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Syria blames Turkey, Qatar and Saudi Arabia for deadly bombings @BBC Law & Politics |
The state-run news agency Sana said the attacks constituted a "serious escalation", and were aimed at derailing peace efforts.
Sana said letters condemning the bombings had been sent from the foreign ministry to the UN.
"The ministry asserted that these terrorist bombings constitute a serious escalation by the extremist and malicious regimes of Riyadh, Ankara, and Doha," the report said.
"They also seek to derail the Geneva [peace] talks and the cessation of hostilities and truce arrangements, as well as turning attention away from the Syrian Arab Army's achievements in the war against terrorism."
Turkey, Qatar and Saudi Arabia support various rebel forces in Syria but are part of an international coalition battling IS.
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AEP: Saudi financial crisis 'could leave oil at $25' as contractors face being paid in IOUs @telebusiness Commodities |
Saudi Arabia faces a vicious liquidity squeeze as capital continues to leak out the country, with a sharp contraction of the money supply and mounting stress in the banking system.
Three-month interbank offered rates in Riyadh have suddenly begun to spiral upwards, reaching the highest since the Lehman crisis in 2008.
Reports that the Saudi government is to pay contractors with tradable IOUs show how acute the situation is becoming. The debt-crippled bin Laden group is laying off 50,000 construction workers as austerity bites in earnest.
Societe Generale’s currency team has advised clients to short the Saudi riyal, betting that the country will be forced to ditch its long-standing dollar peg, a move that could set off a cut-throat battle for global share in the oil markets.
Francisco Blanch, from Bank of America, said a rupture of the peg is this year’s number one “black swan event” and would cause oil prices to collapse to $25 a barrel. Saudi Arabia’s foreign reserves are still falling by $10bn (£6.9bn) a month, despite a switch to bond sales and syndicated loans to help plug the huge budget deficit.
The country’s remaining reserves of $582bn are in theory ample – if they are really liquid – but that is not the immediate issue. The problem for the Saudi central bank (SAMA) is that reserve depletion automatically tightens monetary policy.
Bank deposits are contracting. So is the M2 money supply. Domestic bond sales do not help because they crowd out Saudi Arabia’s wafer-thin capital markets and squeeze liquidity. Riyadh now plans a global bond issue.
While crude prices have rallied 80pc to almost $50 a barrel since mid-February, this has not yet been enough to ease Saudi Arabia’s financial crunch.
The rebound in crude is increasingly fragile in any case as tough talk from the US Federal Reserve sends the dollar soaring, and Canada prepares to restore 1.2m barrels a day (b/d) of lost output. “We feel that markets have moved too high, too far, too soon. We still face a large inventory overhang and supply outages are reversible,” said BNP Paribas.
The oil rally is now at a make-or-break juncture. A growing number of oil traders warn that speculative purchases of “paper barrels” by hedge funds have decoupled from fundamentals. There is usually a seasonal slide in demand over the late summer.
Adam Longson, from Morgan Stanley, said “quant” funds have taken out big positions on Brent crude. "If trends reverse, it could be a catalyst for liquidation," he warned.
Conclusions
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Russia Goes It Alone With First Eurobond Since Sanctions @business Emerging Markets |
Struggling to cover a widening budget gap, Russia is selling its first Eurobond since being hit with international sanctions two years ago, with state bank VTB Capital as the sole organizer of the deal after the U.S. and European Union warned foreign banks against participating.
Russia said in the prospectus Monday that none of the proceeds would go to entities subject to U.S. and EU restrictions. But there were still questions about whether foreign investors would be able to trade the bonds easily. The prospectus said that there could be “no assurance” that the bonds would be eligible for major international clearing systems, such as Euroclear Bank SA and Clearstream Banking SA, on which many foreign funds rely.
"It will be a case-by-case basis whether investors will be able to participate on the primary market,” said Sergei Strigo, who helps oversee $3.5 billion in emerging-market assets as a money manager at Amundi Asset Management in London. “Everyone has their own compliance department and it’s up to them to give them the go-ahead."
