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Macro Thoughts

"I don't see why anybody would change their behavior because there's a
viral drug out there," he said. #ECNYDruckenmiller

 A Cough: A single cough releases about 3,000 droplets and droplets
travels at 50 miles per hour. Most droplets are large, and fall
quickly (gravity), but many do stay in the air and can travel across a
room in a few seconds.
A Sneeze: A single sneeze releases about 30,000 droplets, with
droplets traveling at up to 200 miles per hour. Most droplets are
small and travel great distances (easily across a room).
If a person is infected, the droplets in a single cough or sneeze may
contain as many as 200,000,000 (two hundred million) virus particles
which can all be dispersed into the environment around them.

April CPI m/m fell -0.8% (matching est.) vs. -0.4% in prior month
(lowest since December 2008); core fell -0.4% vs. -0.2% est. & -0.1%
in prior month … y/y up 0.3% vs. 1.5% in prior month & core up 1.4%
vs. 2.1% in prior month … record decline for monthly core prices
(chart)

Home Thoughts

''You felt the land taking you back to what was there a hundred years
ago, to what had been there always.”
Don DeLillo wrote "Everything is barely weeks. Everything is days. We
have minutes to live."

“No one at all sees Death,
no one at all sees the face [of Death,]
no one at all [hears] the voice of Death,
Death so savage, who hacks men down. . . .
Ever the river has risen and brought us the flood,
the mayfly floating on the water.
On the face of the sun its countenance gazes,
then all of a sudden nothing is there!”

Hippo huddle: Terrestrial Wildlife Finalist. Each winter, as the
waters of Botswana’s Okavango River spread across its vast delta, an
array of African wildlife congregates to eat, drink, splash, and soak.
This seasonal wetland was especially important in 2019, when severe
drought left human and animal populations alike desperate for water.
Cattle, elephants, crocodiles, and other creatures were left to vie
for any water they could find in the delta’s shrinking pools.

Political Reflections

''They fancied themselves free'' wrote Camus, ―''and no one will ever
be free so long as there are pestilences''
―In this respect, our townsfolk were like everybody else, wrapped up
in themselves; in other words, they were humanists: they disbelieved
in pestilences.
A pestilence isn't a thing made to man's measure; therefore we tell
ourselves that pestilence is a mere bogy of the mind, a bad dream that
will pass away.
But it doesn't always pass away and, from one bad dream to another, it
is men who pass away, and the humanists first of all, because they
have taken no precautions
We are trending in the 80,000-100,000 #COVID cases a day now. We have
crossed 4,000,000 cases.
The Winners are easy to see @balajis

Developed World ex US has bent the Curve
The European Trend is down now
May 6 In Europe, the number of daily cases is decreasing... @RemiGMI

We are witnessing a Spill Over into EM and Frontier Geographies
―Brazil is the global epicenter of the coronavirus.
In Brazil we have a toxic mix of a „‟Voodoo‟‟ President @jairbolsonaro
and a runaway #COVID19
Brazilians aren‘t infected by anything, even when they fall into a sewer
“It‟s tragic surrealism ... I can‟t stop thinking about Gabriel García
Márquez when I think about the situation Manaus is facing.” Guardian
Bolsonaro rides jet ski while Brazil's COVID-19 death toll tops 10,000 EFE

