|Friday 06th of December 2019
Gauguin's Arii Matamoe (The Royal End) @NationalGallery
In his early days on the island, the Tahitian King Pomare V died, and
the French takeover of the island appeared to be complete.
This moment inspired him to paint, 'Arii matamoe (The Royal End)'.
Gauguin’s aim was not to literally portray the king, or to document
the event, but rather he created a kind of fantastic and macabre
pastiche that referenced both the loss of the local leader and the
sense of mystery that the island setting had sparked in his
What appears to be a severed head rests on a white presentation cloth
spread over a food platter; its eyes and mouth remaining hauntingly
open and suggesting some kind of enduring quasi-live presence.
Figures in the background show their grief through gestures, all
within a highly colourful and patterned interior inspired by sources
ranging from Marquesan sculpture to Persian carpets to convey a
setting that is both splendid and strange.
In this scene, Gauguin wants to impress, mystify, and unsettle the
French viewer through such an unexpected presentation of an imagined,
30-APR-2018 :: "A new history starts now. An age of peace, from the starting point of history."
Law & Politics
The Events that took place on Friday at the truce village of Panmunjom
and during the Inter-Korean Summit were breathtaking for the Hollywood
Optics. The Opening Shot of Kim Jong Un surrounded by a Phalanx of
North Korean Officials [later replayed as Chairman Kim sat in his
Presidential Vehicle surrounded by his Ninja bodyguards] was almost as
good as the opening Sequence in PT Anderson's Boogie Nights [Steadicam
operator Andy Shuttleworth]. This was Cinema of the highest level
which is no surprise when You consider that Kim Jong-Il the Father was
obsessed with Cinema and amassed arguably the world’s largest personal
film collection: over 20,000 bootlegged 35mm screening copies. Kim
Jong-Il also had a penchant for Hennessy Paradis cognac and for two
years in the mid-1990s, he was the world's largest buyer of Hennessy
Paradis cognac, importing up to $800,000 of the stuff a year. Kim
Jong-Il began his career as the head of the state’s propaganda and
agitation department and its clear that Kim Jong-Un's sister Kim Yo
Jong who holds the same role and evidently handles all the optics, is
a chip off the old Block. Friday was tip-top Geopolitical Optics. Mike
Pompeo, the newly minted US Secretary of State [His predecessor was
fired via Twitter] had visited Pyongyang the previous week and
pronounced; that the young North Korean leader was "a smart guy who's
doing his homework"
World food prices surge in November, lifted by meat, vegetable oils: @UN @FAO @Reuters
Law & Politics
World food prices rose strongly in November, lifted by big jumps in
prices of meat and vegetable oils, despite slightly lower cereals
prices, the United Nations food agency said on Thursday.
The Food and Agriculture Organization (FAO) food price index, which
measures monthly changes for a basket of cereals, oilseeds, dairy
products, meat and sugar hit a 26-month high in November, averaging
177.2 points, up 2.7% on the previous month and up 9.5% year-on-year.
FAO also predicted that cereal production would reach an all-time high
of 2.714 billion tonnes in 2019, up 0.4% from its last forecast.
The cereal price index fell 1.2% to 162.4 points, with large export
supplies and strong competition among world producers weighing on
Rice prices fell to six-month lows as new crop arrivals added pressure.
The vegetable oil price index rose 10.4% to 150.6 points, reaching its
highest point since May 2018, led by firmer palm oil prices, which
strengthened on robust import demand, increased biodiesel use and
concerns over possible supply shortages.
The meat price index registered its largest month-on-moth increase
since May 2009, rising 4.6 percent from October to 190.5 points, with
beef and sheep meat rising most strongly, lifted by demand from China
and year-end holiday demand.
The sugar price index averaged 181.6 points, up 1.8% percent from
October, led by expectations of higher demand.
The FAO Dairy Price Index averaged 192.6 points, only marginally up
from October, after two months of declines.