The initial price guidance on the 10-year dollar-denominated notes is a yield of 4.65 to 4.9 percent, according to people familiar with the matter, who weren’t authorized to speak publicly about the deal and asked not to be identified. That’s a modest premium above the 4.02 percent yield for Russia’s September 2023 Eurobond. The Finance Ministry didn’t indicate how large the issue would be, but this year’s budget authorizes as much as $3 billion.
VTB Capital had received $5.5 billion of bids for the bonds as of Monday evening in Moscow and final pricing is expected tomorrow, the people said. Some administrative issues are still being worked out and the organizer will consider Asian investors early Tuesday, they said.
Beyond raising cash, the deal could have important symbolic value for the Kremlin, which has sought to minimize the impact of sanctions since they were imposed in 2014 over the conflict in Ukraine.
“For Moscow this is not about the money, it is about the messaging of undermining and eroding sanctions,” said Tim Ash, head of emerging-market strategy at Nomura International Plc in London. EU officials are expected to extend the restrictions next month or in early July.
Russia’s attempt to find underwriters for the Eurobond in February failed after warnings from the U.S. and EU led banks including Goldman Sachs Group Inc. and Deutsche Bank to drop out of the bidding process. Russian officials had said they wanted prominent U.S. or European banks involved to ensure the success of the issue and had shelved the plans when it became clear they wouldn’t join. The Finance Ministry declined to comment Monday on the timing of the placement.
Sovereign dollar and euro bond sales from emerging markets have reached $65 billion this year, more than half of last year’s volume, according to data compiled by Bloomberg.
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Sugar Is So Scarce in Venezuela That Coca-Cola Will Stop Production @business Emerging Markets |
Coca-Cola Co. is halting production of sugar-sweetened beverages in Venezuela as the company’s namesake soda pop becomes the latest victim of a lack of raw materials in the cash-strapped country.
The iconic drink is the latest to join a group of basic products becoming scarce in a country beset by currency controls, goods shortages and the world’s highest inflation rate. Kraft Heinz Co. and Clorox Co. have also had to interrupt operations in Venezuela, where it’s now common for citizens to wait in long lines for household items such as deodorant, toilet paper and medicine.
“Sugar suppliers in Venezuela have informed us that they will temporarily cease operations,” Kerry Tressler, a Coca-Cola spokeswoman, said in an e-mail. The company is talking with suppliers, government authorities and others to work on a solution.
Venezuela is experiencing the worst recession in decades as the falling price of oil, which accounts for about 95 percent of foreign currency earnings, pushes international reserves to a 13-year low of $12 billion. The economy contracted 5.7 percent in 2015 and is expected to shrink an additional 8 percent this year, according to the International Monetary Fund. The inflation rate is projected to climb to almost 500 percent.
Frontier Markets
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Africa: economic transformation hinges on unlocking potential of cities, says the African Economic Outlook 2016 @AfDB_Group Africa |
Africa's economic performance held firm in 2015 amid global headwinds and regional shocks. The continent remained the second fastest growing economic region after East Asia. According to the report's prudent forecast, the continent's average growth is expected at 3.7% in 2016 and pick up to 4.5% in 2017, provided the world economy strengthens and commodity prices gradually recover.
In 2015, net financial flows to Africa were estimated at USD 208 billion, 1.8% lower than in 2014 due to a contraction in investment. At USD 56 billion in 2015, however, official development assistance increased by 4%; and remittances remain the most stable and important single source of external finance at USD 64 billion in 2015.
The continent is urbanising at a historically rapid pace coupled with an unprecedented demographic boom: the population living in cities has doubled from 1995 to 472 million in 2015. This phenomenon is unlike what other regions, such as Asia, experienced and is currently accompanied by slow structural transformation, says the report's special thematic chapter.