The South American country with a population of 210 million reached
10,627 deaths after 730 fatalities were recorded overnight, while
cases stood at 155,939.
Viruses are in essence non linear exponential and multiplicative and
COVID19 has „‟escape velocity‟‟ in Brazil.
Brazil Real touched a Record Low of 5.884 May 7th
Brazil is a real time Laboratory experiment and the African
@jairbolsonaro is of course @MagufuliJP
According to the African Centres for Disease Control and Prevention,
Tanzania has conducted just 652 tests (as of 7 May). This compares to
over 26,000 tests conducted in Kenya and nearly 45,000 in Uganda.
BRICS ex China is accelerating – covid 19 tracker list. @ vivekmoffical
 Stephen B. Streater @video4me 
Hot countries up. >10%: Mayotte93
>5%: Russia5 Brazil8 Mexico18 Pakistan21 Qatar28 Dominican Republic43 South Africa44 Egypt45 Kuwait49 Bahrain58 Ghana59 Nigeria60 Afghanistan61 Azerbaijan69 Bolivia72 Senegal82 Somalia92 DRC94 Guatemala97
now: >10%: Ghana59, Honduras80, Sudan89
>5%: Russia5, Brazil8, Peru13, India14, Mexico19, Pakistan22, Chile23, Qatar28, Bangladesh36, Colombia41, South Africa44, Egypt45, Kuwait49, Kazakhstan56, Bahrain58, Nigeria60, Afghanistan62, Bolivia73
Coronavirus: @WHO warns of 190,000 deaths in Africa @TheAfricaReport
WHO warns that the coronavirus pandemic could 'smoulder' in Africa for
several years
Should the various lockdowns currently being eased in many African
countries fail to  ̳bend the curve‘, between 29m – 44m Africans risk
being infected, with deaths potentially reaching 190,000.
The WHO believe that transmissions will likely be slower — because of
Africa‘s age pyramid, and social and environmental factors — the
pandemic risks lasting for far longer.
―While COVID-19 likely won‘t spread as exponentially in Africa as it
has elsewhere in the world, it likely will smoulder in transmission
hotspots,‖ said Dr Matshidiso Moeti, the WHO Regional Director for
Africa.
“COVID-19 could become a fixture in our lives for the next several
years unless a proactive approach is taken by many governments in the
region. We need to test, trace, isolate and treat.”
Over 56,000 confirmed #COVID19 cases on the African continent - with
more than 19,100 associated recoveries & 2,100 deaths.

The worrying development is Transmission Hotspots
Kano in Nigeria for example
• Western Cape growing at an alarming rate @sugan250388

Someone with close knowledge of the medical profession said it was
almost impossible to secure a hospital bed in several cities.
The Aga Khan hospital in Dar es Salaam had a well-equipped ward for 80
coronavirus patients, but several were dying each night, he said.
The Question for SSA is whether these Transmission Hot Spots expand
and conflate?
America lost so many jobs in April that we could barely fit the
numbers in this chart of historic downturns (and that includes all of
the Great Recession)

Unemployment Rate versus Stocks

Last week for a moment The FED FUNDS rates went negative for June 2021
which is a remarkable and never seen before thing.
We are in the realms of Behavourial Economics.
I had a clinically “mild” case for 8+ weeks. There was nothing mild
about it. @ ElissaBeth

For example Tourism – I believe it is stopped out through Q4 2021
Business Travel is Toast.
Tourism dependency globally (top 25 most dependent). @Trinhnomics
DEUTSCHE: Our global forecast "has turned decidedly gloomier .. [M]uch
of the world has struggled mightily with the virus and the economic
fallout. .. we now see global GDP falling 10% in Q2 and remaining well
below pre-virus levels through most of next year.
What‘s certain is that the whole global economy has been hit by an
insidious, literally invisible circuit breaker. #COVID19

The US Stock Market has rebounded mightily but this is a Venezuela or
a Zimbabwe Trade, as it were H/T @Adammancini4
Its all about the Print Shop [Scott Burke]
Some Folks dived into BITCOIN which topped $10,000.00 on Friday
Take Your Pick
Paul Tudor Jones
“The best profit-maximizing strategy is to own the fastest horse,”
Jones, the founder and chief executive officer of Tudor Investment
Corp., said in a market outlook note he entitled „The Great Monetary
Inflation.‟
“If I am forced to forecast, my bet is it will be Bitcoin.” Jones, who
said his Tudor BVI fund may hold as much as a low single-digit
percentage of its assets in Bitcoin futures, becomes one of the first
big hedge fund managers to embrace what until now has largely been
snubbed by the financial mainstream.
.@Nouriel Roubini 
Bitcoin crashes by 15% in 7 minutes on NO news: a rigged, totally
manipulated, whales- controlled market where most transactions (90%)
volumes are false as exchanges pretend to have liquidity they don't
have. Massive pump & dump, spoofing, front running, wash trading!
Total Scam!
Crude Oil rebounded
Will it last?
Of course it won’t. But where will it stall?
The drop in worldwide oil consumption in April has been put as high as
35 million barrels a day

Population Density the whole of Africa @undertheraedar
Africa will go Juche
Juche (Korean: 주체/主體, lit. 'subject'; Korean pronunciation: [tɕutɕhe];
usually left untranslated or translated as "self-reliance") is the
official ideology of North Korea
described by the government as "Kim Il-sung's original, brilliant and
revolutionary contribution to national and international thought".
The IMF has put some money to work but It is a Band Aid
biggest African recipients of the #IMF's emergency #coronavirus funding
Amid the #COVID19 shock, lower commodity prices and regional
dependence on tourism & #remittances will push current accounts in
most Sub-Saharan African countries to deficit in 2020. @IIF