The agency raised its forecast for global cereal production in 2019 by
0.4%, estimating world cereal output at 2.714 billion tonnes, compared
with 2018 levels.
Wheat output was seen up 4.8% at 766.4 million tonnes.
Global rice production was seen at 515 million tonnes, up 1.6 million
tonnes from the previous forecast, implying a 0.5 percent fall from
the 2018 all-time high, the agency said.
Not a good moment for this to be happening
21-OCT-2019 :: "The New Economy of Anger"
Law & Politics
The Phenomenon is spreading like wildfire in large part because of the
tinder dry conditions underfoot. Prolonged stand-offs eviscerate
economies, reducing opportunities and accelerate the negative feedback
Ryszard Kapucinski also said: “If the crowd disperses, goes home, does
not reassemble, we say the revolution is over.”
It is not over. More and more people are gathering in the Streets.
Reality was whatever the Party put out on the nightly news, or in the official newspapers, @PravdaRu which means "Truth" and @izvestia_ru Izvestia which means "News." @CNN @Kasparov63
Law & Politics
As the joke went, "there is no news in the truth and no truth in the
news." Eventually the disparity between truth and lies became too
great; life wasn't improving and more and more information was making
it through the Iron Curtain.
Denying reality became too grave an insult to our dignity, an
underestimated ingredient in the spirit of revolution.
My ongoing attempts to fight that tragedy led to my exile in the
United States. Now my new home finds itself locked in its own perilous
battle -- a battle to avoid becoming the latest member of the
President Donald Trump and his Republican defenders in Congress have
followed his lead in declaring war on observed reality.
Critical reports are "fake news," journalists reporting the facts are
"enemies of the people," a phrase from Vladimir Lenin's, debunked
conspiracy theories is repeated, and public servants testifying under
oath about documented events are dismissed as Never Trumpers.
The internet was supposed to shine the light of truth into every
corner of the world, breaking the authoritarians' monopoly on
But it has also become a light-speed delivery system of lies and
propaganda. The web has been chopped into pieces. Like a shattered
mirror, each fragment reflects a different distorted image instead of
a single reality.
Protests in Iran are difficult to follow when the regime can shut down
internet access across the country. It's easier to find out about Hong
Kong's pro-democracy protests in just about any country other than
China thanks to their draconian censorship.
Russia jails bloggers and shuts down nongovernmental organizations
while flooding the country, and the world, with disinformation.
It's alarming to see America taking its own Trumpian path down this
dark road. In the USSR, we didn't have a choice of which news channel
Americans have limitless options, but many voluntarily confine
themselves to a few like-minded sources. For Trump's followers in
particular, denying reality is a badge of honor, a symbol of belonging
to a defiant cult.
If you watched the impeachment hearings only on Fox News you would
have thought things were going great for the President.
Any phrase that might sound like it exonerated him -- and there
weren't many -- was repeated over and over like a mantra. The copious
and damning evidence provided may as well not have existed.
American companies are also falling in line, with Apple recently
changing its maps app inside Russia to show the illegally annexed
Ukrainian territory of Crimea as Russian. (Google has done so for
American tech giants are happy to help Putin create a false reality
inside the borders of Russia. Apparently Apple and Google will stand
up to the FBI, but not the FSB, aka the KGB.
Software is soft power, and US companies betray the values of the
nation that enabled their success by doing the bidding of dictators.
Tech firms defending themselves by saying it's just business, not
politics, sound a lot like the Hollywood studios that edited their
movies and fired Jewish staff under Nazi pressure in the 1930s.
What's the truth? In the era of regionalized facts, it depends on
where you stand, what channel you're watching, and what party you
But there cannot be a red state reality and a blue state reality any
more than there should be one world map inside of Russia and a
different one outside.
Trump is finally facing the music, and that must begin with everyone
facing the facts.
