidents of the two chambers of parliament Jean François Ndongou and Paulette Missambo, joined Ndong Sima in encouraging active participation to secure a "Yes" vote for a new social contract in Gabon. Ndong Sima emphasized that high voter turnout was crucial, urging for collective change to move the country forward.

The draft constitution has faced some opposition due to several provisions in it. Marcel Libama, a prominent civil society figure and advocate for democratic ideals, sees the draft as a threat to the country's democratic gains since 1990. One of the most contested points is the article that prohibits Gabonese citizens married to foreigners from running for president. Libama argues that this provision infringes on personal freedoms and creates a hierarchy among citizens, favoring an elite and undermining true equality.

The political party Réagir announced its decision to vote "No" in the upcoming referendum. Réagir raised several criticisms against the draft text, particularly highlighting that the preamble appears to legitimize the use of force to seize power. Réagir also opposes the seven-year presidential term, advocating insteead for a five-year term to support democratic renewal.

• Commission claims all issues have been resolved
• Opposition NDC still criticises register saying some data is omitted
• Party demands release of detailed statistics, warns about risk of eroding trust in electoral process

The electoral commission formally presented the final voter register to political parties, which is an important step in the electoral process. The commission chairperson Jean Mensa said that after the public exhibition of the revised voter register, they received a total of 158 communications from voters about issues and they have all been resolved. She also described the register as robust and credible, and fit to deliver transparent, fair and peaceful elections.

However, shortly after the presentation, the opposition National Democratic Congress (NDC) criticised the commission over its failure to conduct a forensic audit of the register, as demanded by NDC which has claims there are significant discrepancies that could undermine the credibility of the elections. The party also noted that the register that has been sent to parties lacks voter data that is needed to verify its credibility, such as statistics on national, regional, and constituency numbers, on gender, and on absentee and proxy voters. This omission, the NDC warned, risks eroding the public trust in the electoral process and tarnishing Ghana's democratic reputation. The party therefore urged the electoral commission to release the full statistical data of the register and called on international observers to monitor the commission's actions closely in the lead-up to the elections.

Over $14.6m, £2.4m, and GH₵167.8m found in dormant accounts at BoG - ILAPI (Joy FM)

We'll occupy Majority side when Parliament resumes on Thursday - Agbodza (Joy FM)

Parliament reconvenes today amid Majority-Minority standoff over vacant seats (Citi Newsroom)

Bawumia to launch credit score system today (Citi Newsroom)

Election 2024: EC presents final Voters' register to Political Parties (Citi Newsroom)

NDC raises red flag over EC's omission of key voter data ahead of 2024 polls (Class FM)

• Move comes amid rising tensions in parliament
• Bagbin also accuses executive and judiciary of trying to undermine parliament authority
• President has refused to sign anti-LGBTQ bill due to ongoing legal cases against it

Parliament speaker Alban Bagbin said at a press briefing that he had instructed the parliament clerk to re-send the Human Sexual Rights and Family Values Bill, known as the anti-LGBTQ bill, to President Nana Akufo-Addo to either sign it or send it back to parliament. The move comes after the president refused to accept the bill earlier this year citing the pending legal cases against it in court. Bagbin claimed that the executive and the judiciary are scheming to undermine the authority of the parliament, noting that the president did not have the authority to instruct the parliament not the transmit the bill to him. He also said that the judiciary, which agreed to hear two suits against the anti-LGBTQ bill, cannot interfere in the parliamentary process and can only act on a bill when it becomes a law.

The statements come ahead of the resumption of parliamentary sitting today, Nov 7, and will certainly add to tensions between the two parliamentary groups, of ruling NPP and opposition NDC. Bagbin last month declared four MP seats vacant which resulted in NDC getting majority in parliament, but shortly after that the Supreme Court stayed the decision while the matter is resolved in court. In the ensuing chaos, Bagbin suspended the sitting indefinitely on Oct 22, but the NPP caucus requested a recall and in line with the constitution, Bagbin announced one for Nov 7. The parliament should consider important issues before the Dec 7 elections including the Q1 2025 budget, but it is yet to see how it will work amid the rising tensions.