The Outliers are rolling over
 ZAMBIA On the brink of sovereign default @Africa_Conf

The government is getting no help from the IMF because it won't stop
borrowing unsustainably and covertly
After stopping payments on several commercial loans this year, Zambia
is set to default on its US$3 billion Eurobonds, now trading at
'distressed debt' levels, with yields over 50%, Africa Confidential
has learned.
Ratings Agencies are throwing in the Towel.
Another devaluation looms as Naira depreciates at forwards market, now
N570 to $1 @nairametrics
Nigeria‟s 5 years onshore Non-Deliverable forward contract posted its
biggest drop by plunging 27% from N413.36 to close at N569.69 a price
differential of N156.
The 1-year Non-Deliverable forward contract was down 5% from N394.29
to close at N421.22 a price differential of N26.93.
Regime Implosion risk in SSA is trending higher.

International Markets

Euro 1.0852
Dollar Index 99.954
Japan Yen 107.13
Swiss Franc 0.9694
Pound 1.2286
Aussie 0.6474
India Rupee 75.3955
South Korea Won 1225.51
Brazil Real 5.8866
Egypt Pound 15.744
South Africa Rand 18.3932

high tech, millenial, crypto, avocado economy exhibits viral, wildfire
and exponential and even non-linear characteristics not unlike Ebola.