Turkey sees the entirety of northern Syria as an area it wants to either control directly or use proxy forces to control @ForeignPolicy
Law & Politics
It now runs areas around Afrin, Idlib, Jarabulus, and Tal Abyad. This
is an unprecedented expansion of Ankara’s power not seen since the
The successful operation against Baghdadi symbolizes how short-term
tactics, such as killing terrorists, fail to advance any sort of
long-term solution to the instability and radicalization that led to
the Islamic State’s rise.
The U.S. government doesn’t want to address these issues in Iraq or Syria.
Iran, Russia, and Turkey want to solve issues on the ground, but their
approach tends toward cynical power politics and carving up these
states into spheres of influence.
Every country involved in the war against the Islamic State now seems
drawn to the spoils in its wake.
"Get Brexit done"? It's not as simple as @BorisJohnson claims @TheEconomist
Law & Politics
As in 2017, this was meant to be a Brexit election. Also as in 2017,
it has quickly morphed into one about the National Health Service,
security and terrorism.
Yet the pithiest slogan of the campaign is still Boris Johnson’s
much-repeated promise to “get Brexit done”. And although his poll lead
has narrowed, the odds are that this pledge will help bring him
The question is: what then? With a Tory majority, Parliament seems
sure to ratify the Article 50 withdrawal agreement that Mr Johnson
renegotiated in October in time for Britain to leave the European
Union by January 31st.
The European Parliament, whose consent is needed, should do the same.
The psychological importance of Brexit formally happening will be
profound, not least because it will kill the argument for holding a
Yet Brexit will still not be done. On February 1st Britain will move
into a transition phase, when it must abide by all eu rules, that ends
on December 31st. Mr Johnson’s plan is to negotiate and ratify a
best-in-class free-trade deal during this period. There is a provision
to extend the deadline by one or two years, but this has to be agreed
on before July 1st. And the Tory manifesto declares in bold type that
“we will not extend the implementation period beyond December 2020.”
Both houses of Parliament must also pass a mass of other legislation
to replace the eu’s laws and regulations when the transition period
These include bills on fisheries, agriculture, trade and customs,
immigration and financial services. Several are both long and
controversial, which is why they have made minimal progress in the
past two years.
More problematic will be the talks on future relations with the eu.
These will be far more difficult than the Article 50 negotiations,
supposedly an easy first stage. A new deal must cover trade, security,
data, research, student exchanges, farming and fish, to name but a few
The list is so extensive that the result will be a “mixed” agreement,
under Article 218, that needs unanimous approval and ratification by
27 national and several regional parliaments. The Institute for
Government, a think-tank, notes that less ambitious eu trade deals
with Ukraine, Canada, South Korea, Japan and Singapore have taken
between four and nine years to negotiate and ratify.
That is why many are urging Mr Johnson to seek more time. But this
will be tricky, and not just because of his manifesto pledge. In
transition Britain will be in a form of vassalage, obliged to apply
all eu laws and regulations with no say in making them.
Extending the time limit requires unanimous approval, and that may
come with conditions such as access to British fisheries. It would
also mean more money, as Brussels would expect a hefty contribution
from Britain, probably without keeping its current budget rebate.
China Spends $29 Billion on Pampering Pets as Birthrate Slows
On a sunny mid-October afternoon, Leia spent her third birthday
munching a gourmet three-course meal of chicken, beef with salmon and
a yogurt-based cake atop a rooftop restaurant in Beijing.
Leia is a German miniature pinscher and one of millions of pets in
China whose every whim are indulged by their owners.
Spending on pets in China is accelerating despite a broader trend of
slowing retail sales growth in the world’s second-largest economy.
Perhaps exacerbated by a growing trend of singlehood and
childlessness, urban pet owners are on track to spend 202 billion yuan
($28.6 billion) on their pets this year, 19% more than 2018, according
to a study by Goumin.com, a Chinese social network for pet-owners.
