Question:

I reviewed your numbers, which indicate that spending and revenues reached approximately 90% of the target. The target in this case refers to the 0.7% actual fiscal deficit. However, what were the main reasons for the actual deficit falling below the initial target of 2.4% of GDP?

The question was asked in relation to the following story: Government budget deficit down by 41.5% y/y to ALL 18.3bn in 2024

Answer:

It seems that the lower deficit in 2024 (0.7% of GDP) compared to the planned deficit target of 2.4-2.5% of GDP for the year, is on the back of underspending. The government managed to reduce the budget deficit to ALL 18.2bn from ALL 57.2bn, which was the 2024 plan, due to lower expenditure compared to the budget law. The budget deficit in 2024 thus reached its lowest level in 30 years, since 1994.

Revenues reached 99.5% of the target, while the government expenditures accounted for 94.5% of the planned target. The actual spending was approximately EUR 420mn lower than the planned, according to data from the finance ministry. Spending was planned to reach ALL 771.3bn, but only ALL 728.6bn was actually spent. The data breakdown showed that current expenditure was ALL 22.8bn less than the plan, mostly due to lower spending on personnel and interest payments. The government spent ALL 11.0bn less on wages compared to the salary increase plan. The state also paid ALL 5.9bn less on debt interest, seemingly due to continued exchange rate appreciation during 2024, in our view. Spending on local governments was also ALL 8.3bn short of the target and another ALL 3.7bn was saved from reserve funds, due to the lack of unexpected events or unexpected expenses during the year.

Capital expenditure was also ALL 16.8bn less in 2024 compared to the plan, mostly due to projects with foreign financing. The government has not allocated foreign financing for capital investments according to plan, and used only ALL 17.4bn, compared to the planned ALL 28.8bn. This has become a trend in the last few years, possibly because these projects are subject to a higher level of scrutiny from lenders, in our view.

A detailed table of financial items from the Ministry of Finance is available for further analysis at https://financa.gov.al/treguesit-analitik-fiskal/ (unfortunately not in English though).

Question:

How does Belarus raise funds in the Eurobond market? Are the investors known?

The question was asked in relation to the following story: FinMin raises USD 26.9mn in primary eurobond auction

Answer:

Officially, there is no investor breakdown for Belarus' eurobonds. The FinMin's publication on the latest issuance features minimal information and only confirms that both natural persons and corporate entities invested in the bonds.

Unofficially, general comments by the FinMin over the last couple of years suggest Russian investors are crucial. This can also be confirmed indirectly as Belarus limited eurobond placements in 2023 when tensions between Russian bond holders and the Belarusian FinMin were particularly high. By end-Q1 2024, the matter seemed to have been resolved and Belarus made several placements later in the year.

It is also notable that the weight of CNY-denominated bonds on the Belarusian market has increased ostensibly. Data by the central bank shows last year's total CNY issuance reached 1.22bn, even though it was largely negligible before. There were no official announcements of CNY-denominated placements and the bank's data does not even specify if the bonds are sovereign or corporate. They are likely sovereign after all, possibly traded as part of negotiated sales that are not disclosed publicly.

Question:

I'm wondering if you could help me with a summary of housing policy measures in place and considered by governments in Czechia, Poland and Romania?

Answer:

Poland: There are no active government pro-housing policies. The latest one was implemented under PiS and was the so-called "safe 2% loan" program. The program was launched in July 2023 and ran until end-2023 (though it did boost lending in December 2024 as well). The credit provided first-time buyers under the age of 45 with a fixed interest rate of 2% for 10 years. The difference between the guaranteed rate and the market rates was subsidised by the state. There were maximum value limits. The original cost was to be PLN 11bn or so, but I think this was expanded by about PLN 4bn-5bn later.

The senior ruling KO and others ran a program of '0%' loans, but the ruling coalition has not been able to agree. The KO and Left are generally for a subsidised lending scheme whereas the Polska 2050 part of the Third Way (TD) argues that the programs simply subsidised developers and lead to higher property prices (the 'safe 2% loan' program did indeed lead to much higher prices).