Commodities

What I do know is this. Regime implosion is coming to the Oil Producers

Emerging Markets

The Maldives’ coral-encrusted islands have long been irresistible to tourists.
But today its secluded luxury resorts are deserted, except those
converted into makeshift quarantine facilities for stranded
coronavirus patients.
The virus has shattered global tourism and devastated the Maldivian economy.
The IMF has gone from projecting a 6 per cent expansion in gross
domestic product this year to an 8 per cent contraction.
The risk is that this brutal, abrupt recession could translate into
the Maldives becoming the latest country to sink into sovereign
bankruptcy.
Zambia, Ecuador and Rwanda have all announced in recent weeks that
they are struggling to repay their debts.
Lebanon has already kicked off its restructuring process, while
Argentina, which was battling its creditors even before the pandemic
struck, appears to be heading for its ninth sovereign default since
independence in 1816.
Investors believe many other developing countries are not too far behind.
The Maldives is hardly the biggest country likely to succumb, but
given its debt burden to creditors such as China and the severity of
its recession, it is the “poster child of how easily the dominoes will
fall”, warns Mitu Gulati, a sovereign debt expert at Duke University.
The IMF has already lent the country $29m to tide it over, but warned
that the loss of tourism has “severely weakened” the economy and that
additional financial support would be needed.
The country’s $250m bond due in 2022 has tumbled to trade at just 81
cents on the dollar, indicating that investors are increasingly
concerned about the Maldives’ capacity to make good on its
obligations.
The kindling for another big emerging markets debt crisis has been
accumulating for years. Investor demand for higher returns has allowed
smaller, lesser-developed and more vulnerable “frontier” countries to
tap bond markets at a record pace in the past decade.
Their debt burden has climbed from less than $1tn in 2005 to $3.2tn,
according to the Institute of International Finance, equal to 114 per
cent of GDP for frontier markets. Emerging markets as a whole owe a
total of $71tn.
“The challenge is enormous,” says Ramin Toloui, a former head of
emerging market debt at bond manager Pimco and assistant secretary for
international finance at the US Treasury, who now teaches at Stanford
University.
“The withdrawal of money [from EM funds] is greater and more sudden
than in 2008, the economic shock is huge and the path to recovery more
uncertain than it was after the last crisis.”
The G20 has agreed to temporarily freeze about $20bn worth of
bilateral loan repayments for 76 poorer countries. It has urged
private sector creditors to do the same, but few analysts believe that
is feasible, and predict the result will probably instead be a series
of ad hoc debt standstills and restructurings for swaths of the
developing world.
Resolving the coming debt crises may be even tougher than in the past,
however. Rather than the banks and governments — the primary creditors
in the mammoth debt crisis that racked the developing world in the
1980s and 1990s — creditors are nowadays largely a multitude of bond
funds.
They are trickier to co-ordinate and corral into restructuring agreements.
Although the need for financial relief is stark in many cases, there
are indications that some investment groups may break with the custom
of reluctantly accepting financially painful compromises to achieve a
restructuring, and instead fight for a better deal.
“Normally these guys would get out of Dodge City at the first sign of
trouble in the debtor country. They're not set up to deal with
prolonged debt restructurings and don't like the reputational risk
that would result from an aggressive campaign against a country in
deep economic and social distress,” says Lee Buchheit, a prominent
lawyer in the field.
“But having watched some holdout creditors extract rich payouts, even
some of the traditional institutional investors appear to be
reconsidering the virtues of passivity.”
Holdout strategy
In the past, such aggression has been the preserve of what critics
call “vulture funds” — investors who seek to profit from government
debt crises through obstinacy and legal threats.
Their basic strategy is to act as a “holdout”. Sovereign debt
restructurings amount to exchanging a country’s old bonds for new
ones, often worth less, with a lower interest rate or longer repayment
times.
Holdouts refuse to join in, and instead threaten to sue for the full
amount. As long as the number of holdouts is tiny, countries have
often elected to simply pay them off rather than deal with the
nuisance of a potentially lengthy courtroom battle.
For example, when Greece restructured most of its debts in 2012, it
grudgingly chose to repay in full a smattering of overseas bonds where
hedge funds had congregated.
Others, like Argentina, have chosen to fight. The uncertainty of the
outcome — and how hard it can be to compel a country to pay through
legal means — long ensured a delicate but functional balance to the
sovereign debt restructuring process.
However, in 2016 Elliott Management’s Jay Newman etched his name in
the annals of big hedge fund hauls by extracting $2.4bn from Argentina
for the firm after a decade-long legal battle.
“[Holding out] long seemed like a cat-and-mouse game that was costly
and uncertain, but now it has shifted to a more promising strategy,”
says Christoph Trebesch, an academic at the Kiel Institute for the
World Economy in Germany.
Although still daunting, Elliott’s success could inspire more copycats
and complicate the looming spate of EM debt crises, some experts fear.
Moreover, there are signs that traditional investment groups are also
toughening up, which could turn a difficult process into a more
protracted nightmare for government lenders and borrowers alike.
One lawyer who has worked with creditors points out that many
investment funds have piled into EM bonds in recent years, and the
prospect of deep and broad losses could be ruinous to some
heavily-exposed funds.
 “Before, the holdouts were the main problem, but now it could be the
traditional funds,” he says. “If your back is against the wall, you’re
going to fight.”
After the IMF’s failed attempt to set up a quasi-sovereign bankruptcy
court in the early 2000s, the main response by governments has been to
introduce “collective action clauses” into their bonds.