China’s falling birthrate is matched by its mounting pet love. The
Asian nation now has the world’s largest dog and cat population of 188
million and surpassed the U.S. in pet numbers in 2018, according to
data compiled by Euromonitor International. This was the same year
that child birth steeply declined.
By 2024, China will likely have 248 million pet dogs and cats compared
to 172 million in the U.S., underscoring the huge potential it holds
for global pet food makers such as Mars Petcare US Inc. and Nestle
Purina Petcare Co.
The pet love runs counter to western stereotypes that often portray
China as a place where dogs are bred or captured to be eaten. It also
reflects changing cultural norms domestically: keeping a dog as a pet
was illegal in Beijing as recently as the 1980s, because pets were
considered to be a bourgeois affectation.
Almost half of dogs and cats adopted in urban areas this year have
been by Chinese born in the 1990s and 88% of caretakers are women,
according to Goumin.com.
About half of pet-owners they studied across China’s major cities are
single and nine out of ten said they consider their pets on par with
children or family members.
China’s birth rate fell to 15 million babies last year, the lowest in
Some researchers warn that the pet boom in China is coming at a cost.
Local news reports have exposed unlicensed pet farms where
over-breeding of dogs take place without regulatory oversight, giving
rise to health problems among the animals.
Pet food companies are also using more meat in their products to
market them at the premium end. This, said University of California
Los Angeles professor Gregory Okin, is adding to climate change.
Meat-eating by dogs and cats in the U.S. contributed as much as 30% of
the overall hit to the environment due to animal production, he found
in a 2017 study.
“With China just being the size that it is, those pets will
potentially have a huge impact,” said Okin, who recommends getting
smaller-sized dogs and feeding them a grain-heavy diet.
Saudi @Aramco to Lead Elite $1 Trillion-Plus Club After IPO @markets
It seems like only yesterday equity investors had pegged $1 trillion
as the dividing line between run-of-the-mill large cap companies and
freakishly huge ones. Saudi Aramco just took things to a whole new
The oil producer’s initial public offering Thursday valued the company
at $1.7 trillion. That may have trailed Crown Prince Mohammed bin
Salman’s hoped-for $2 trillion valuation, but it gives the Saudi
Arabian behemoth about a $600 billion lead on Apple Inc. and Microsoft
Inc., the only two other companies in the world worth more than $1
The race to $1 trillion had become something of a spectator sport in
recent years as technology megacaps led the record-long bull market in
U.S. stocks. Amazon.com Inc. and Google parent Alphabet Inc. have also
been in the running, although neither passed the milestone.
Saudi Aramco’s debut would mark the first time in a decade that the
world’s largest publicly traded company is outside the U.S. In 2009,
Exxon Mobil Corp. lost the title to PetroChina Co.
@Glencore Under Investigation for Bribery by U.K. Authorities shares fell as much as 8.6% to a three-year low. @markets @tbiesheuvel
Glencore Plc is being investigated for bribery by U.K. authorities,
deepening the legal troubles that threaten the world’s biggest
commodities trader. The shares fell as much as 8.6% to a three-year
The move by the Serious Fraud Office adds to ongoing corruption probes
that Glencore is facing in the U.S. and Brazil, which have scared
investors and shaken the company over the past two years.
The SFO cast a wide net, saying it’s looking into suspicions of
bribery by the company, its employees, agents and associated persons.
“This is an obvious negative for the Glencore investment case,” said
Tyler Broda, an analyst at RBC Capital Markets. “We believe this
clearly will hamper sentiment in what remains a complex investment
case for investors.”
The language of the U.K.’s investigation, albeit with limited detail,
suggests it could be wider in scope, Broda wrote in a research note.
That potentially raises the penalty, if Glencore is found guilty or
reaches a settlement, he said.
The new probe also ramps up pressure on Glencore’s billionaire Chief
Executive Officer Ivan Glasenberg. He told investors earlier this week
to prepare for more leadership changes and hinted that his own
departure may come sooner than previously anticipated.