As for the anti-LGBTQ bill, it is considered one of the most stringent in Africa, envisaging up to 10 years prison for LGBTQ rights activism. It is widely supported at home but has drawn criticism from international partners with the US saying it would affect aid and investment. The IMF has also said it would evaluate the bill's potential impact. The finance ministry has issued a brief on the impact of the legislation saying that signing it into law risked losing USD 3.8bn World Bank support as well as negative implications on budget financing, reserves and the exchange rate. It recommended consultations with religious groups and more conservative countries for possible funding that could bridge the gap. It also advised the president to not hurry into signing the bill before the court rules on any challenges filed against it.

• Food inflation remains major driving force behind rise in headline print
• Non-food inflation also picks up, mainly due to higher power and fuel prices
• Central bank likely to leave rate on hold at MPC meeting later this month

CPI inflation accelerated to 22.1% y/y in October from 21.5% y/y in September, hitting a four-month high. The main driving force behind the pickup was food inflation, which rose to 22.8% y/y from 22.1% y/y in September, but it was partly due to base effect as food prices rose by just 0.3% m/m, slowing from 4.2% m/m in September. Non-food inflation also accelerated, to 21.5% y/y from 20.9% y/y in September, which was mainly due to the categories of housing and utilities (due to higher prices of electricity and solid fuels), alcoholic beverages and tobacco, and clothing and footwear.

Data Download

At the same time, the inflation rates in education, and restaurants and accommodation slowed, which was partly due to base effect as prices continued rising in n/m terms, and at a faster rate in the case of restaurants and accommodation. In m/m terms, CPI rose by 0.9%, easing from 2.8% in September, which was largely due to the much slower increase in food prices.

October marks the second month in a row that sees inflation acceleration, which reflects the continued pressure on the cedi but also the impact of the 200bps rate cut made by the central bank in September. The uptick in inflationary pressures suggests that the rate will likely be left unchanged at the MPC meeting later this month. At the September meeting, the central bank said it expects inflation to ease towards the target range of 13-17% for the year and meet the medium-term target of 6-10% by the end of 2025, but this now appears unrealistic. The next MPC meeting is scheduled for Nov 20-22, and the decision is set to be announced on Monday, Nov 25.

• In latest meeting in October, it opted for 75bps cut, and said there was scope for further easing
• IMF maintains a tighter policy is necessary to ensure price and currency stability

The next meeting of the Monetary Policy Committee of the Central Bank will be held on 5 December, the bank said in a short note on its website. The Committee usually meets once every two months. At the last meeting on 8 October, the MPC opted to lower the benchmark rate by 75bps to 12.00% for a second time in a row, bringing the cumulative cut since August to 100bps.

The MPC noted previous tightening had had the desired impact, whereas inflation has now receded below the mid-point of government's target range (5.0%), and is expected to remain there in the short term supported by stable exchange rate, as well as lower food and fuel prices. On the other hand, GDP growth slowed in Q2, and credit growth decelerated, albeit partly reflecting the impact of the currency strengthening on forex loans. While CBK has hinted it sees scope for further easing, in its recently published report on the country the IMF maintained a tighter policy is still necessary to ensure price and currency stability.

• Result covers Ethiopia operations and is attributed to the currency depreciation there
• Kenya's unit posts 14% y/y in net profit with mobile money remaining the largest revenue stream

Safaricom, Kenya's largest telco, reported an 18% y/y decline in its net profit to KES 28bn in April - September 2024, which is H1 of its FY 2024/25. The result includes its activities in Ethiopia and the drop was explained with the impact of the Birr depreciation. Adjusted for that impact, net profit grew by 22% y/y to KES 37bn, and the EBIT - by 32% y/y to KES 62bn.