These dictate that if a large majority of bondholders vote for a
restructuring, typically 75 per cent, the agreement is imposed on all
holders.
But investors have wised up, buying bigger chunks of specific bonds in
an attempt to amass such a large position that they enjoy a de facto
veto over the restructuring terms of the instruments. And some older
bonds have no such clauses.
So far there are only a few examples of larger investment firms taking
a tougher stance, but they are notable for how successful they have
been.
The first was Franklin Templeton, which managed to extract what some
analysts say were surprisingly favourable terms in Ukraine’s 2015 debt
restructuring, having snapped up enough bonds to become the country’s
largest private creditor.
More recently, Ashmore has built up a huge stake in Lebanon’s debt
that in practice gives it a veto over how the country will restructure
some of its bonds.
And this year, Fidelity successfully played hardball with Buenos
Aires, calling the Argentine province’s bluff that it was unable to
make a $250m payment due in January. Buenos Aires ended up paying in
full.
Fidelity is also part of a larger creditor group that has pushed back
on Argentina’s plans to restructure its $65bn foreign debt burden.
The group includes some of the world’s largest institutional
investors, including BlackRock and T Rowe Price, and together with the
two other main bondholder groups, wields enough power to make or break
any deal.
Franklin Templeton and Ashmore declined to comment. Fidelity declined
to comment on its Argentine bust-up, but said in a statement that its
policies on sovereign restructurings had not changed.
“When it becomes necessary to negotiate with those who have borrowed
our investors’ money, we do so in good faith and in a reasonable,
professional manner,” the investment group said.
“The interests we represent are those of the millions of individuals,
and thousands of financial advisers and institutions who have
entrusted their money to us to invest on their behalf.”
Debtor advantage
Fidelity’s nod to the fiduciary duty money managers owe clients is
telling. Traditional asset managers are unlikely to be quite as
stubborn or litigious as Elliott.
But with a spate of examples that a tougher approach can be
successful, more may feel compelled to follow suit — no matter how
severe the coronavirus crisis proves for many countries.
“They don’t want to be Elliott, but they have a fiduciary duty and for
some of them it will be existential, so they might as well fight to
the death,” says the creditor lawyer.
“It doesn’t take many of them to change their attitudes and this will
become very difficult.”
Clinching a victory, however, is another story, says one holdout
investor. Amassing a blocking stake “gets you a seat at the table, but
it doesn’t tell you when you will be eating”, the person adds.
These dynamics are why many investors believe the G20’s call for
private-sector creditors to copy their blanket debt “standstill” will
probably prove futile.
Absent some kind of extraordinary legal mechanism — such as the UN
Security Council resolution that shielded Iraq’s assets from seizure
from creditors after the US invasion in 2003 — investors warn that it
will be challenging to come to a collective and voluntary agreement.
Instead, they say the coming wave of debt crises will have to be
handled on a case-by-case basis.
For the investment funds looking to take an aggressive stance in any
default talks, the obstacle might not be the potentially bad PR but
the perception among some governments that the pandemic gives them
more leverage.
Given that bond prices have plummeted to distressed levels, countries
will probably harden their stance and seek more favourable terms in
forthcoming restructurings.
Bill Rhodes, a former top Citi executive who was one of the key
figures in the Latin American debt crisis of the 1980s, argues that
the threat of fresh outbreaks of coronavirus will strengthen the hand
of debtor countries when negotiating repayment terms.
“We are looking at just the first wave of Covid-19, so some of these
finance ministers are going to feel like they really have to drive a
tough bargain,” he says. “The IMF will be very firm on pushing for the
countries to get discounts.”
A group of sovereign debt experts, including Mr Gulati and Mr
Buchheit, has come up with a pandemic debt relief proposal.
Countries should strike an agreement with creditors to funnel debt
payments into credit facilities set up by the World Bank or a regional
development bank, which would then be lent back to the countries to
pay for essential spending.
Its backers hope this would avoid a technical default and impose a de
facto debt standstill. The carrot of the legal protection enjoyed by
organisations such as the World Bank — which are considered
“super-senior” in debt restructurings — might help sweeten the deal.
Once the crisis has faded a decision can then be taken on whether a
full but orderly debt restructuring is needed, and any money deposited
in the facility would be protected.
It is unclear whether the World Bank, which has not publicly commented
on the idea, would go for this proposal, and some heavy-handed
coercion from the likes of the US would probably be needed to get many
creditors to agree.
But Mr Trebesch says the proposal may be acceptable to China, which
has edged out the IMF and the World Bank as the largest official
creditor to developing economies via its Belt and Road Initiative,
according to data he compiled with Harvard’s Carmen Reinhart and
economist Sebastian Horn. “If things really blow up, China might
prefer this option to an outright default,” he says.
Debt relief: which countries are most vulnerable?
Whatever avenue is eventually taken, it is essential that policymakers
start grappling more forcefully with emerging market travails, given
the danger that their severity is likely to reverberate across the
international financial system, according to Scott Minerd, chief
investment officer at investment firm Guggenheim Partners.
“This pandemic will quickly escalate from a health crisis to a
humanitarian crisis, and ultimately to a solvency crisis,” Mr Minerd
wrote in a recent note to clients.
“Political stability will be the last domino to fall. But my biggest
concern is that this crisis will be much deeper and more prolonged
than people anticipate, which leaves a lot of space for another shoe
to drop in the global financial crisis.”