In mid-February, Minister of Development and Technology Krzysztof Paszyk presented a new government housing program called "Key to housing" based on three "keys": municipal housing, social housing, and ownership housing in so-called "First Keys" program. The goal is to get built some 15,000 new apartments in the first year and 40,000 by 2030. The program is to direct at least PLN 2.5bn in the first year to social and communal housing, with student housing also created. The scheme will also have a "First Keys" pillar that will help those who do not yet own their own place. Here, a support program will be available to those meeting income criteria and who want to purchase on the secondary market only. The apartment or house must be put into use at least 5 years earlier and the previous owner must have owned it for at least 3 years, with this to discourage so-called flippers. There will be a price limit of PLN 10,000 per square meter (PLN 11,000 for Warsaw, Gdansk, Krakow, Poznan and Wroclaw). Municipalities will also have the option to set a price limit on their own.

As far as we understand, the details are still being worked on.

Romania: The government has a programme for flats construction, but there were no new flats built for years. The flats in the programme are meant for renting to young families at favourable prices or for doctors, teachers, and police which choose to relocate to rural areas. Another programme is offering state guarantees on mortgage loans. This one is implemented since 2009 and has been very successful. However, the allotted amount for guarantees has been constantly falling in the past years, from RON 2-3bn to RON 500mn this year. The only eligibility condition for beneficiaries is to be at the first house purchase.

Czech Republic: There have been occasional programmes for the construction or purchase of housing, but their scope has always been small. Essentially, it is mostly up to local governments to prepare or launch such programmes, and terms for these can vary a lot. The only national programme that is currently active has a budget of CZK 7bn (about EUR 280mn) and provides subsidies for the purchase of housing by people up to 35 years, people in certain professions (teachers, healthcare professionals, police officers), or middle-class households that are not in the top 20% percentile. Subsidies range around 25-40% of the final price, and can be combined with a preferential loan at 1-3% interest (currently, market mortgage rates are at about 4.7-4.8%). However, the programme aims at only 7,500 homes being bought, which is not much by any measure.

There is also an ongoing housing benefit, which was used as a vehicle to deliver energy subsidies to households in Q4 2022. Eligible households are those whose housing expenses (rent, energy, water, etc.) exceed 30% of their net income (i.e. after taxes and social contributions). The size of the benefit varies a lot depending on the size of household, dependable persons (children, disabled, etc.), how the home is heated, and whether it is rented or owned. There is also a separate calculation scale for pensioners, who would be most likely to be homeowners rather than tenants. The benefit cost the budget CZK 17.9bn in 2023, according to a report from the Czech statistical office from last November; information for 2024 is not available yet.

Question:

Will the supermarket boycott have a significant impact on retail sales? The high frequency data sometimes show drastic numbers, but only a slight loss of momentum is apparent. Do these boycotts only delay purchases by days or can we expect a negative impact later on?

Answer:

The boycotts of retailers started only in late-January, i.e. on Jan 24 to be precise, so we are not surprised that only moderate retail sales moderation, including of food sales, is apparent in the data released by the stats office yesterday.

The first boycott of retailers on Jan 24 brought strong results - namely, according to Tax Administration data cited by local media, the total number of receipts issued in retail trade was 40% w/w lower (compared to the previous Friday, Jan 17), while the total value of receipts fell by 47% w/w to EUR 7.558mn. The next boycott was on Jan 31, when the number of invoices increased by 11% w/w compared to Jan 24 but was 21% lower compared to Jan 17, while the value of the receipts -was 11% w/w higher but by 27% lower compared to Jan 17; in retail trade alone, on Jan 31, the number of invoices and their value increased by 20% and 19% respectively against Jan 24, but were 32% and 44% lower than on Jan 17, when there was not boycott.

