Question:

I am trying to understand how much fiscal space Poland, Czech and Hungary have without violating EDP rules. To me it is a bit complicated with carve outs for defence spending etc. How wide can deficits go in these countries before EDP is likely to be triggered? And is there any key timeframe at which point EDP could be activated?

Answer:

PL: Poland is already in the EDP, so there is technically no issue. Poland targets a general government deficit of 6.5% of GDP this year, to be down from 6.9% next year. No further updates have come, but there will be new deficit estimates and forecasts in the coming days. In fact, on Apt 1, GUS is due to release its first estimate for the 2025 debt and deficit. Eurostat will release its debt and deficit notification on Apr 22, and that will include a potentially new forecast for 2026.

CZ: Defence spending is nominally 2.07% of GDP in 2026, so the part that gets covered by the escape clause is 0.07% of GDP, or about CZK 0.6bn. While there are concerns that NATO might not recognise some expenses on transport infrastructure as defence-related, the European Commission has recently approved funding from the SAFE initiative for those projects. As a result, that transport infrastructure spending will be exempt for EDP purposes, no matter what. There isn't anything else that is currently exempt for the excessive deficit threshold, which means that fiscal space is 0.87% of GDP before the threshold is hit. As a reminder, the general government deficit is projected at 2.2% of GDP in 2026.

HU: Hungary is also in the EDP, but it has been suspended due to the defence clause. The original leeway provided by the escape clause was 1.5% of GDP, but this was back when the government's deficit target was 2.5% of GDP for 2026. The government has updated the target to 5% of GDP for this year and economy minister Marton Nagy has commented that this has completely exhausted the headroom for incurring a budget deficit without falling back into the EDP. The government had signalled at the time that the escape clause will allow for additional non-defence spending of 0.9% of GDP, taking into account that defence spending has been already raised since 2021. The EC already warned that Hungary was in danger of missing the benchmark in 2026.

Please note that the EU's updated fiscal framework is defined in terms of net expenditure growth, rather than the budget deficit, and the transition from the net expenditure growth target to a corresponding budget deficit level is not trivial, so we rely on ministry and EC estimates for any conclusions. The timeframe within which the EDP could be activated is the spring European Semester exercise, during which the EC evaluates the budget execution for the previous year. If the EC finds non-compliance with the fiscal rules outside the leeway provided by the escape clause, it will recommend stepping up the EDP. All three countries were expected to be within the leeway in 2025, so we would not expect the EC to recommend harsher measures at this stage. The current EC expectations were for Hungary to miss the benchmark in 2026 and if this does happen, the EC will prompt corrective action in the spring of 2027.

Question:

Regarding the HUF 450bn budget for law enforcement bonuses: was this amount fully exhausted by the January payments? Does the January budget balance data confirm that all that amount has been spent? Any spillover to hit the February wage data?

The question was asked in relation to the following story: Budget improves y/y to HUF 32.3bn surplus in January

Answer:

The finance ministry reported HUF 725.5bn of payroll expenses in January (HUF 395.4bn in Jan 2025) and HUF 1,410.9bn in Jan-Feb (HUF 821.2bn in Jan-Feb 2025). It has not commented specifically on the size of the bonus payment and its monthly distribution. What we can infer from the figures though is that part of the payment likely fell in February as well, since the February figure is quite comparable to the January expenditure. The total y/y increase in the payroll expenses was HUF 589.7bn in Jan-Feb, meaning that the bonus was likely fully paid out. The remaining part of the expenditure increase should be on account of the 15% hikes in public administration, local governments and social sectors, we believe.

Some spillover is possible in the February wage data, we would imagine, inasmuch as it appeared that the payout of the bonus continued in February. The data from 2022, when the first such bonus was distributed, also showed the main impact coming in the first month of the payout - February, but the Mar 2022 data was also elevated compared to the usual trend in the adjacent months, possibly suggesting some minor spillover.

Question:

Can you tell me the %s for Tisza + Fidesz for this Zavecz and 21 Research Centre polls, with the 3 categories of likelihood to vote, and the same for their last poll?