Lets Turn now to the defining Engagement of the last two decades for
SSA – The SSA China relationship.
Basically China has an Option to buy in SSA Assets at fire-sale Prices.

This Phenomenon was positive for the last two decades but has now
undergone a Trend reversal.
The ZAR is the purest proxy for this Phenomenon.
African Countries heavily dependent on China being the main Taker are
also at the bleeding edge of this Phenomenon.
This Pressure Point will not ease soon but will continue to intensify

Frontier Markets

Sub Saharan Africa

We Know that the #Coronavirus is exponential, non linear and multiplicative.
what exponential disease propagation looks like in the real world.
Real world exponential growth looks like nothing, nothing, nothing ...
then cluster, cluster, cluster ... then BOOM!

Someone with close knowledge of the medical profession said it was
almost impossible to secure a hospital bed in several cities.
The Aga Khan hospital in Dar es Salaam had a well-equipped ward for 80
coronavirus patients, but several were dying each night, he said.
The Question for SSA is whether these Transmission Hot Spots expand
and conflate?

Omari*, a motorcycle taxi driver, stopped outside a house in Arusha
City, a tourist hub in northern Tanzania and pointed to a large, grey
gate.
"A person here died from COVID a few days ago," he said, before
starting up his engine again and continuing down the city's
pothole-riddled dirt roads.
He slowed down at another house and loudly mumbled through his blue
protective mask: "The father here drives the bus between Arusha and
Dar es Salaam. He picked up COVID in Dar and he died about a week
ago''
"This is becoming very serious," he added. "This disease is killing a
lot of people."
Hussein Kwikima said when he visited the department of health at the
Ilala municipal council on April 30 to discuss the burial, he saw the
worker on duty open a book titled Mazishi ya COVID-19- Swahili for
"COVID-19 burials" - and that his father was the 256th name in the
book.

Scores of mysterious deaths in northern Nigeria have sparked
speculation that coronavirus may be moving untracked through Africa’s
most populous nation, which has reported few confirmed cases but
conducted fewer tests than other countries with smaller populations.
Ten weeks after Nigeria reported sub-Saharan Africa’s first
coronavirus cases, the country has recorded 4,400 infections out of a
population of more than 200m.
That is compared with about 4,300 cases in Ghana, where the population
is only 30m, 10,000 cases in South Africa and 9,400 cases in Egypt.
Nigerian officials concede that the low count is due in part to
limited testing. Nigeria has tested just 27,000 samples, compared with
about 356,000 tests in South Africa, which has a population less than
a third of the size.
The country’s response is led by a group of well-respected doctors,
but has been hobbled by decades of under-investment in healthcare and
a global supply chain for equipment, medicines and chemicals that
appears to have largely shut out developing countries.
Last month, Nigeria was so desperate for testing supplies that Dr
Chikwe Ihekweazu, head of the country’s Centre for Disease Control,
was forced to put out an urgent call for so-called RNA extraction kits
on Twitter, including his email address at the bottom for any supplier
who wanted to respond.
Health minister Osagie Ehanire has been candid about the healthcare
system’s vulnerability and the need for people to follow government
guidelines on mandatory mask-wearing and social distancing.
But officials have also acknowledged that it may be difficult for the
poorest Nigerians to comply and case counts are now rising by hundreds
each day, just as economically challenging lockdowns are being eased.
Last week, Lagos, Africa’s largest city, relaxed its restrictions,
allowing the millions of inhabitants who live hand-to-mouth to go out
to earn for the first time in five weeks, leading to scenes of crowded
markets and banks flooded with customers withdrawing money.
On the other side of the country, patients at a government isolation
centre in north-eastern Gombe state protested in the streets at what
they said was mistreatment.
In one of many videos circulating on social media, a healthy-looking
patient referenced a conspiracy that the pandemic was an elite
money-making scheme.
“They said we have coronavirus. Look at us?” she said in Hausa,
according to a translation by Nigeria’s Vanguard newspaper. “Do we
look sick? Do you see any sign of sickness in us? Look at us very well
and see!”
Late last month in Kano state, the north’s commercial centre,
gravediggers told local media they were burying far more bodies than
usual, despite few officially confirmed cases of the virus and just as
the government laboratory conducting Covid-19 tests in the state shut
after staff tested positive.
A government team led by a forensic pathologist is expected to release
a report on the deaths soon.
Last week, an official from Jigawa state, east of Kano, told TV news
that roughly 100 people had died of Covid-19-like symptoms in a single
municipal area, only for state officials to contradict him days later.
In neighbouring Yobe, state officials disputed local news reports that
155 people had died within six days of symptoms related to the
disease.
In spite of the fears of under-reporting, Nigeria’s healthcare system
has so far held up relatively well even though it is one of the least
funded in the world on a per capita basis.
Few patients have needed scarce ventilators and hospitals have not
been overwhelmed, even as many Nigerians have complained of
difficulties in getting tested.
The country’s private sector has stepped in to donate millions of
dollars, tens of thousands of testing kits, hundreds of intensive care
beds, medical equipment and a number of temporary isolation centres.
That was a good start, but further collaboration would be needed to
avert a crisis, said Dr Folabi Ogunlesi, managing partner at Vesta
healthcare consultancy in Lagos.
“It has to be a combination — in terms of the resources and endeavours
— of both the government and private sector because I don’t think the
government alone in Nigeria can do it,” he said.
“It needs a handshake between the government and the private sector to
formulate a coherent strategy.”
Dr Ogunlesi, who practises respiratory medicine and has an advanced
degree in molecular immunology, said he could not yet explain
Nigeria’s comparatively low caseload but worried about the situation
in Kano and other northern states.
“There will be a need, after the whole thing is over, to look at data
and try to work out with some rigour how the pandemic transpired in
Nigeria,” he said. “Having said that, gravity does occur in Nigeria,
so I don’t think we should be complacent.”