The Kenyan unit alone recorded KES 48bn net profit, up by 14% y/y, and KES 79bn EBIT, up by 18% y/y. Service revenue posted 12.9% y/y growth, reaching KES 178bn. Growth remained solid across most revenue streams. The mobile money (M-PESA) segment remained the largest contributor to service revenue, fetching KES 77bn, up by 17% y/y. Revenue from voice services stood at KES 41bn, up by 5% y/y, and from mobile data - at KES 36bn, up by 20% y/y.

We note Safaricom holds the largest market share in Kenya's telecommunication industry. It is 35% owned by SA Vodafone with the govt also holding 35%. The Company has significant contribution to Kenya's economy and the govt budget. Commenting on the results, its CFO noted performance was satisfactory, emphasizing the challenging operating environment, including currency fluctuations, floods and economic disruptions.

• Withdraws request asking Appeals Court to freeze swearing in of a successor
• Successor is already fact as former interior minister Kindiki was sworn in within a day following lower instance ruling last week
• In meantime, president Ruto reportedly planning wide purge of Gachagua's allies

Former Kenyan Deputy President Rigathi Gachagua has withdrawn his request to stop the High Court from removing an order that prevented Kithure Kindiki from assuming office as his replacement, according to local news reports. This comes after Kindiki was officially sworn in last week. He however maintained the part where he is asking the Court of Appeal to address the legality of the judicial panel involved in his case, arguing that Deputy Chief Justice Philomena Mwilu did not have the authority to appoint the judges.

Gachagua's latest filing thus questions the fairness of his initial court proceedings, citing procedural errors and a possible breach of his right to justice. He also contends that certain judicial actions, such as the scheduling of urgent hearings outside regular hours, were irregular, arguing that only the Chief Justice can authorize exceptions to standard court operations. He calls for an expedited ruling, emphasizing the issue's national importance.

In the meantime, President Ruto is reportedly preparing a broad ouster targeting MPs and government officials who had opposed Gachagua's impeachment. This mass reshuffle is expected to affect Cabinet Secretaries, Principal Secretaries, and leaders of key state agencies aligned with Gachagua. Certain reports, citing unnamed sources, also indicate that Ruto will be giving up on the idea to have technocrat ministers, and will instead be opting for political allies who could rally support for his 2027 re-election. The expected shift is said to be accompanied by heavy lobbying for the vacated roles, with leaders from the Mount Kenya keen to retain regional influence after Gachagua's removal.

• President Ruto endorsed his candidature in August after a truce was reached following months of turmoil
• Truce also saw key opposition leaders join Ruto's second cabinet

Kenya's candidate for African Union Commission (AUC) Chairperson, Raila Odinga, will present his strategic vision for AU leadership at an event on Friday, November 8, 2024, in Addis Ababa, according to local news reports. He is expected to outline his priorities, emphasizing a pan-African approach aligned with the AU's Agenda 2063, a framework for promoting inclusive growth and development across the continent. His platform focuses on economic transformation, intra-African trade, infrastructure growth, financial self-sufficiency, gender equity, climate action, and youth empowerment, among others. Odinga also emphasizes peace and security as central to the continent's sustainable progress.

We recall president William Ruto's launched Odinga's candidature in Nairobi in August, as a truce between the two was reached after months of political turmoil. The truce also saw key opposition leaders join Ruto's cabinet of national unity, formed following the GenZ protests in the summer, and bolstered Ruto's efforts to make inroads into Odinga's strongholds.

• Emphasizes currently the govt wants to ensure wider tax base and compliance rather than hike the taxes, Mbadi says
• Country has potential to boost revenue collection to 22% of GDP, meaning it may avoid borrowing altogether
• PPPs also necessary if country is to enhance its infrastructure
• Govt has been in active campaign to communicate need for higher revenue collection after it announced the revival of some Finance Bill 2024 tax measures

Amid economic challenges, the government is pushing for enhanced revenue collection and the expansion of public-private partnerships (PPPs) to fuel steady economic growth and reduce dependency on international loans, finance minister John Mbadi said in interviews with the local media. Mbadi also emphasized the need for stronger economic growth, noting that the current 5% rate would not be enough for the achievement of accelerated economic progress, particularly in job creation and infrastructure.