On Feb 7, the third day of the boycott, the total number of receipts increased by 16% w/w and their value - by 17% w/w; compared to Jan 24, the number of receipts issued was 29% higher and the total value was 30% higher. Compared to Jan 17, when there was no retail boycott, the number of receipts issued was 9% lower and the total value was 10% lower. On Feb 14, the number of receipts issued by retailers was 9% w/w higher and the total value of receipts was 20% w/w higher than on Feb 7, but compared to Jan 17, when there was no boycott, the number of receipts was down by nearly 7% and the total value was lower by 4%. The number of receipts issued in retail trade on Feb 21, was 4% w/w higher, while the total value of receipts was 1% w/w lower; compared to Jan 17, when there was no boycott, the number of receipts was 3% lower and their value was 5% lower.

As you can see, the strong fall of number of receipts and turnover in retail trade observed in the first day of the boycott (Jan 24) was not maintained and has translated into rather moderate retail sales deceleration in the month. Therefore, as in February the reported falls of the number of invoices and their value fell only slightly against Jan 17, when there was no boycott, and even increased compared to previous weeks, we rather expect negligible retail sales growth moderation in February. While we agree with you that people may be postponing purchases, we doubt this could be done indefinitely. Therefore, we rather expect retail sales growth not to moderate considerably or even to speed up again, especially in view of the fact that the inflation moderation resumed in February (it slowed down to 3.4% y/y in the month from 4% y/y in January, reporting deceleration for the first time since September 2024), hence possibly positively influencing consumer sentiments as well.

The question was asked in relation to the following story: Retail sales growth eases to 4.4% y/y wda in January in negative surprise

Question:

Apparently the government is raising the TV fee to 150 CZK and the radio fee to 55 CZK per month in May. Haven't seen anything on this with you. Do you have an idea/calculation of how much that would affect CPI?

The question was asked in relation to the following story: Uncertainty, sticky service price inflation to keep policy rate unchanged

Answer:

The reason you haven't heard anything from us is that the impact of this increase is negligible. Public TV and radio licence fees fall under a category that also includes TV subscriptions, and its weight in the CPI basket is only 0.9648267%. Even if we assume that the category includes only the public TV and radio fees, the impact on year-on-year headline inflation is +0.13pps. However, this is a very generous assumption, as the category covers all kinds of TV subscriptions, including cable TV and streaming services. Just for reference, the combined monthly licence fee will become CZK 205, an increase from CZK 180. This is less than a monthly subscription for services like Netflix (CZK 239) or Max (CZK 219), and this doesn't even compare to cable subscriptions, where typical packages start around CZK 200 but can go to CZK 350-400.

My point is, the public TV and radio licences represent a tiny share in that category, so the actual impact on headline inflation may be as low as a tenth of what we noted above. This issue has never come up in CNB discussions as a possible inflation risk, even though the debate about raising the licence fee for public TV and radio has been going on for months.

Question:

What would be the impact on energy prices into the CPI if the government lifted the price caps?

Answer:

It is difficult to make a precise estimate because of the uncertainty about what the prices would be under purely market conditions. As you know, the government instituted two price brackets for gas and electricity consumption, keeping the headline prices intact for below-average consumption and introducing much higher prices for above-average consumption in mid-2022. Specifically, the headline retail gas price is HUF 102 per c.m. and the headline electricity price (daily tariff) - HUF 36/kWh. The higher-bracket prices are respectively for gas - HUF 747, and for electricity - HUF 70.1. The government signalled at the time that even the higher-bracket prices were below market prices, but this was in the peak of the energy crisis. The government has said that around 20% of households fell under the higher bracket.

If we assume that the higher bracket prices currently correspond to the market prices, the removal of the regulated prices would mean a 632.4% increase in the gas price and a 94.7% increase in the electricity price. Gas prices have a 1.673% weight in the consumer basket for 2025, while electricity prices - 1.623%. Given that this hike would affect the larger part of households, around 80%, we estimate an inflationary impact of 9.7pps. We note that the NBH had estimated the inflationary impact of the original hike (which affected around 20% of the population) at 2.5-3.0pps in the course of one year.