The Pyramid of Deng Kur, South Sudan—built by the Nuer Prophet
Ngundeng 1890s. A key symbol of Nuer resistance to British rule, the
monument was dynamited on the orders of colonial officer Percy Coriat
in 1928, shortly after he took this photograph.

Kenya

REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY—PRESS
RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR THE
REPUBLIC OF KENYA
The impact of COVID-19 on the Kenyan economy will be severe. It will
act through both global and domestic channels, and downside risks
remain large.
''To ensure that COVID-19 related resources are used for their
intended purpose, the authorities plan to conduct independent
post-crisis auditing of COVID-19 related expenditures and publish the
results.”
Kenya is facing a pronounced economic slowdown and an urgent balance
of payments need owing to the COVID-19 pandemic.
The Central Bank of Kenya (CBK) should, however, continue to closely
track inflation developments and keep its policy decisions
data-dependent.
The CBK should also continue to allow the exchange rate to act as a
shock absorber.
The COVID-19 shock has given rise to urgent balance of payments (BOP)
financing needs in Kenya. The pandemic is having a pronounced negative
impact on the economy, including sharp declines in the services sector
and agricultural exports, as well as severe disruptions of supply
chains.
Staff projects that real GDP growth will drop to 0.8 percent in 2020.
With international financial markets effectively closed to emerging
market and frontier issuers such as Kenya, staff expects an external
financing gap of about $2.1 billion (2.1 percent of GDP) in 2020.
The fiscal deficit widened in 2018/19 to 7.8 percent of GDP, owing to
a disappointing revenue outturn and higher recurrent expenditure.
Similar to previous years, public investment execution was less than
budgeted. Due to inadequate control of spending commitments, payment
arrears of about 0.6 percent of GDP accumulated. Gross public debt
rose to 62.4 percent of GDP in June 2019.
Staff projects that real GDP growth will drop to 0.8 percent in 2020,
5 percentage points below the pre-COVID baseline.
The main channels of impact include (i) a sharp slowdown in the
traditionally resilient services sector (concentrated in tourism,
transport, and wholesale/retail trade), (ii) severe disruptions of
supply chains and (iii) lower agricultural exports (in particular tea
and flowers) and activity in the agro-processing sector due to
transport disruptions and reduced global demand.
On the demand side, domestic activity will slow owing to social
distancing and lower remittances (sizeable at about 3 percent of GDP
in 2019).
The external impact would be strongest on tourism receipts and the
financial account.
The current account deficit is expected to narrow to 4.4 percent of
GDP in 2020, as the reduction in oil imports (owing largely to lower
global energy prices) and lower capital goods imports more than
outweigh a sharp contraction in tourism receipts (about 2 percent of
GDP in 2019), the decline in goods exports, and lower remittances
(two-thirds of remittances come from the UK and the US).
The shock to emerging market and frontier economies’ access to
international capital markets also hit Kenya and is expected to
severely constrain new issuance or contracting of new syndicated loans
for the remainder of 2020.
The resulting BOP financing need is assessed to be some $2.1 billion
in 2020 (2.1 percent of GDP)
Assuming a gradual recovery of the global economy through 2020−21,
staff expects that growth would improve to 5.5 percent in 2021 and 6.1
percent in 2022 and decline to 5.8 percent in 2023
Risks are tilted to the downside. Risks include a deeper or more
prolonged duration of the global pandemic or its spread in Kenya that
could further deteriorate the outlook and put severe strains on
balance sheets of the public sector, households and firms.
Domestic risks include a stronger-than-expected negative impact of the
locust invasion on agriculture production, weaker remittances, and a
more severe-than-expected impairment of bank balance sheets due to the