The question was asked in relation to the following story: Support for Tisza rises m/m, voters withdraw from Fidesz - ZRI

Answer:

ZRI:

March

• All voters - Tisza 39%, Fidesz - 31%
• Decided voters - Tisza 50%, Fidesz - 39%
• Decided voters certain to vote - Tisza 51%, Fidesz - 38%

February

• All voters - Tisza 38%, Fidesz - 32%
• Decided voters - Tisza 48%, Fidesz - 40%
• Decided voters certain to vote - Tisza 50%, Fidesz - 38%

21 Research Centre:

Current - Mar 23-28

• All voters - Tisza 40%, Fidesz - 28%
• Decided voters - Tisza 54%, Fidesz - 38%
• Decided voters certain to vote - Tisza 56%, Fidesz - 37%

Previous - Mar 2-6

• All voters - Tisza 38%, Fidesz - 30%
• Decided voters - Tisza 51%, Fidesz - 41%
• Decided voters certain to vote - Tisza 53%, Fidesz - 39%

Question:

What is the minimum excise duty on petrol and diesel allowed by the EU?

The question was asked in relation to the following story: PM announces VAT and excise tax cuts for fuel and windfall tax for oil firms

Answer:

This site from the EC has all the minimum excise taxes: https://trade.ec.europa.eu/access-to-markets/pl/content/akcyza.

It has the following information for fuel:

Petrol

Unleaded petrol: EUR 359 per 1000 litres.

Diesel oil

Used as propellant: EUR 330 per 1000 liters.

Used for some industrial and commercial purposes: EUR 21 per 1000 litres.

Used for heating purposes (both business and non-business purposes): EUR 21 per 1000 litres.

Question:

With what frequency will they announce maximum prices, daily, weekly? Thanks

The question was asked in relation to the following story: Energy Ministry announces first max fuel prices giving 13-16% price cut

Answer:

Wholesale fuel companies are obliged to send information to the Energy Ministry daily and the Energy Ministry says it will announce the price daily (here). On weekends and for holidays, the law says that the preceding maximum price will remain in effect. In the law itself, it doesn't actually say that the energy minister will announce this daily. It rather says the maximum price will go into effect the day after it is announced in the Official Gazette and that it remains in place if there is a weekend or holiday.

My understanding is that it is to be set daily, and, though there was no announcement early in the day, it did eventually come. This is the Official Gazette website (here) and the first two announcements are hereand here.

Question:

From the report from Poland's Energy Ministry, the VAT on fuels is not 8% as the government previously proposed, but rather 13%. Is this right? Am I missing something?

The question was asked in relation to the following story: Energy Ministry announces first max fuel prices giving 13-16% price cut

Answer:

I can only go one what the government said. As you can see here, PM Tusk clearly said the VAT on fuels will be cut to 8% from 23%. Though the statute doesn't clarify this, it is possible that the two prices in the maximum are one without VAT or the other taxes (such as the fuel charge or the emission fee) and then with the VAT and the other taxes. This would make more sense than the Energy Ministry choosing an arbitrary increase. It is important to remember that this is a political issue and the right-wing PiS is hammering the government for not doing enough. If it cut the VAT to 13-14% instead of 8%, that would open it up to further attack.

Question: When you say that a reconfigured Romanian cabinet is the most plausible scenario, do you consider this scenario higher probability than a status quo scenario (i.e. after the PSD party conference on 20 April there is no change in the coalition parties and the current cabinet remains in place unchanged)? I'd be interested in what probabilities you attach to the different scenarios (the two referenced above and also the scenario of a minority government with nominal PSD support that prevents a government collapse, and of course the scenario of a government collapse that leads to a snap election? This latter option makes very little sense for PSD given opinion polls that show it has no chance of winning anywhere near enough seats to form a single party government, and assuming the PSD remain unwilling to form a coalition with AUR.

The question was asked in relation to the following story: PSD renews exit threat as internal pressure rises and credibility erodes

Answer: You're right that maintaining the status quo is a real possibility. Still, we don't see it as more likely than some form of cabinet adjustment. From our perspective, the most advantageous scenario for PSD would be to keep a low profile and allow PNL and USR to carry the weight of fiscal consolidation, reforms, and the external pressures linked to the Middle East and Ukraine, at least until the scheduled PM rotation in May 2027, which is a pre‑election year.