The country has the potential to increase tax collection to around 22% of GDP, up from the current 14.5%, Mbadi noted, adding this could generate significant additional revenue, up to KES 800bn, meaning the govt would no longer need to borrow. He further emphasized that the focus is not on higher taxes but rather on improved efficiency in tax collection to bolster the government's ability to fund development. In fact, the government is considering to skip introducing a Finance Bill in 2025, allowing time to fully implement current tax laws without adding new burdens on the public, and also to ensure tax stability and predictability, Mbadi said.

To address Kenya's infrastructure needs, Mbadi advocates for more PPPs, which he believes are critical for financing large-scale projects that would otherwise strain the government's fiscal resources. Despite public resistance and past controversies around PPPs, he argues that these partnerships are essential for achieving national growth objectives and addressing infrastructure gaps, such as in the transportation sector.

We note after announcing its plan to re-introduce some of the measures from the repealed bill, the finance ministry seems to have undertaken a campaign to communicate the government's plan and address public concerns on revenue collection, tax reforms, and economic growth.

Trump throws Kenya, US business talks into doubt (Business Daily)

US elections: What Trump win means for Kenya (Nation)

CEOs revive growth plans on falling operating costs (Nation)

Treasury CS spells out plans to lay ground for steady economic growth (The Standard)

Lobbying intensifies as purge looms for rebel MPs (The Standard)

Ruto, Mudavadi congratulate Trump on election victory (Kenya Broadcasting Corporation)

Raila to engage key players in Addis as race for AUC chairmanship intensifies (Kenya Broadcasting Corporation)

Kenyan Shilling Remains Steady Despite Dollar Surge After Trump Win (Kenyans.co.ke)

Ndii Explains Plot to Use Paybills and Tills to Collect Tax From Small Businesses (Kenyans.co.ke)

• Slowing reflects monetary tightening, impact of exchange rate appreciation on forex loans
• CBK has hinted at further easing whereas IMF maintains tighter policy stance is still necessary

Domestic credit growth slowed further to a more than a decade low, with banks' lending to the private sector printing at 0.4% y/y in the year ending September, down from 12.2% a year earlier, and 1.3% in the preceding month, according to the latest data released on CBK's website.

Data Download

The development continues a trend from the preceding 8 months, and is not unexpected amid high interest rates, tightened credit standards and slower GDP growth. In fact, in its latest meeting in October, CBK's MPC highlighted the sharp deceleration in credit to the private sector, concluding there was scope for further easing, even though the drop is not that sharp, when accounting for the impact of the exchange rate appreciation on forex loans. According to CBK's presentation at the time, adjusted for that impact, credit growth would have printed at 4.3% y/y in August, some 3pps above the actual print for that month.

The IMF also maintains that a tighter policy is still necessary to ensure price and currency stability, cautioning against further easing, which could increase money supply and drive up inflation, particularly core inflation, which stood at 3.3% in October.

We recall CBK first opted for easing in August, when the benchmark rate was cut by 25bps. A larger, 75bps cut followed in October, bringing the rate to 12.00%.The impact of the cuts is however yet to be fully transmitted, with most banks opting to maintain their interest rates unchanged, reportedly prompting CBK to hold meetings with key executives, urging for rate cuts.

• Slightly above pre-announced target of KES 25bn
• Govt targets KES 600-880bn issuance this FY, according to recently published borrowing plan

The Central Bank sold KES 26bn worth of T-bonds due in 2033 and 2037 in its first monthly auction in November, which closed on Wednesday, according to the auction outcome published on its website. This brings the total amount of T-bonds issued so far this FY to KES 220bn, against an indicative issuance plan of KES 600bn - KES 880bn, according to govt's recently published borrowing plan.

Demand stood at KES 33bn, almost equally split between the two papers, however expensive bids were rejected with the total allotment slightly exceeding the pre-announced target for the auction, which stood at KES 25bn. With no maturities falling due, the proceeds from the auction will be used to fund the current fiscal year budget.