We feel obliged to point out that a removal of the regulated utility prices is a near zero-probability event for the next couple of years. The ruling Fidesz party has based its policy on a strict promise to maintain the regulated prices as a priority policy, so it would be a spectacular own goal if it were to remove the regulation. We find it extremely hard to imagine that this could happen before the 2026 elections and not even afterwards, irrespective of the election winner.

Question:

I would like to kindly ask you whether you could provide information on the source of this survey: "The payment of such income will be concentrated in Q1 and market surveys have shown that households will spend at least part of this income. The spending was expected to be directed mostly for tourism purposes, but we believe that it could also finance consumer durables purchases."

The question was asked in relation to the following story: Retail sales recover to 4.7% y/y growth in January

Answer:

The source of the news is an article from the news portal Portfolio, which reported on a survey from OTP and Groupama Insurance. You can find the article in Hungarian here, although Portfolio is a partially paid service and the full text might not be accessible without a subscription. We also covered the survey at the time when it was published - you can read our story here, the survey is discussed in the last para.

Question:

Does the government publish a breakdown of VAT revenues?

Answer:

The most comprehensive official source is the state revenue committee's data on tax receipts. It breaks down VAT revenues into six major categories.

Question:

Any estimate of the impact on the govt budget deficit if they accept the proposal to subsidize the contributions? Also, what is the likelihood that the government will accept at this stage?

The question was asked in relation to the following story: Trade unions seek 26.7% minimum wage hike to MKD 28,567

Answer:

The government has not yet presented any concrete estimate of the impact of a potential subsidising of the contributions. However, the government most likely counts on higher revenues from the personal income tax due to the higher wages to partly offset the subsidies for the contributions and limit their fiscal impact. At the last Economic and Social Council, the government told employers and trade unionists that they would not subsidize an increase in wages in any way but would support an agreement between workers and employers. Regarding the proposal of the trade unions, the government said that will look at the proposal once it arrives at the government, and then it will make a statement. Our opinion is that the government is highly unlikely to accept the proposal in the current version.

Question:

What is behind the rise in FDI inflows in Q4 in North Macedonia? The reference is to UK debt-creating financing.

The question was asked in relation to the following story: Current account swings into 2.3% of GDP deficit in 2024

Answer:

Here is the official information from the central bank:
"During the fourth quarter of 2024, the total direct investments in the country registered net-inflows of Euro 397.5 million, as a result of increased net inflows in intercompany debt (of Euro 296.7 million) and increased investments in equity (Euro 104.4 million) amid decreased reinvestment of earnings (Euro 3.6 million)."
https://www.nbrm.mk/direktni_investicii_dvizenja-en.nspx
So most of the FDI inflows to North Macedonia in Q4 have been related to intercompany debt, according to the central bank. The net FDI inflows to the country in Q4 were actually not much higher compared to the previous three quarters (EUR 355.2mn in Q4 compared to EUR 732.9mn in Jan-Sep), according to the latest balance of payments data of the central bank.
https://www.nbrm.mk/platen_bilans-en.nspx

Question: Can you please let us know what is the size energy subsidies on the fiscal side? And if there are any plans to remove them if energy prices decline.

The question was asked in relation to the following story: Romgaz net profit increases 15% y/y in 2024, despite 12% revenue drop

Answer: The energy regulator (ANRE) approved more than RON 25.9bn (EUR 5.2bn) compensations to suppliers for selling natural gas and electricity at capped prices in various versions of the energy price schemes implemented since November 2021 until end-H1 2024. The government did not provide an estimation of the overall fiscal impact and it did not regulate the situation when prices decline below caps. This has raised significant criticism from market experts because those situations occurred several times for some periods in 2023 and 2023, but final consumers could not benefit because suppliers still sold at cap prices. The caps were adjusted downwards in 2023, but marginally. The energy ministry argued it could not risk witnessing price hikes that would have led to higher compensations.