However, our impression, based on following the party for the past two decades, is that PSD currently has one of its weakest leadership teams in many years. Sorin Grindeanu seems to have limited authority over regional leaders, whose priorities are increasingly narrow and locally focused rather than strategic. Many of them are strongly affected by Bolojan's administration reforms and want him removed, without necessarily considering what PSD would do afterwards. Grindeanu himself appears primarily focused on maintaining his leadership position, which means he will likely need to deliver something tangible to satisfy regional leaders. In that context, replacing the USR minister, securing at least one USR portfolio, or reshuffling certain positions could be enough to calm internal pressures for a while.

There is also dissatisfaction with some PSD ministers. Aside from the justice and agriculture ministers, several others are seen as competent professionals without corruption scandals and therefore less inclined to engage in the traditional influence networks that some regional leaders still expect. A reshuffle affecting those posts might also ease internal tensions.

Overall, we think cabinet changes are the most likely way for PSD's regional leaders to feel reassured and for Grindeanu to consolidate his position ahead of the 2027 rotation. A pure status‑quo scenario would require a level of discipline and long‑term thinking that, in our experience observing PSD over the years, would be quite a departure from past behaviour.

As for a minority government, we see that scenario as having less than a 20% probability. Our sense is that only a small fraction of PSD members would be willing to give up influence, positions and access to power in order to distance themselves from fiscal consolidation and the shift toward investment‑driven growth, for preserving a Social Democrat ideology. That doesn't seem sufficient to make a minority‑government arrangement viable.

On snap elections, we're aligned, we also see that scenario as extremely unlikely. While the nationalist opposition AUR may favour it, they cannot trigger it without PSD, and we find it hard to imagine PSD MPs voting for early elections given current polling and the high risk of losing their seats.

Question:

What would push the CBT to change course and allow more flexibility in the lira?

The question was asked in relation to the following story: CBT burns 50 tonnes of gold in one week, reserve debates grow

Answer:

Indeed, the CBT cannot meaningfully flex the lira precisely because it has held it for so long. At this point, releasing it would not be a controlled devaluation but an uncontrolled overshoot. There are no meaningful USD sellers in the market, corporate open FX positions are close to USD 200bn, and the geopolitical backdrop keeps risk premiums elevated. Worth keeping in mind that the current 31% inflation print is partly an artifact of suppressed FX pass-through, so a weaker lira move, no matter sharp or light, would detonate a second inflation shock on top of already elevated war-related costs. We encourage you to review our most recent special report.

In case of a weakening in lira, the only positive thing could be that the exporters would see a one-month gain at best before import-heavy input costs reprice and wipe it out, and that assumes the open FX position book does not trigger a wave of corporate failures in the process, we assess.

The deeper issue is that the programme itself is a standard stabilisation programme, we think, consisting of combination of tight money, managed real exchange rate, fiscal consolidation. Moving beyond it would have required structural transformation in industry, agriculture and import substitution that was never undertaken, we underline. That narrowed the policy space from the outset, and the authorities have made several missteps even within that narrow corridor, we think.

So the CBT really has two paths. It can continue suppressing the dollar without hiking rates, which bleeds reserves and ends in a disorderly adjustment. Or it hikes rates meaningfully alongside continued FX management, which slows reserve erosion, puts inflation on a more credible downward path, and buys time. A genuine move toward lira flexibility only becomes viable once inflation is sustainably lower, net reserves are rebuilt, and the corporate sector has worked down its open FX exposure, none of which are near-term prospects given the current external environment, in our view.

Question:

is there any website or data source to monitor Azerbaijani oil price in daily or weekly basis?

The question was asked in relation to the following story: Azerbaijani oil price exceeds USD 132bbl

Answer: Yes, I personally take it from here: https://report.az/en/tag/azeri-light-crude. It is reported on a daily basis.

Question:

Does the latest public debt represent the share of debt to GDP for that month only or cumulatively for the year?

The question was asked in relation to the following story: Public debt equals 39.5% of GDP at end-2025

Answer:

The outcome represents total public debt at the end of 2025. The monthly difference between Nov-Dec amounted to USD 50mn. In the end, public debt grew from USD 8.85bn to USD 8.9bn

Question:

With the bond issued this week, how much of Uzbekistan's 2026 external borrowing plan has now been covered?