The re-opened paper due in 2033 attracted KES 16bn worth of bids. CBK took KES 10bn of these, with the weighted average yield on accepted bids printing at 15.97%, edging down from 16.39% in the previous sale of this bond held in June. The 2037 bond attracted KES 17bn worth of bids, of which CBK took KES 15bn. The yield on this bond came in at 16.30%.

• project's first phase is expected to yield approximately 2.3mn tons of LNG annually
• govt in process of reviewing contracts with foreign investors in oil, gas and mining

Senegal is on course to launch its inaugural LNG export early next year as part of the Greater Tortue Ahmeyim (GTA) project, which it shares with Mauritania, the country's deputy energy minister Cheikh Niane said, cited by the local media. The development signifies a major milestone in the nation's energy sector, following the launch of oil production earlier this year.

Operated by BP in partnership with Kosmos Energy, the GTA project is located offshore between Senegal and Mauritania. Despite the delays incurred so far, the project's first phase is expected to yield approximately 2.3mn tons of LNG annually, utilizing a floating liquefaction vessel. BP estimates that the GTA field will sustain LNG production for over two decades, positioning the region as a significant energy hub.

This LNG project, alongside Senegal's Sangomar oil field, is part of the country's strategic push to enhance national energy revenues amid concerns over the announced by President Bassirou Diomaye Faye plan to re-negotiate the terms of the contracts with foreign investors signed so far. Reportedly, the government is currently reviewing these contracts, including with BP and Kosmos, and has said it plans to increase state stakes in the ventures, potentially doubling Senegal's share in some projects to 20% by next year.

• Argue that the national processing company will struggle to handle the entire domestic harvest

The Senegalese government has announced a suspension on peanut exports starting November 15, 2024, a move raising concerns among farmers in key production regions. This policy, introduced by the Minister of Agriculture on Wednesday (6 November), has stirred debate due to its potential impact on local incomes and market dynamics. Cheikh Tidiane Cissé, secretary-general of farmers in Senegal's peanut basin, expressed disappointment over the lack of prior consultations with stakeholders, noting that the national processing company, Sonacos, may struggle to handle the entire domestic harvest due to aging equipment, according to local news reports. Cissé argued that the presence of foreign buyers, especially from China, has historically helped stabilize prices and ensured reliable markets for local producers.

The suspension has also drawn criticism from opposition leader Amadou Ba, who questioned the decision's fairness, particularly in the absence of fixed prices for local sales. Speaking in Karang during a campaign rally, Ba called on the current administration to focus on actionable solutions for Senegal's agricultural and economic challenges rather than rhetoric.

• decreasing vs the preceding quarter but up by 3pps y/y
• employment rate declines by 5pps y/y to 40.8%

Senegal's extended unemployment rate stood at 23.2% in Q2, according to the latest employment survey released by the statistical office ANSD. The rate is measured as the share of working age population who have been without a job in the reference period even where these have not been actively looking for a job due to circumstances outside their control. This definition is considered to provide a more precise picture of unemployment in the country than the stricter ILO definition. The figure represents a 4.6pps rise compared to the same period a year earlier, even though it is lower than the print in the preceding quarter. Rural areas experience greater unemployment (25%) than urban ones (19.3%), and unemployment among women stands at a stark 34.0%, significantly higher than the 12.4% rate for men.

Data Download

Data for Q2 2024 further indicate that the labor force participation rate fell to 57.6%, down by 5.9pps y/y, with rural areas seeing higher participation (59.6%) than urban areas (56.2%). Gender disparities remain significant; 67.5% of working-age men participate in the labor force, compared to 48.0% of women. These rates exclude people working as household aids, estimated to be at about 6% of the active population in Q4.