Question: What is the timeline on announcement of Presidential candidates (assume 15 March)? Also what is Georgescu's status? The court decides on him in 2 days? If Georgescu is out, who is alternative right-extreme candidate?

The question was asked in relation to the following story: Motion of no confidence in Ciolacu cabinet expectedly fails

Answer: The deadline for submitting applications for presidential election is Mar 15. The central elections bureau must validate the applications by Mar 17. Georgescu should have submitted his candidacy last week but he postponed it without any explanation. He said that he has a surprise for his voters.

Prosecutors haven't sent Georgescu's file to court yet. This is a very long process. And even if they send it today, a long process follows that may take years. We don't think we can see Georgescu sentenced so soon he could be banned from running for president. However, the Constitutional Court could remove him from the race like it did with SOS Romania's leader Diana Sosoaca. On grounds of jeopardizing constitutional order (his public fascist and antisemitic statements, praising war criminals and advocating for persons convicted of crimes against humanity). We think he delayed submitting his candidature because he fears the CCR will remove him and then the nationalists will not have a strong candidate in the election.

We believe all scenarios are possible. If Georgescu runs and the CCR leaves him in the race, he will most probably make it to runoff with Bucharest Mayor Dan. In this scenario, nationalists have the biggest chance to win. If the CCR removes him from the race and there is no other candidate for nationalists, Dan could make it to runoff with the establishment candidate, Antonescu.

If Georgescu doesn't want to risk being removed from the race, he will probably endorse someone else and we think that AUR leader Simion will submit his candidacy. Media speculates that Simion already gathers signatures from supporters (in Romania a person who wants to run for president must present 200,000 signatures from supporters). However, with all Georgescu endorsement, Simion cannot muster so much support and he will very likely be defeated.

Another one who could attract nationalist voters is Victor Ponta, a former PSD PM and leader who announced today he intends to run. The PSD backs the establishment candidate, Antonescu, so Ponta risks being expelled from the party. Nonetheless, Ponta is a well-know politician, a person of the system and despite his radical switch to a nationalist, isolationist and "Trump is only doing the right thing" stance, we don't think he could gather so much support as Georgescu did.

Question:

Do you know of any sources for spot natural gas prices in Colombia?

The question was asked in relation to the following story: Press Mood of the Day

Answer:

The Bolsa Mercantil de Colombia (BMC) publishes daily reports that include spot prices for natural gas in Colombia. You can find these reports under "Informes" --> "Informes Diarios". The average price for daily transactions is the best reference for the spot price.

Question:

What percent of Mexican exports to the U.S. are covered by USMCA?

The question was asked in relation to the following story: US delays tariffs on Mexican USMCA goods until April 2

Answer:

We can't find the data that gives a specific and updated answer to your question. The Economy Ministry publishes a periodic report about trade with the US, but it doesn't identify what share of exports to the US obtain preferential treatment because of the US-Mexico-Canada Agreement (USMCA).

According to the Economy Ministry, 83.5% of the country's total exports in 2021 were recorded under the USMCA. However, it's unclear if this means the goods are exported to the US and Canada or actually included in the trade deal.

We've seen international media cite an unnamed US government official saying some 50% of Mexican exports comply with the USMCA. We cannot refute this figure.

Question:

Could you tell me please where I can find budgeted local market issuances in Israel? I cannot find draft budgets. I need for the period 2018-2025.

Answer:

The easier way is to look at the budget execution files, which you can find on this link . You can find deficit financing breakdown from domestic and foreign markets, including borrowing and repayments, originally planned and execution in the file named "The budget deficit and its financing" for 2021-2024. There is just one excel for each of the earlier years but it still contains the information you need in the worksheet: גירעון ומימונו Deficit. In those files, data for budgeted local market issuances in 2025 are not available yet. Data are in millions of NIS.