The question was asked in relation to the following story: Q&A: 2026 budget financing sources

Answer:

As explained here, the 2026 budget deficit is to be financed, among other sources, with UZS 30trn in domestic financing and UZS 31.8trn in foreign financing (or around USD 2.6bn using the reference FX rate of 12194 for the bond issue you refer to). Moreover, the annual ceiling on new externally borrowed and government-guaranteed loans for 2026 is USD 5bn. Hence, given that they just issued USD 1bn to cover the fiscal gap, they have room to do additional USD 1.6bn for budget financing, and another USD 2.4bn for other investment projects, if needed.

Questions:

(1) How do you see BanRep getting around this?
(2) Is it possible that monetary policy will basically be on pause until a new government is presumably seated?

The questions were asked in relation to the following story: BanRep poised for further jumbo hikes, but board rupture clouds rate outlook

Answer:

These are very valid questions. We believe the legal situation remains unclear despite Governor Villar's assertion that the finance minister, whether Germán Avila or an ad hoc appointee, must attend the meetings. In Colombia, where challenges to statutes, regulations, and decrees are an everyday occurrence, Ávila could [try to] find a way to withdraw from the board legally, although a review of such a decision would be heavily delayed by the substantial caseload that the high courts usually face.

Article 35 of BanRep's Statutes (Decree 2520 of 1993), which we have discussed in detail since yesterday, is key: the board "may meet, deliberate, and decide only with the attendance of at least five of its members, one of whom must be the Minister of Finance and Public Credit, who shall preside." Under this reading, we reiterate that the presence of the minister, or a delegate, is a mandatory condition for any decision, including the setting of interest rates. So, would the board be left without legal power to make binding monetary policy decisions if the minister or any delegate does not participate? This question, in other words, reflects yours.

We are waiting for a public statement from BanRep on the legal scope of the ministry's decision to withdraw from the board, which, frankly, we do not understand how it would be carried out from a legal standpoint. Likewise, we are waiting to learn how monetary policy decisions will be made moving forward.

BanRep is not a vocal institution in terms of political dissent, and the board does not have media or sufficient political experience to sustain debates with veterans such as President Petro or the Finance Ministry itself. We believe yesterday's meeting and subsequent press conference was a miscalculation, since Villar did not know how to address the legal background and, in our reading, acted as if he was unaware of Article 35. It also raised more questions than answers and created uncertainty that affects the risk premium not only of the country but also of the central bank, in a very complex fiscal, monetary, and overall policy backdrop.

In our assessment, without the minister being part of the board, any decision could be classified as nonbinding and could be challenged. Thus, with presidential elections in May/June and a new government seated in August, monetary policy could, in practice, be in limbo for several months.

Questions:

(1) Could you clarify the latest estimates of the gap between domestic gasoline and diesel (ACPM) prices and their international benchmarks, and how this has evolved since early 2026?

(2) In particular, how much of the gap is currently being absorbed by the Fuel Price Stabilisation Fund (FEPC), and to what extent recent oil price increases and domestic pricing decisions are widening the associated fiscal costs?

The questions were asked in relation to the following story: Press Mood of the Day

Answer:

Regarding the Press Mood item, it is important to clarify that the Government floated a proposal to "liberalize" diesel (ACPM) prices, but it is not official policy.

On Wed., Mar 31, the Finance Ministry confirmed that the COP 500-per-gallon gasoline subsidy in place since Feb 1 would not continue, and prices rose accordingly. Our earlier answer was written before this was confirmed. Although fairly expected, the subsidy discontinuity was announced Wed. late evening. Still, our answer holds.

All else equal, a higher crude price has a negative impact on the balance of the Fuel Price Stabilization Fund (FEPC). According to estimates by Corficolombiana in early March, for every additional USD 1 in the Brent price, the Fund's surplus would shrink by approximately COP 500bn. This elasticity is relevant given recent conditions. In Jan 2026, arguing that its obligations were settled and that it was in a surplus position, the government announced a path of gasoline price reductions with the explicit purpose of bringing the Fund's balance to zero. However, external conditions shifted quickly toward the end of February, pushing the external price above the internal price. From that point, almost the entire differential has been absorbed by the FEPC, which acts as an implicit subsidy by financing the gap between the international reference price and the retail price.