The employment rate for Q2 stood at 40.8%, marking a decline of 5.2pps from the 46.0% observed in the same period last year. Employment rates were notably higher in urban areas, with 44.1% compared to 35.7% in rural areas. Gender disparities persisted, with men showing an employment rate of 54.2%, significantly higher than the 28.0% for women. Salaried employment accounted for 36.1% of total jobs in Q2, down from 37.4% in 2023. The rates exclude people working as household aids, estimated to be at about 7.4% of the active population in Q2, up by 1.1pps y/y.

The NEET rate among youth (15-24), measuring people outside education, employment, or training remained especially high at 30.7%, with rural areas and young women most affected; 39.2% of young women and 37.6% of rural youth fall into this category, underscoring structural obstacles in job access and education.

• Government repays USD 506.8mn IMF loan instalment
• Gold stock rises by USD 548mn reflecting 5.14% dollar gold price increase

The stock of gross gold and foreign exchange serves is down by USD 605mn to USD 63,028mn at the end of October, the central bank said in a statement on Thursday (Nov 7). The change reflected a drop in the stock of foreign exchange reserves by USD 1,036mn and SDR holdings by USD 117mn. This is attributable to valuation changes but mostly to the USD 506.8mn payment under the IMF loan. Gold reserves, on the other hand, increased by USD 548mn reflecting the 5.14% increase in the US price of gold to USD 2,777 in October. The stock of net international reserves, meanwhile, increased by USD 168mn to USD 61,197mn at the end of the month as the foreign currency deposits received were down by USD 769mn.

Data Download

In a longer perspective, the gross foreign reserves increased by USD 510mn since the end of last year. The stock is substantially higher than its pre-pandemic level, rising by USD 8bn since Dec 2019, strengthening the resilience of the economy against external shocks.

• Trucks delayed at the border and potential charges by shipping companies could push costs for miners and raise minerals prices
• Protests are expected to escalate on Thursday

The closing of the Lebombo border point which is the main route into Mozambique has disrupted mining companies exports through the port of Maputo. The closure of the critical minerals export route will cause losses in the amount of millions of losses per day. The local media is reporting long lines of trucks stuck at the border which has been closed due to the eruption of the civil unrest in Mozambique. South Africa deployed police and army at the border and is calling for a calm. According to local authorities, there is no violence on the South African side of the border.

Mining companies are transporting coal, chrome and magnetite through the border and estimate losses of ZAR 1,000 per truck per hour delayed. These costs will increase considerably if shipping companies also respond with charges due to the delayed loading at the port. According to an expert trader quoted by News24, the demurrage fee on the most common Panamax vessel at Maputo port is currently about USD 14,250. One of the company utilizing the export route to Maputo is Exxaro Resources. However, coal volumes are relatively small and should not be impacted by disruption. Some effect could be expected on the already high price of chrome which is imported mainly by China, an industry expert told News24. It was reported that South African authorities are cooperating with authorities on the Mozambique side to reopen the border but the road is littered with debris and the protests are expected to escalate on Thursday.

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• GEPF initially experienced technical issues and delays in processing the applications
• GEPF is the largest pension fund with about 1.2 million active members

The Government Pension Administration Agency (GPAA) announced that 95% of the two-pot withdrawal claims submitted by the members of the Government Employees' Pension Fund (GEPF) have been paid out as of Nov 5. The GEPF is the largest domestic retirement fund with about 1.2 active members. The fund experienced initial delays in processing the claims it had received due to technical issues and procedures which have now been resolved.

The two-pot retirement system became effective on Sep 1, allowing members to access a portion of their savings prior to retirement but leaving the remaining funds until retirement. Prior to the amendment, workers were able to withdraw their savings when they changed jobs, reducing the amount saved for retirement. Under the new legislation 10% but up to ZAR 30,000 of existing pension savings were allocated to the savings pot which is available for withdrawal prior to retirement. Withdrawals are allowed only once in a 12-month period and the amounts withdrawn are added to the income base for that year and taxed at the marginal rate of the member.