Glencore said it will cooperate with the probe, but didn’t provide any
The investigation will be also be a major test for the U.K.
prosecutor, which has stumbled with some cases. Three Tesco Plc
officials caught up in an accounting scandal were cleared after a pair
of trials and the agency has dropped some high-profile probes into
individuals at companies including Rolls-Royce Plc and GlaxoSmithKline
For Glencore, the investigations have raised fundamental questions
about how the business of commodities trading is conducted around the
Traders have traditionally been willing to do business in many of the
world’s most impoverished and corrupt countries. And they have long
relied on agents -- intermediaries who work on commission -- to help
them secure deals.
“It’s more of the same, but now it’s getting attacked from a different
angle,” said Hunter Hillcoat, a London-based analyst at Investec
Securities Ltd. “Glencore was already trading at a discount because of
the DoJ, but when this news comes out it gets whacked again.”
While the SFO didn’t specify what part of the business it was looking
at, Bloomberg reported last year that the agency was preparing to open
an investigation into Glencore and its work with Israeli billionaire
Dan Gertler and former Democratic Republic of Congo President Joseph
Gertler and Kabila have been implicated in previous British and
American bribery investigations. The U.S. imposed sanctions on Gertler
in 2017, saying he’d used his friendship with Kabila to corruptly
build his fortune.
Gertler and Glencore first invested together in a Congolese mine in
2007 and developed a close partnership over the years in the Mutanda
and Katanga Mining copper and cobalt operations. While Glencore has
cut its business relations with Gertler, it still must pay him
royalties for the mines.
Glencore is being investigated by the U.S. Department of Justice and
Brazilian authorities in the Car Wash scandal. The company has also
been subpoenaed by the Justice Department for documents relating to
possible corruption and money laundering in Nigeria, the Democratic
Republic of Congo and Venezuela.
The U.S. Commodity Futures Trading Commission is also investigating
the company for possible corrupt practices.
In response to the DoJ investigation, which the company also says it’s
cooperating with, Glencore set up a board committee to respond to a
U.S. probe, that included chairman and former BP Plc Chief Executive
Officer Tony Hayward.
Congo: Millions Die While the "@UN Keeps the Peace" @GRTVnews
In its most recent report to the UN Security Council, the UN
Stabilization Mission in the Democratic Republic of the Congo
(MONUSCO) blandly recounted “progress” in service to their mission,
but what is their mission?
Up until 2013, MONUSCO had no combat mandate; they were somehow
expected to keep the peace amidst a war for Congo’s resources without
In 2013, however, as the M23 militia was ravaging North and South Kivu
Provinces, the UN Group of Experts on the Democratic Republic of the
Congo (DRC) reported that M23 answered to the command of Rwandan
Defense Minister James Kabarebe, who of course answered to Rwandan
President Paul Kagame himself.
There were competing factions within M23, and some of its officers
answered to high-level officials in Uganda, who of course answered to
Ugandan President Yoweri Museveni.
This made Rwanda and Uganda’s wars of aggression so obvious that the
UN Security Council finally felt obliged to do what the UN Charter
compels them to: organize a UN military intervention to stop the
Rwandan and Ugandan militias.
The UN Force Intervention Brigade, composed of Tanzanian, South
African, and Malawian troops, was the first UN Peacekeeping mission
with an explicit combat mandate, and they did indeed chase M23 back
into Rwanda and Uganda.
Then the press reported that M23 had “surrendered” to Kagame and
Museveni. That was more or less like reporting that the Confederate
Army had fled South to surrender to General Robert E. Lee, but the
world that had been horrified by M23’s atrocities applauded their
defeat and turned its attention elsewhere.
Museveni, one of the aggressors, presided over a so-called peace
conference in Uganda’s capital Kampala, which produced an agreement
giving M23 everything it had asked for at the outset of the war.