According to the authors, lack of urban planning leads to costly urban sprawl. In Accra, Ghana, for example, the population nearly doubled between 1991 and 2000, increasing from 1.3 million to 2.5 million inhabitants at an average annual growth rate of 7.2%. During the same period, the built up area of Accra tripled, increasing from 10 thousand hectares to 32 thousand hectares by an average annual rate of 12.8%.
Urbanisation is a megatrend transforming African societies profoundly. Two-thirds of the investments in urban infrastructure until 2050 have yet to be made.
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African Economic Outlook @AfDB_Group Africa |
Africa’s economic performance held firm in 2015, amid global headwinds and regional shocks. Growth in real GDP is estimated at 3.6%, higher than the 3.1% for the global economy and 1.5% for the euro area. Africa remained the world’s second fastest growing economy after East Asia. In 2015, sub-Saharan Africa (excluding South Africa) grew faster than the continental average, at 4.2%, with East Africa leading the way at 6.3%. Growth in Central, North and West Africa was above 3%, while Southern Africa grew by an average of 2.2%. Looking ahead, average growth in Africa is expected to remain moderate at 3.7% in 2016 but could accelerate to 4.5% in 2017.
Several African countries (Côte d’Ivoire, Djibouti, Ethiopia, Mozambique, Rwanda and Tanzania) were among the fastest-growing countries in the world with growth between 6% and around 10%.
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The Resource Curse is a much talked-about phenomenon, but what about the "presource curse" Africa |
The Resource Curse is a much talked-about phenomenon, but what about the ‘presource curse’ – when a country’s economy is derailed not by resource exports, but the mere prospect of them?
Mozambique is the latest country to fall victim to this ill. The government took out more than $2 billion in secret, state-backed loans in 2013 and 2014 on the assumption they would be easy to repay once gas revenues from its giant Rovuma Basin LNG projects started flowing in 2018. But that date always looked optimistic: now, after the oil price collapse, even a 2021 startup – when the largest of the debt repayments is due – looks unlikely. With the government broke and at real risk of a sovereign default, the FIDs could be pushed back further still.
Brazil and Ghana, for example, are both arguably cases where elevated expectations of oil returns led to macroeconomic recklessness. But Tanzania is perhaps an interesting counter-example.
"Like Mozambique, Tanzania has been planning LNG investments for years. Unlike Mozambique, it looks more certain to miss out on these altogether. Tanzania didn’t go as far down the investment path as Mozambique or Ghana, and perhaps as a consequence didn’t get into any deep fiscal problems either," said Jim Cust, director of research and data at the Natural Resource Governance Institute. "It’s hard to prove the counter-factual, but they just got a ringing endorsement from the International Monetary Fund on the state of the economy."
So while Mozambique may beat its northern neighbour in the race to export LNG from East Africa, Tanzania could be the real economic winner in the long term. "Time will tell, but looking at Ghana and now Mozambique, it’s not hard to think Tanzania might have dodged a ‘resource’ bullet, in the short run at least," said Cust
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Mozambique heads for default after missing loan repayment deadline BBC Africa |
Mozambique was heading toward a default on Monday after the government failed to honour a sovereign guarantee behind a $535 million loan taken out by a state-run company to build shipyards that have not materialised, a Finance Ministry source said.
The repayment crisis in what was once one of the continent's brightest economic prospects is likely to trigger a reappraisal of the wave of commercial lending to African governments during the past decade of relatively strong regional growth.
The state firm, Mozambique Asset Management (MAM), was unable to make the $178 million payment and the government - which last month admitted to $1.35 billion of secret foreign borrowing - also failed to come up with the cash, the source said.
Foreign creditors behind the loan, organised by Russia's VTB Bank, had rejected the war-scarred Southern African country's initial proposals to renegotiate payments, but were still in talks to try to reach a deal, the source added.
VTB declined to respond to questions submitted by Reuters earlier in the day. Calls and messages sent to Finance Minister Adriano Maleiane's mobile phone went unanswered.
Although a grace period built into most loans means Mozambique is not in formal default, the secret borrowing revelations - which takes its foreign debt obligations to $9.86 billion, or 80 percent of GDP - made a repayment crunch almost inevitable.