The GEPF said it received 326,596 claims and paid out 309,514, comprising an estimated 25% of all withdrawals across the pension industry. The central bank expects, a pre-tax withdrawal of ZAR 40bn in Q4/2024 and ZAR 20bn per year thereafter on top of the pension withdrawal due to resignations. This will support household spending growth by real 0.9% in 2024 and 1.6% in 2025, according to the SARB. Pension withdrawals will also have an impact on government revenues as these withdrawals are taxed at the marginal tax rates. According to SARS data reported in October, withdrawal applications amounted to ZAR 21bn and the estimated tax revenue is at least ZAR 7bn.

• Yields rise by 21-44bps despite government accepting just 40% of bids
• Govt securities sold this fiscal year so far account for 43% of revised full-year plan

The government sold UGX 177.5bn T-bills at the auction held by the Bank of Uganda on Nov 6, half the UGX 355bn target, as the government again rejected a large portion of the bids to prevent rise in yields. The bids submitted at the auction totalled UGX 448.4bn, but the government accepted less than 40% of them. Yields still increased, by between 21bps and 44bps, the biggest increase seen for the 91-day T-bills despite the fact that the government accepted just UGX 4.5bn of the bids for this maturity from the UGX 38.6bn submitted.

With the latest auction, the total issuance this fiscal year so far (Jul 1-Jun 30) is UGX 9.1tn, which is 73% of the original issuance plan for the year (UGX 12.6tn). However, a recent report suggested this plan has been increased to about UGX 21.3tn, which means issuance so far has reached 43% of total.

• Several legislators are suspended following scuffles
• Bill has been strongly criticised by opposition, coffee-growing regions
• Critics claim agriculture ministry lacks capacity to manage coffee sector successfully

The Parliament passed the controversial National Coffee (Amendment) Bill, which envisages the dissolution of the Uganda Coffee Development Authority (UCDA) and the transfer of its functions to the agriculture ministry. The bill has been strongly criticised by opposition MPs but also some NRM MPs, as it is unpopular in the coffee-growing regions. Before the vote, the situation was tense and there were scuffles, resulting in the suspension of 12 legislators for alleged misconduct. Some legislators called on speaker Anita Among to recuse herself due to conflict of interest, but she refused to do so. Journalists were also forced out of the chambers.

Amid the criticism of the bill, the government has insisted that the reform is needed to streamline government services and reduce the high administrative costs associated with maintaining multiple agencies. The critics, however, have pointed out that the agriculture ministry lack the capacity to manage the coffee sector, which might affect its performance and the livelihoods of farmers. We note that coffee exports reached USD 1.4bn in the just concluded 2023/24 season (Oct-Sep). The issue is important for NRNM in view of the forthcoming elections in 2026 as some view it as potentially strengthening the opposition. Buganda is the main coffee-growing region and forms the largest opposition block in parliament.

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• Investments are across various industries and are expected to create 5,500 jobs
• Key investments include a USD 50mn Deal to setup a beverage plant & deal to build 2,000 housing units

Lusaka South Multi-Facility Economic Zone (LS-MFEZ) has announced that it approved 16 investments this year, totaling USD 130mn across various industries, including chemical fertilizers, agro-processing, and recycling. These investments are expected to create up to 5,500 jobs over the next three years, significantly contributing to Zambia's economic diversification. A notable investment includes a USD 50mn agreement with Varun Food Beverages Zambia Limited, which will establish a state-of-the-art facility to produce Carlsberg beer. This project is expected to create 939 new jobs, enhancing regional distribution capacity and reinforcing LS-MFEZ's role as a regional industrial hub.

Several companies are already constructing facilities within the zone, with Kings Worth Group Limited, Umoyo, and Proton Cables having completed their setup. Looking ahead, LS-MFEZ said it is collaborating with Ongos Real Estates and Zambia's National Housing Authority to build 2,000 housing units, which will support future commercial developments, including shopping malls and office spaces. Additionally, 400 hectares have been designated for future commercial developments, including a five-star hotel, shopping malls, healthcare services, and office spaces. The zone is also ensuring stable operations through a power purchase agreement (PPA) with Zesco for reliable energy supply and is advancing water infrastructure projects with connections to Libala Water Works and Kafue Bulk Water, aiming to meet both industrial and residential needs. LS-MFEZ is a Special Economic Zone established to drive economic diversification and foster the development of Zambia's manufacturing sector. Its mandate is to attract both local and foreign investment, promote industrial activities, stimulate exports, and facilitate technological development, job creation, and skills transfer​.