Recent estimates by local academics and subject-matter experts suggest that with a 50% or greater increase in the international diesel price due to the conflict in Iran, the diesel price per gallon in Colombia should be around COP 20,000. The diesel price varies by region, but on average, it is currently around COP 11,000 to COP 11,500. This implies that the FEPC is subsidizing approximately COP 8,500 per gallon on average.

Likewise, the increase of more than 30% in international diesel and gasoline prices has lifted the producer price received by Ecopetrol, widening the gap versus the regulated domestic price. When the international price exceeds the producer price, the FEPC must cover the difference, creating greater fiscal pressure for the Government. The effect has been significant: only three weeks ago, the same calculations indicated the diesel subsidy exceeded COP 3,500 per gallon, while the gasoline subsidy was around COP 1,500 per gallon, after recent cumulative reductions of COP 1,000 in the internal price. In this context of rising international prices and relatively low domestic prices, the FEPC has simply been widening its deficit. Note that the standard gasoline price also varies by region, averaging around COP 15,100 per gallon.

The increase in Brent and the decision to keep domestic prices relatively contained have widened that gap since early 2026, raising the FEPC's fiscal cost. Think tank ANIF and other analysts estimated a week ago that the fund could accumulate a deficit of about COP 10.7tn in 2026, equivalent to 0.6% of 2025 nominal GDP, if domestic prices are not adjusted. This indicates that rising international oil prices, combined with local price-setting decisions, are significantly increasing the associated fiscal cost.

We recently addressed two related questions on how the Fund works and its impact under the current conditions: rising international crude prices, a nominal exchange rate stable around COP 3,700, and the effect of frozen prices for freight and passenger transport, which may offer additional context.

Question:

Do you have an estimate of how many KWD these measures will release into the system?

Answer:

CBK's press statement lacks any concrete details, but the Gulf business news portal AGBI has published a list of these temporary measures, namely:

• The Regulatory Liquidity Ratio was cut to 15% from 18%
• The Liquidity Coverage Ratio (LCR) was cut to 80% from 100%
• The Net Stable Funding Ratio (NSFR) was cut to 80% from 100%

We tried to calculate the impact of the reduction in the liquidity ratio and the LCR based on the January 2026 monetary sector report, but some key figures are missing so we are not really sure if we can get e meaningful estimate. The analysis pieces that we saw basically say that "these measures will boost liquidity and eventually bank lending" but no one has given any concrete estimates. According to the IMF, the LCR and NSFR have consistently stayed above the regulatory thresholds, so the liquidity that these measures free may not necessarily translate into higher lending.

Question:

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

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

Answer:

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

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

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

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

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

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

Question:

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

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

Answer:

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

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

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

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

Question:

How does the 2025 full-year growth figure compare to the forecasts embedded in the initial budget and the supplementary ones?

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

Answer:

The initial 2025 budget (LFI) was built on a growth assumption of 8.8%, which was revised down to 8.0% in the first supplementary budget (LFR1), and further to 7.8% in the second supplementary budget (LFR2), endorsed in the last days of 2025. The ~8% assumption was not only the authorities' projection but was broadly shared, including by the IMF and rating agencies.

It is worth noting as well that the 6.7% estimate remains provisional and revisions have been common, often with a significant lag. In fact, the latest publication also revised the 2024 growth data. In addition, the ongoing GDP rebasing exercise means that historical growth rates and GDP levels may be revised further once the new base year series is published.

Follow up question:

Would this impact the 2025 deficit projections?

Answer:

On the nominal side, we would expect the turnout to be largely in line with the projection, based on the assumption that the second revised budget was adopted at end-December 2025, and by that point the authorities should have already had a relatively clear picture of revenue and expenditure execution for the year. In addition, although we've not heard much news on expenditure execution, there have been reports, indicating revenue performance was on track, or slightly above the LFR2 target.

As to the deficit/GDP ratio, there may some mechanical impact. The revised macro framework in LFR1 was based on nominal GDP of about XOF 21,690bn and, while this figure is not explicitly restated in LFR2, it appears to have been retained unchanged, given that both the nominal deficit and the ratio were left unchanged (XOF 1,696bn, 7.82%). Summing the four quarters published by ANSD gives nominal GDP of roughly XOF 21,535bn for 2025. Assuming the same deficit, the ratio would print at about 7.88%, i.e. slightly (+0.06pps of GDP) above the LFR2 projection.