But who bothered to read or understand the agreement? Others no doubt
did, but I’m the only one I know of who bothered to report what it
said—on Pacifica Radio and in the San Francisco Bay View Newspaper,
which the powerful players feel free to ignore, even if they were
Violence has continued in the DRC’s Kivu Provinces. According to the
Congo Research Group based at New York University, at least 99
Congolese civilians have been massacred since November 5 in North
Kivu’s Beni Territory alone.
UN Peacekeepers have failed to protect them from marauding militias,
and protesters have taken to the streets in Beni, Goma, and Butembo to
say that the peacekeepers are part of the problem and demand that they
In Beni they burned down most of at least one UN military base, and
one protester has been reported killed, five wounded.
Angry residents of this eastern Congo city burned the town hall and
stormed the UN peacekeeping mission, known as MONUSCO, after Allied
Democratic Forces rebels killed eight people and kidnapped nine
With 18,000 troops, the UN Peacekeeping Mission in Congo is the
largest in the world, and it has been in Congo for 20 years without
protecting the people or the peace.
A young protester in Beni told Aljazeera, “The UN is supposed to keep
us safe, to keep peace in North Kivu, but we’ve never seen the peace.
So we are so angry we don’t want them to stay here in North Kivu.”
Congolese Swiss historian Bénédicte Kumbi Njoko also spoke to Aljazeera:
“If we think about the UN and its presence, we need to go back to
almost 59 years that the UN has been working in the Congo because
there were problems in the country. And I think that if we take that
into perspective, we can of course question the utility of this
organization, because what we have seen the last 20 years now is that
people are still dying and this war that is happening in the Congo has
caused already more than 8 million deaths, so maybe the response that
the UN is giving to that situation is not an appropriate one.”
South African mining researcher and community organizer David Van Wyk agreed.
“Sadly,” he said, “it’s one more failed intervention. The UN has
failed the Congolese people from the very first day of the Congo’s
independence 59 years ago.”
“Rebels,” “rebellions,” and “rebel groups”
Kumbi told me that she had asked Aljazeera why, like the rest of the
international press, they describe the militias killing the Congolese
people as “rebel groups” when they are in fact gangs—Rwandan, Ugandan,
and Congolese—fighting over Congolese territory and resource riches.
They are not Congolese nationals fighting for power or social justice
as the term “rebel groups” implies. They are fighting at the country’s
easternmost edges, on its borders with Uganda, Rwanda, and Burundi.
The war-torn Kivu Provinces couldn’t be farther from Congo’s capital,
Kinshasa, which is on its western border with the Republic of Congo
and near its Atlantic coast.
So they are not trying to overthrow the existing government as any
self-respecting rebels would.
Her question, Kumbi said, did not make it into Aljazeera’s final cut.
It is essentially the same question that she demanded an answer to at
a UN conference in Geneva back in 2013, where—until the gendarmes
dragged her out—she interrupted then UN Secretary General Ban-Ki-Moon
with this scream:
“What about people of the Congo? Please! What about people of the
Congo??? You don’t say anything about that! There’s been killed eight
million people and you say you’re making fictitious peace and you’re
telling us that this is peace when aggressors are not named! Rwanda is
responsible for what is going wrong in the peace in Congo. And nobody
says something about that! Burundi! Uganda! You should say that! We
are sick and tired of hearing every time people just being so
‘peaceful’ with Africa. You should let Africa in peace!”
So long as the UN Security Council and the international press blame
the war on non-existent “rebels” and “rebel groups” carrying out
non-existent “rebellions,” the Congolese holocaust will go on.
NGOs and UN agencies will continue to call for millions of dollars to
help with the humanitarian crisis, comparing it to Syria, Yemen, and
Iraq, and the displaced population already numbering four million will
continue to rise.
Neither the UNSC nor anyone else is going to defeat “rebels” or end a
war they refuse to name.