expected 2020 slowdown, which would limit banks’ ability to support
economic growth.
All of these risks could lead to lower growth in 2020 and a smaller
rebound in activity in 2021 than currently projected by staff.
8. The authorities viewed the outlook as more positive than staff.
They expected growth in 2020 to be around 3 percent, buoyed by the
agricultural sector and some services, such as communication and
information technology.
Kenya’s debt remains sustainable. The risk of debt distress has moved
to high from moderate due to the impact of the global COVID-19 crisis
which exacerbated existing vulnerabilities
Consequently, a number of debt indicators have worsened. Kenya’s
external and public debt vulnerabilities also reflect the high
deficits of the past, including due to a decline in tax revenues as a
share of GDP in recent years.
Solvency indicators for the PV of external debt-to- GDP ratio and PV
of total public debt-to-GDP ratios are firmly below the indicative
threshold/benchmark under the baseline scenario.
However, there are breaches of one solvency indicator (i.e., the
present value (PV) of external debt-to-exports ratio) and one
liquidity indicator (i.e., the external debt service-to-exports ratio)
above the thresholds under the baseline scenario.
It is expected that Kenya’s debt indicators will improve as exports
rebound after the global shock dissipates.
Kenya’s overall public debt has increased in recent years. Gross
public debt increased from 50.2 percent of GDP at end-2015 to an
estimated 61.7 percent of GDP at end-2019
At end-2019, multilateral creditors accounted for about 331⁄2 percent
of external credit to Kenya while debt from bilateral creditors
accounted for 33 percent.
Of Kenya’s bilateral debt, about 72 percent is owed to non-Paris Club
members, mainly due to loans from China to finance construction of the
Standard Gauge Railway project (SGR).
Kenya’s reliance on commercial financing has increased. Commercial
debt (mainly Eurobonds and syndicated loans) accounted for about 33
percent of external public debt at end-2019, up from 223⁄4 percent at
end-2015.
Existing Eurobonds, US$6.1bn in total, accounted for 60 percent of
commercial debt at end-2019.
In June 2014, Kenya issued its inaugural sovereign Eurobonds, at 5-
Year and 10-year maturities, raising US$2 billion in June and a
further US$750 million in December 2014.
4 In February 2018, Kenya raised an additional US$2 billion in a new
sovereign Eurobond issue,5 followed by another sovereign bond issue of
US$2.1 billion in May 2019.
6 Another major type of commercial borrowing is syndicated loans. In
October 2015, Kenya contracted a two-year US$750 million syndicated
loan at LIBOR plus 570 basis points, equivalent to an effective yield
of 8 percent.
Payment for nearly 90 percent of this syndicated loan was extended to
April 2018 reflecting delays in the issuance of a planned Eurobond due
to the protracted election period.
In February 2018, the maturity of the syndicated loan was extended to
seven years. In 2019, Kenya contracted a 10-year US$250 million
syndicated loan in January and a 9-year US$1.25 billion syndicated
loan in February for refinancing purposes.
Tax revenues have gradually declined since 2013/14 as a share of GDP,
reaching their lowest level of the past 10 years in 2017/18. Tax
revenues in 2018/19 slightly improved by 0.3 percentage points of GDP
to 15.1 percent of GDP, while non-tax revenues were 0.2 percentage
points of GDP less than in 2017/18.
Kenya’s revenue performance remains in line with the regional average.
Public sector debt is projected to increase from 61.7 percent in 2019
to 69.9 percent in 2022, followed by a gradual decline. It remains
strictly below the benchmark of 70 percent of GDP in PV terms.
The PV of public debt- to-revenue ratio would increase from 313.9
percent in 2019 to 357.4 in 2022 before easing to 282.7 percent in
2030 and further to 190.7 percent in 2040.
The debt service-to-revenue ratio is expected to remain stable in the longer
This DSA finds that Kenya’s risk of debt distress has moved to high
from moderate in the context of the ongoing global economic turmoil
associated the COVID-19.