The harder way, is to look at the more detailed files, which you can find on this link . There is information for 2025 but there are too many details and everything is in Hebrew only. To get to the total budgeted local market issuances you need to sum all planned issuances by bond (tradable and non-tradable domestic bonds). To do this, insert filters in the excel file, then go to column E and choose value "86" (deficit financing), then to column M and choose value "0083" (domestic bonds), and then go to column AD and choose מקורי (which means the original budget plan, the other options are the approved budget and execution for years up to 2024), and then go to AE and sum up the amounts. This should be the planned gross domestic issuance for the year. Data are in thousands of NIS. I checked against the budget execution files for few years and it overall worked. There is some discrepancy of NIS 13mn for 2024 though and I am not sure where it comes from. Anyway, there is no other source for the planned issuance in 2025 as far as I am aware.

Question:

Do you have a breakdown of the US financial assistance to Jordan? Do you have an update on whether the US will suspend such funding?

Answer:

Here is a breakdown of the US financial assistance to Jordan in 2024:

Cash transfer to government - USD 845.1mn

Humanitarian assistance - USD 58mn

Water sector support - USD 42mn

Informal livelihoods activity - USD 20.7mn

USAID pay and benefits - USD 18.9mn

Municipal support programme - USD16.7mn

Justice strengthening activity - USD 15.9mn

Technical assistance - USD 13.8mn

Education - USD 13.8mn

Regarding the second question, the US, which has frozen the funding to Jordan for 90 days until end-April, is reportedly still reviewing whether to fully or partly suspend its financial assistance to the kingdom. US President Trump's administration had said that the review process would determine whether the funding aligns with their policy goals. However, Trump has suggested he would no longer threaten to withhold foreign aid from Jordan following his meeting with King Abdullah at the White House. During the meeting, King Abdullah, who has rejected the US plan about the Gaza takeover and forcing Jordan to take in a large proportion of Palestinian refugees, said that the kingdom is prepared to accept around 2,000 sick Palestinian children from Gaza, which is less than 0.1% of the enclave's population.

Meanwhile, Jordanian senior officials, including King Abdullah, are also preparing for different scenarios regarding the US financial assistance, according to local media reports. Jordan, which is a key US partner in the region and hosts nearly 4,000 American troops, assumingly aims to convince Washington to value its political, military, and security partnership with Amman.

Question:

Do we have news on the success of the buyback plan that was supposed to be announced on February 19?

The question was asked in relation to the following story: Govt launches repurchase offer for 2025 Eurobond, plans new issuance

Answer:

A few publications reported on Feb 17 that government committed to repurchasing approximately USD 225mn of the USD 605mn Eurobond, but there doesn't seem to be much of an update after that. USD 315mn was remaining before this commitment. The government also issued USD 570mn in new dollar-denominated notes at a yield of 12.7%, as they announced before. This was the highest yield for a benchmark-sized bond from an African country, according to Reuters.

Question:

Has Kenya after all decided to go against IMF debt control guidelines to issue this bond or did they wait until there was no longer a concern? Also, what is your assessment of the IMF program renewal risk in April and short term funding risk if not renewed?

The question was asked in relation to the following story: Govt plans KES 135bn bond to clear road contractors' pending bills

Answer:

The government's decision to pursue a KES 135bn bond to clear pending bills for road contractors appears to be driven by longstanding concerns over the impact of delayed payments on private businesses and economic activity. Given govt's financing constraints, this move seems more like an effort to address this problem.

While the IMF has consistently advocated for fiscal consolidation, it has also acknowledged the importance of settling arrears to support economic activity and at this stage there is no clear indication that Kenya has deliberately acted against IMF guidance. The authorities may be planning to structure the bond in a way that aligns with the broader fiscal framework, or they may be counting on tacit approval, given the rationale behind the plan.