The rebasing exercise is, of course, likely to lower the ratio mechanically, going forward. The size of the economy was increased by 13% for 2021. For illustration, applying the same uplift to the provisional 2025 nominal GDP figure would raise it to about XOF 24,335bn, which would in turn bring the deficit ratio down to around 6.97% of GDP. The eventual impact though will depend on the final rebased GDP.

Question:

Why did Senegal downsize this quarter's APE target from XOF 300bn in the preliminary plan announced at the UMOA annual meeting end-January to XOF 200bn at launch? Did this reflect lower financing needs?

The question was asked in relation to the following story: Results of the first APE for 2026

Answer:

We would not interpret this as a sign of lower financing needs, but rather as an execution strategy / market-related decision rather than a needs-related one. The government has already raised a large share of its Q1 financing via competitive auctions, with issuance reaching close to XOF 1,070bn by end-March, so the XOF 200bn from the APE comes on top of that, for a total of around XOF 1,270bn vs. XOF 1,008bn in the plan presented at the meeting.

That said, investor sentiment in Q1 has been relatively cautious, reflecting uncertainty around the Eurobond repayment, the outcome of the government's revenue-raising measures, progress on IMF discussions, as well as the domestic political uncertainty. This weaker sentiment was already visible in UMOA auctions, where longer-dated maturities generally saw weaker subscription levels. In that context, it would make sense for the authorities to downsize the initial APE tranche rather than risk under-subscription on longer maturities, and then potentially upsize a subsequent tranche when conditions are more favourable.

More broadly, annual financing plans are highly indicative and are frequently adjusted. Last year, the plan announced at the annual meeting was around XOF 1,000bn, but actual domestic issuance ended at XOF 2,200bn via competitive auction only, and close to XOF 4,000bn including the APE issuances. Even within this year, there are already differences between indicative calendars - another preliminary UMOA calendar (from February) showed around XOF 780bn in Q1 via auctions (vs. XOF 708bn in the version presented at the meeting), while the final advertised amounts came in at close to XOF 900bn.

Question:

Hello. I'm looking into whether the oil shock and terms of trade depreciation have a meaningful impact on South Africa's structural outlook, and one of the channels I'm exploring is fiscal. Do you have any estimates or rules of thumb on how changes in terms of trade feed through to government revenues? (maybe through GDP or commodities revenues) Thanks in advance!

The question was asked in relation to the following story: Main budget turns to surplus of ZAR 27.3bn in February

Answer:

A deterioration in the terms of trade can weigh on fiscal revenue indeed but the pass-through is not mechanical. I think the GDP channel is a useful starting point. According to the SARS a long-run tax buoyancy of about 1.2, meaning that, over time, a 1% change in GDP is associated with roughly a 1.2% change in tax revenue. In 2024/25, this ratio increased to 1.6 but this is unusually high and was driven largely by PIT/PAYE strength and two-pot withdrawals, not by commodities.

But this is only a rough guide for a terms of trade shock. Commodity prices and terms of trade have been researched mainly in light of commodity cycles that affect exports. The primary impact of commodity price shocks is on real incomes, the current account and the fiscus, with part of the effect offset by rand appreciation, according to SARB research. Unfortunately, I have not seen any rules of thumb that can be used to assess the impact on mining profits, CIT and royalties.

I would also note that a potential structural impact would need to see a sustained increase in oil prices that is not offset by the terms of trade for export commodities (coal, iron, gold, and PGMs) that then translates in lower incomes and lower tax base. This was recently mentioned by Treasury official Duncan Pieterse.

Question:

I have a question on the USD/INR exchange rate and RBI FX reserves. The INR has been on a significant depreciation trend for some time but I notice that RBI FX reserves have climbed during both January and February not just due to gold price revaluation but also the FX currency position. This seems odd when the INR has been on a weaker trend. Could it be that RBI is deliberately buying US dollars in the market and willing to tolerate/push INR weaker during January and February? But we know that in March that RBI has now tightened net FX open position limits and so seems more concerned about prospects for further pressure on INR. I am just trying to understand why in January in Feb did we see FX reserves rise even as INR was continuing to trade weak?