@MoodysInvSvc changes the outlook on Nigeria's ratings to negative from stable; affirms the B2 ratings
Moody's Investors Service ("Moody's) has today changed the outlook on
the government of Nigeria's ratings to negative from stable.
Concurrently, Moody's has affirmed the B2 long-term local and foreign
currency issuer ratings, the B2 foreign currency senior unsecured
ratings, and the (P)B2 foreign currency senior unsecured MTN programme
The negative outlook reflects Moody's view of increasing risks to the
government's fiscal strength and external position.
Already weak government finances will likely weaken further given an
extremely narrow revenue base and persistently sluggish growth that
hinders fiscal consolidation.
As pressures mount, there is a risk that the government resorts to
increasingly opaque and costly options to finance a moderate but
rising debt burden.
Moreover, vulnerability to an adverse change in capital flows is
building in light of Nigeria's increasing reliance on foreign
investors to fund the country's foreign exchange reserves.
Moody's decision to affirm the rating at B2 recognizes a combination
of credit strengths including the country's large and diversified
economy supported by vast oil and gas endowments, notwithstanding
persistent credit weaknesses such as its very weak institutions and
governance framework and in particular poor public finance management.
RATIONALE FOR THE NEGATIVE OUTLOOK
NIGERIA'S PUBLIC FINANCES ARE INCREASINGLY FRAGILE IN A SLUGGISH
The change of outlook to negative is informed by the increasing
fragility of the country's public finances and sluggish growth
The increasing fragility of Nigeria's public finances is evident in
the greater reliance by the government on financing from the Central
Bank of Nigeria (CBN) over the last three years to cover persistently
large fiscal deficits, with CBN cash advances reaching 2.5% of GDP on
a net basis at the end of September 2019, in addition to government
debt instruments held by the CBN worth 1.4% of GDP.
In particular, CBN advances are more expensive than debt funded on the
domestic capital market as the CBN applies a penalty rate on top of
its monetary policy rate currently at 13.5%.
Moody's expects general government revenues to remain very low at
around 8% of GDP until 2022, despite measures to such as the VAT rate
increase to 7.5% from 5% in 2020.
In general, Moody's expects real growth to remain weak, at just over
2% over the next few years. The economy has yet to fully recover from
the oil price shock of 2015 and the subsequent recession in 2016; real
growth remains below population growth, denoting an erosion in incomes
from already low levels.
Overall, given Moody's expectation that general government fiscal
deficits are likely to remain around 4% of GDP (50% of revenues) and
growth subdued over the coming years, rapid debt accumulation will
continue. Moody's expects debt to GDP to reach N49 trillion by the end
of 2021, or 27% of GDP.
While still at moderate levels, debt has accumulated quickly over the
last four years, almost tripling to an estimated NGN33 trillion (23.2%
of GDP) in 2019 from NGN12.6 trillion (or 13.2%) in 2015. This number
includes the debt of the federal government, the states and the
municipalities, the net cash advances from the CBN, as well as the
stock of promissory notes issued to clear past arrears.
EXTERNAL VULNERABILITY IS INCREASING
The negative outlook is also underpinned by rising vulnerability to an
adverse change in external capital flows.
Official foreign exchange reserves at around $40 billion at the end of
October, or 5-6 months of import cover, at first appear to be
relatively comfortable. However, Nigeria's external position is
increasingly dependent on foreign capital inflows in the form of
portfolio investments, which by definition are volatile and
susceptible to reversal.
In order to maintain price and exchange rate stability, the CBN has
issued domestic certificates (via Open Market Operations) to mop up
naira liquidity, which has been boosted following the creation of the
import-export windows by the central bank in 2017.
The stock of certificates has grown very quickly to reach NGN17.4
trillion in September 2019 from NGN5 trillion in 2017, of which around
NGN5.8 trillion ($16 billion) are currently held by foreign investors.