Regarding the IMF program renewal in April, signals have been mixed. While statements from government officials last month suggested a preference for another funded program, these contrasted with earlier remarks from a senior presidential advisor indicating that the administration was considering reducing its reliance on IMF support. Recent policy decisions - including the increase in fiscal deficit targets for both the current and next fiscal years, as well as the government's move to proceed with a USD 1.5bn loan from the UAE - appear to diverge from IMF recommendations, similarly to the road bond.

In our view, reaching an agreement will not be easy. While the IMF has previously shown considerable flexibility with Kenyan authorities, persistent delays in meeting fiscal consolidation targets and implementing structural reforms, high outstanding credit and elevated risks may prompt a more cautious approach this time. At the same time, the government is also likely to resist more aggressive fiscal consolidation measures, particularly given last summer's protests and prevailing anti-IMF sentiment.

If the program is not renewed, short-term funding risks would rise. However, given the government's proactive efforts to secure alternative financing, the main concern would likely be maintaining investor confidence and ensuring affordable borrowing costs. This will, at least in part, depend on the IMF's review of Kenya's program performance and economic outlook. Notably, the government's latest fiscal projections seem to assume no further IMF financing this year or next.

Question:

Please provide a breakdown of the 2024 financing (deficit + amortizations).

The question was asked in relation to the following story: Link or copy of govt's presentation to investors

Answer:

The table below presents the breakdown as provided by the finance ministry in the 2024 supplementary budget document.

Question:

Please provide breakdown of SOE debt by domestic vs. external component as per the audited report.

The question was asked in relation to the following story: Audit Court publishes long waited report

Answer:

The focus of the audit report is central administration debt. The report cites SOE debt as of end Q1 2024 at XOF 1,517bn, breaking down in XOF 1,007bn external debt and XOF 510bn domestic debt - figures that align with the debt agency's report for the same period. There is also a later release by the debt agency, citing SOE debt at XOF 1,632bn at end-June (o/w XOF 1,095bn external, and XOF 537bn domestic).

However, the audit report also raises concerns about state-guaranteed debt, stating that it stood at XOF 2,264bn (supposedly at end-March, though not explicitly mentioned) - a significant increase from the XOF 535bn previously reported. It remains unclear how or where this is accounted for, and whether we might see revised SOE debt figures as part of future audits.

Question:

The story on the downgrade of Senegal by S&P mentions "investment expenditure reviews". Do you have more concrete information on the review process, e.g. regarding the timeline? In your opinion, how likely is the cancellation of ongoing projects and which sectors would you expect to be affected primarily? Are you aware of projects already being delayed or suspended?

The question was asked in relation to the following story: S&P also downgrades country amid fiscal and debt concerns

Answer:

Here's what we have gathered regarding Senegal's investment expenditure review:

In February, the government announced the finalization of its 2025-2029 roadmap, which includes 276 projects and programs, with 60 designated as priorities. While a full list has not been disclosed, a government official highlighted several key projects, including the Grand Water Transfer Project (GTE), the Senegal Gas Network (RGS), and the Regional Mining Hub, alongside two transport projects (the Dakar-Tivaouane-Saint-Louis Highway and the Dakar-Tambacounda railway).

At the same time, the government identified concerns with around 500 ongoing projects, citing issues such as:

• Long implementation timelines-exceeding five, and in some cases, ten years
• Low completion rates despite extended timeframes
• Absence of investment expenditure, with only operating expenses recorded
• Overlapping mandates across ministries
• Lack of regular reporting by para-public entities on projects executed by them.

The government has not specified which sectors are most affected. The PM has tasked a working group with further analysis and rationalization, which may involve merging or discontinuing certain projects. However, the exact timeline for this review process remains unclear.

In addition, further adjustments are likely, as authorities have mentioned plans for a supplementary budget aimed at reducing the fiscal deficit from 7.1% to 5.0%, a consolidation effort that will almost certainly impact development expenditure too, if followed through.