• Solar plant works to accelerate, addressing Zambia's energy shortfall due to drought
• India also delivers 2,500 tonnes of maize to support food security following crop failure
• Bilateral trade reached USD 448mn in 2023-2024, with India's pledging USD 5bn investment

India has committed to accelerating the construction of a 400 MW solar power plant in Zambia as part of its support to tackle the country's ongoing energy crisis, worsened by severe drought conditions. The initiative is part of India's pledge under the International Solar Alliance (ISA) to assist Zambia in enhancing its renewable energy infrastructure. Shri Singh, India's Minister of State for External Affairs, Environment, and Climate Change, confirmed the fast-tracked timeline during the opening of the Zambia-India Joint Permanent Commission in Lusaka.

Alongside the solar power project, India has also sent 2,500 tonnes of maize to Zambia in humanitarian aid, aimed at alleviating food insecurity caused by crop failures. This is part of India's broader development support package for Zambia, which includes providing 100 solar-powered irrigation pumps and 500 embroidery machines to boost women's empowerment and agricultural productivity. Bilateral trade between Zambia and India reached USD 448mn in the 2023-2024 period. India's pledged investment in Zambia has surged to USD 5bn, focusing on public-private partnerships (PPPs) in key sectors. Singh emphasized India's readiness to increase its role in Zambia's development, particularly in sectors such as energy, manufacturing, and mining. We note that in April this year, India pledged to support Zambia with the development of a 400MW solar power project in Kalulushi district, representing a significant step toward strengthening renewable energy in Zambia. The project, worth over USD 650mn, was approved by the Zambia Environmental Management Agency (ZEMA) and is set to be completed in phases over 3-5 years.

• USD 2,000+ outbound fund transfers will now require tax compliance certificate or pay 15% advance tax refundable upon proof of compliance
• Regulation introduced in response to rising illicit financial transactions as reported by FIC, takes effect on Jan 1, 2025
• Bus tax rates raised by up to 20% as part of revenue mobilization for drought relief

Government says it will introduce a new regulation requiring anyone transferring USD 2,000 or more abroad to present a tax compliance certificate or pay 15% of the total amount as an advance tax. Finance Minister Situmbeko Musokotwane announced this measure during a media briefing, effective January 2025. The 15% advance tax will be refundable if the sender proves compliance with Zambia's tax laws. Musokotwane said that this regulation aims to prevent illicit transfers of large sums, as highlighted in the recent Financial Intelligence Centre (FIC) report. The regulation is designed to ensure that individuals transferring large amounts abroad are compliant with Zambia's tax requirements. We recall that in October, FIC announced that it had detected approximately USD 3bn in suspected illicit financial transactions this year, representing a 6-fold increase in illicit transactions in 2024 compared to 2023.

In addition to the transfer rule, the government has adjusted taxes for bus operators, increasing the annual tax for a 64-seater bus from ZMW 12,960 to ZMW 15,555. Smaller buses with 50-63 seats will now pay ZMW 12,960, up from ZMW 10,800. This increase is part of efforts to raise revenue for drought response. The government has also introduced changes to VAT, requiring the use of "smart invoices" to combat fraudulent refund claims. Additionally, a new tax on betting will generate revenue and discourage gambling. We note that some of these measures were already proposed by Musokotwane during the presentation of the 2025 draft national budget to parliament in September this year. The government also reported a significant rise in the fuel debt inherited from the previous administration. The fuel debt, which stood at USD 500mn in 2021, has now exceeded USD 800mn due to accrued interest. Secretary to the Treasury, Felix Nkulukusa, stated that efforts are underway to reduce the fuel arrears.