Answer:

In January, the RBI turned a net buyer of dollars in the spot market for the first time in eight months, purchasing USD 2.5bn. Meanwhile, its outstanding forwards rose to USD 67.8bn at end-January, the highest level since end-April 2025. This indicates that while the RBI continued to intervene to support the rupee, the focus shifted from the spot to the forward market, which does not immediately impact forex reserves. This partly explains the USD 9.5bn m/m increase in RBI's foreign currency assets in January. However, the revaluation of gold holdings accounted for most of the USD 36.0bn m/m gain in forex reserves.

Data on RBI intervention and the forward book for February are still awaited. We believe that spot purchases may have increased substantially, possibly as greater rupee stability, partly due to strong portfolio inflows (which reached a net USD 4.2bn, the highest since Sep 2024), allowed the central bank to mop up dollars. As a result, RBI's foreign currency assets jumped by USD 10.7bn m/m in February, offsetting a decline in gold holdings. Our understanding is that improved forex liquidity during the month led the RBI to boost its forex reserves, without causing pressure on the rupee.

It is noteworthy that the unwinding of net short dollar positions accumulated in January reportedly put additional pressure on the rupee in March. More than half of the outstanding forwards at end-January had a maturity of 1-3 months.

The question was asked in relation to the following story: RBI's tightening of forex rule fails to lift rupee

Question:

Can you add some perspective to the news story doing the rounds that India's fertilizer reserves stocks are about 10% higher by March this year compared to the previous year. While in isolation that sounds impressive, how large are the reserves relative to the Kharif planting season typical demand?

Answer:

The Ministry of Chemicals and Fertilizers stated in a press release earlier this month that fertilizer stocks as of March 19 were significantly higher than in the same period last year. Urea stocks increased by 10.7% to 6.1mn tonnes, NPK stocks rose by 66.1% to 5.7mn tonnes, and DAP stocks more than doubled to 2.4mn tonnes. However, a subsequent press release showed that stocks of urea, DAP, and NPKs declined sharply within just four days, by March 23. This indicates that stock levels fluctuate frequently and should not be viewed as a definitive measure of overall adequacy or availability.

The closure of the Strait of Hormuz and a reported export curbs by China are likely to affect the supply of Urea and DAP the most. India sources about 39% of its total urea imports from China, Saudi Arabia, Qatar, and the UAE. These countries also account for about 48% of India's total DAP imports.

Sales of urea, used as a proxy for consumption, during the 2025 kharif season stood at 19.3mn tonnes, according to government data. This demand was met through domestic production, averaging about 2.5mn tonnes per month, and imports totalling 5.9mn tonnes during Apr-Oct last year, an official press release shows.

However, reduced gas supply to fertilizer plants amid ongoing crisis has lowered production to around 2.0mn tonnes per month at present. Combined with potential disruptions in imports from key suppliers, this could significantly affect fertilizer availability for the 2026 kharif season, in our view. The situation may be more severe for DAP, given India's higher dependence on imports from China and Gulf countries.

That said, the situation could improve if Iran allows safe passage for Indian gas tankers, which would help stabilize gas supply and support domestic fertilizer production. India would still need to secure substantial imports from alternative sources. According to Reuters, the government is in talks to increase purchases from Russia, Belarus, and Morocco. We believe unless these discussions translate into firm supply agreements, India may face fertilizer shortages in the upcoming kharif season if the Iran war prolongs.

Question:

Hello, the strong tax revenues are mainly coming from profit tax, that's driven by semiconductors? "using KRW 25.2tn in excess tax revenues driven by strong semiconductor and stock market performance and KRW 1.0tn in fund resources."

The question was asked in relation to the following story: Govt unveils KRW 26.2tn supplementary budget in response to Iran war impact

Answer:

Yes, the excess tax revenues come largely from profit tax driven by the semiconductor boom, which is expected to continue in 2026. Samsung Electronics and SK Hynix alone accounted for 10% of all corporate tax income in 2025 and 19% of total tax revenue growth. However, the semiconductor boom is also having secondary effects on other tax revenue categories, such as income tax (due to increased remunerations in the sector) and even the securities transactions tax (due to stronger stock market activity).