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Kenya central bank cuts main lending rate to 10.5 pct Kenyan Economy |
Kenya's central bank reduced its policy lending rate on Monday by 100 basis points to 10.5 percent, saying inflation was expected to decline further.
Eight out of 12 analysts polled by Reuters had expected the bank to hold rates but the bank's Monetary Policy Committee (MPC) said lower inflation had created room to ease policy.
"Overall inflation is expected to decline and remain within the Government target range in the short-term," the MPC said in a statement.
Inflation fell to 5.27 percent in April from 6.45 percent in March, well within the government's preferred band of 2.5-7.5 percent.
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Kenya economy to grow 6 pct in 2016, current account deficit to narrow: c.bank Kenyan Economy |
NAIROBI (Reuters) - Kenya's central bank governor said on Tuesday the economy was expected to expand by 6 percent in 2016 after 5.6 percent growth last year, while the current account deficit was expected to narrow to 5.5 percent of GDP in 2016 from 6.8 pct.
Governor Patrick Njoroge was speaking at a news conference a day after the central bank cut interest rates by 100 basis points to 10.5 percent, saying falling inflation offered room for an easing of monetary policy.
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Imperial Bank owners offered auditors Sh500 million loans @BD_Africa Kenyan Economy |
Imperial Bank shareholders induced its auditors with a $5 million (Sh500 million) low-interest loan to turn their attention away from a Sh34 billion embezzlement scheme at the collapsed lender, the Kenya Deposit Insurance Corporation has claimed in court filings.
The KDIC, Imperial Bank’s receiver manager, says in documents filed at the Milimani High Court that top managers at audit firm PKF Kenya were lent Sh500 million through a real estate company they owned to rope them into the multibillion-shilling scandal.
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Uchumi Creditors to Convert Kenya supermarket's Debt into Equity Kenyan Economy |
Suppliers of Uchumi Supermarkets Ltd. agreed to resume stocking Kenya’s only publicly traded retailer as the company’s biggest shareholder said it would ensure they received payment.
The 40-year-old company that was placed into receivership in 2006, from which it emerged in 2010, owes creditors including Nairobi-based lender KCB Group Ltd. a total of 3.6 billion shillings ($35.8 million). Over the past year, the company has closed down almost half its stores to cut costs and conserve cash.
After a meeting between management and government officials on Friday, suppliers agreed to convert half of the company’s debt into equity and to channel future payments through a jointly managed escrow account. In addition, Uchumi’s biggest shareholder, closely held lender Jamii Bora Bank Ltd., offered suppliers invoice discounting, or short-term loans based on purchase orders from the retailer.
“That has been sorted out so now we know that Uchumi will fly again,” said Samuel Kimani, chief executive officer of Jamii Bora, which owns 15.2 percent of the retailer. “The revival of Uchumi is very important. It means the value of the shares should go up.”
The stock fell to a record low of 3.4 shillings on May 19, bringing its decline to almost 70 percent so far this year -- the most of any of the 25 companies ranked in the FTSE NSE Kenya 25 index. Shares of the 1.37 billion-shilling ($13.6 million) company gained 8.7 percent on May 20 after the company said it was in talks with creditors for more time to pay off its debts.
The company plans to dispose off one of its biggest outlets to raise additional money and has also asked the government for a 1.2 billion-shilling bridging loan. Part of the proceeds will pay 800 of the smallest companies providing Uchumi with merchandise and owed a total 40 million shillings, according to Chief Executive Officer Julius Kipng’etich, who was appointed in September after his predecessor was fired.
The biggest threat to the recovery plan is a commercial court case by seven suppliers seeking to wind up Uchumi over a 300 million-shilling debt, according to Kipng’etich. No lenders can extend any facility to the chain while the matter is still before a judge.
“It is now a question of just unlocking that court case,” said Richard Rugendo, the chairman of the Association of Kenya Suppliers, a lobby group for some of Uchumi’s creditors.
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