In order to attract foreign investors, the CBN is paying high interest
rates on these certificates. This policy is very costly, and with
consequent impact on the yields of other government financing
Importantly, the large holdings of foreign investors make Nigeria's
external position vulnerable to an adverse change in investor
sentiment that could quickly materialize given the short-term nature
of the instruments.
Ghana's Cedi Heads for 25th Straight Annual Drop Against the U.S. Dollar @markets
Ghana’s cedi is headed for its 25th straight year of depreciation
against the dollar as the government’s fiscal challenges erode
investor confidence in the currency of the world’s second-biggest
The cedi is down 13% so far in 2019, according to data compiled by
Bloomberg, poised for the worst decline since 2015, when it slumped
It has declined every year since Bloomberg started keeping records in 1994.
Investors are concerned the government won’t stick to spending targets
as it gets closer to an election next year, according to Cobus de
Hart, chief economist for west, central and north Africa at NKC
African Economics in Paarl, South Africa.
“The overshooting fiscal deficit and debt from arrears is putting
pressure on the cedi,” De Hart said by phone.
“We have an election coming up next year and portfolio investors are
concerned that the plan outlined in the 2020 budget will not be met
because revenue continues to underperform.”
Ghana’s budget deficit is forecast to widen to 4.9% of gross domestic
product this year, from 4.1% in 2018, according to the median estimate
in a Bloomberg survey of economists.
The shortfall is rising as the government increases spending to pay
for financial-sector bailouts and liabilities in the energy sector.
The central bank’s inability to quickly build foreign reserves due to
a deficit in the current account is another source of cedi weakness,
De Hart said.
“Even though the trade account is in surplus, the current account is
in deficit, impeding accumulation of foreign reserves,” he said.
“Gross reserves have hovered around $8 billion for some time now,
which suggests that the central bank has not aggressively intervened
to support the currency.”
Ghana adopted the cedi in 1965 to replace the Ghanaian pound, which
was equal in value to the British pound and its currency since
independence in 1957.
The “new cedi,” worth 1.2 original cedis and about half a British
pound, was introduced in 1967.
Decades of high inflation led to a redenomination in 2007, when the
new cedi was phased out and replaced by the current currency at a
ratio of one to 10,000. It has since lost about 80% of its value.
Kenya Doubles Down on Debt With $3.5 Billion Road-Bonds Plan @markets @herbling
Kenya will issue bonds of as much as 360 billion shillings ($3.54
billion) to develop roads and repair an infrastructure network
neglected from years of running a budget deficit in East Africa’s
The plans come amid growing concerns that Kenya is accumulating more
loans than it may afford.
Last year, the International Monetary Fund raised its assessment of
Kenya’s risk of external debt distress to moderate from low and
estimates public debt by the end of December will be equal to 59.9% of
gross domestic product.
A National Assembly transport committee approved plans to allow the
Kenya Roads Board to leverage taxes from fuel imports to back the
infrastructure bond, according to a report on parliament’s website.
New legislation to implement the changes is scheduled for debate on
The bonds will be floated in tranches with the first 150 billion
shillings potentially issued in March if lawmakers pass the
legislation before the end of the year, according to Jacob Ruwa, the
agency’s executive director.
Part of the proceeds will settle 80 billion shillings in pending bills
due to contractors. A search for transaction advisers could begin as
soon as next week, Ruwa said.
While Kenya requires 667 billion shillings to complete ongoing
rehabilitation work and to clear pending bills, the government
allocated its infrastructure ministry just 65 billion shillings,
according to the transport committee’s report.
“With this allocation the road sector needs approximately 10 years to
complete the ongoing works and maintenance of about 50% of the road
network annually,” according to the committee.
The revenue-backed bond “offers the national government an off-balance
sheet solution that will not have an impact on debt sustainability,”
according to the report.
The agency collected 72 billion shillings in the year through June
from a road maintenance fuel levy of 18 shillings per liter of
gasoline and diesel.