At this stage, we are not aware of any formally canceled or suspended projects. Given that the government has also signaled a shift toward greater private sector involvement, particularly in productive sectors such as agriculture, energy, and manufacturing, we might expect some projects in these areas to be restructured in favor of public-private partnerships or fully private development.

As the review process continues, further details on potential project restructuring or cancellations will likely emerge in the coming months.

Question:

Do you perhaps have a copy or a link to last weeks investor presentation?

The question was asked in relation to the following story: Moody's downgrades country to B3, citing high debt and fiscal risks

Answer:

Unfortunately no, it hasn't been formally released and we've not been able to find a copy.

Follow-up Question:

At the moment it is difficult to formulate a view because pretty much everybody's numbers are wrong, based on outdated information/assumptions. Do you perhaps have any suggestions?

Answer:

The latest debt data from the final audit report are available in our story here (and within the report itself). These figures are unlikely to undergo significant revisions going forward.

There is less clarity on the debt service schedule - we only have the government's projections for this year as outlined in the budget, which excludes new debt. From what we know about the new debt, direct credit from local banks accounts for most of it, and half of the direct credit has a medium-term maturity, 25% is short-term and the remaining 25% is long-term. Beyond 2025, there is little information, except that financing needs are expected to remain elevated through 2028.

Regarding the budget, we only have the current plan. However, based on recent government statements, an amendment for the current year is likely, potentially lowering the deficit to 5% from 7%. This adjustment appears to be a precondition for an IMF program, though whether the government can follow through remains to be seen. There have been numerous commitments (probably in the virtual meeting with investors as well), and while confidence in the government remains high, some proposed expenditure cuts seem unrealistic given the country's strong syndicate traditions.

On growth, while it is expected to remain strong, significant budget reductions, especially if coupled with strikes and/or social unrest, could weigh on economic prospects.

On the financing side, investor confidence has remained high despite last year's political and social unrest. However, the latest revelations highlight disorganized fiscal management, even under sustained IMF programs. Going forward, much will depend on the government's ability to convince markets that it is in control and capable of implementing the necessary reforms within a reasonable timeframe, even if that takes longer than officially pledged.

Question:

Can you explain how generation is above consumption when there is an energy deficit?

The question was asked in relation to the following story: Electricity generation declines 47.3% y/y in December

Answer:

The reason it looks like Zambia is generating more electricity than is being consumed is because of two main factors. First, it is due to prolonged load shedding where power is deliberately cut off for extended periods. As a result, consumers end up using far less electricity than they normally would. This means the recorded consumption numbers are lower than the actual demand. Second, as a response to these outages, many households and businesses are switching to alternative energy sources like solar systems or diesel generators, which aren't counted in the domestic consumption figures.

You may recall that Zambia's installed capacity is about 3,777 MW, with peak demand around 2,400 MW. However, because of drought-related issues, the supply shortfall has been estimated between 750 MW and 1,300 MW. Even though Zesco is importing around 410 MW monthly to help bridge this gap, a significant deficit remains hence the daily 17+ hours of load shedding. Additionally, some of the electricity produced is exported under power purchase agreements, while consumption figures only reflect what's used domestically.

You may also recall that, recently we reported on Zesco's inability to raise USD 15mn monthly revenue target from the time the domestic tariffs were hiked in October last year, generating only USD 2.4mn in November and USD 7.6mn in December. This is mainly because the load shedding which has forced most domestic users who can afford to slowly turn to alternative power solutions such solar home systems and LPG gas alternatives. Industrial companies are doing the same. We reported recently that diesel consumption has increased significantly across the country, with the Energy Regulation Board noting that diesel consumption surged by 900,000 litres to 4.5mn litres daily, driven by increased mining activity as industries sought alternative energy sources. Overall, we see this situation as consumers increasingly turning to cheaper, readily available renewable energy alternatives, as a way of avoiding the frustration of long hours of load shedding and increased emergency tariffs.