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By Ken Stibler, Noah Berman and Nojan Rostami. Executive editor: Dan Keeler

Africa

Ethiopia nets financing boost after letting currency float

Ethiopia agreed to let its currency float on Monday, unlocking $20 billion in loans and grants from the IMF and the World Bank—and prompting an immediate plunge in the value of its currency, the birr. The World Bank will provide the bulk of the funding, with a plan to provide some $16.6 billion in financing for the East African nation over the next three years, including an initial package of $1.5 billion in grants and loans. 

The program marks the World Bank’s first-ever direct budget support to Ethiopia, Reuters reports.

The bank’s commitments came after the IMF agreed on Monday to lend Ethiopia $3.4 billion, hours after the country’s government said it would float its currency. The fund said its bailout enabled the immediate disbursement of almost one-third of the total, the BBC reports.

On the ground in Addis Ababa, people clamored to buy staple goods before prices soared after the birr depreciated by 30% this week before stabilizing.

The financing will “set the government up for faster progress in debt talks, but the government may struggle to keep to fiscal austerity much like its peers,” Capital Economics analyst David Omojomolo wrote in a note this week.

Mozambique to recover $825mn from ‘tuna bonds’ fraud

Mozambique has won back $825 million from the so-called tuna bonds scandal that still looms over the East African nation’s finances, the WSJ reports. On Monday, a court in London ruled in favor of Mozambique in the country’s suit against Privinvest, a Gulf-based shipbuilder at the heart of the scandal.

In 2013, investors bought billions of dollars in sovereign bonds issued by Mozambique. Privinvest was to use the proceeds to design maritime projects. Many of those projects never happened. In 2016, the fraud was revealed, and Mozambique plunged into economic distress.

Ruling on Monday, Justice Robin Knowles said the country had been “exploited by highly developed institutions and corporations” and “let down by its own officials and office holders.”

IMF approves $820mn disbursement for Egypt

The IMF has approved an immediate $820 million disbursement to Egypt as part of its $8 billion lending arrangement with the North African country, but urged the country’s leadership to push harder on reforms of state-owned enterprises, Reuters reports.  

The lender said Egypt’s ongoing economic reform program, including the government’s decision to float its currency, have helped the country recover from its worst downturn in decades. “These improvements are beginning to have a positive effect on investor confidence and private sector sentiment,” the IMF said in a statement.

Indeed, Egypt this week signed $340 million of oil and gas deals with Shell and Malaysian firm Petronas, Reuters reports.

The IMF warned Egypt faces ongoing economic risks related to the war in Gaza and associated strikes by the Yemen-based Houthi rebel group on commercial shipping in the Red Sea.

African countries deepen digital cooperation deal with China

China this week announced an intensification of its push into Africa’s telecom and digital infrastructure sectors, state-run media outlet Xinhua reports. At a ceremony in Beijing, more than two dozen African countries agreed to partner with China to build infrastructure focused on developing 5G and 6G telecom networks, as well as on data centers and undersea cables, according to a Chinese readout of the forum. 

Around three-quarters of the countries in Africa that have 5G networks are likely to use or already using equipment from Chinese telecom giant Huawei. In South Africa, more than 70% of such infrastructure is supplied by Chinese companies, according to Chinese state media. Speaking at the forum, Senegalese Telecommunications Minister Alioune Sall said the agreement was a “win-win” for China and Africa.

Podcast

Tarik Senhaji, Casablanca Stock Exchange 

Morocco has long been considered a gateway for investment into West Africa and beyond. In our podcast this week, Casablanca Stock Exchange’s CEO Tarik Senhaji discusses the exchange’s strategy for deepening the country’s capital markets, the impact of generational change in Morocco, and the crucial role the African Continental Free Trade Agreement will play in Africa’s economic development. 

Listen to the full episode on Spotify or wherever you get your podcasts.

Asia 

Bangladesh bans key opposition party amid mass protests

Bangladesh banned the Islamist political party Jamaat-e-Islami on Thursday, accusing it of inciting mass student-led protests that shook the nation last month and resurged this week, AP reports. Bangladesh’s home ministry branded the party a “militant and terrorist” organization, AP reports.

• Bangladesh protest movement launches foreign remittance freeze (Nikkei)

Jamaat-e-Islami called the ban unconstitutional and denied its role in the protests, which resulted in more than 200 deaths. The protests died down after the government appeared to cede to protesters’ demand to dismantle a controversial job quota system, but broke out anew this week, the New York Times reports.

Bangladeshi Prime Minister Sheikh Hasina has sought to muzzle Jamaat-e-Islami several times in the past decade. Between 2013 and 2016, her government executed five of the Islamist party’s leaders for their alleged role in Bangladesh’s 1971 war of independence. Hasina’s government accused the leaders of murder, torture, and rape, Bloomberg reports. Each maintained his innocence.

Thailand’s auto sector upended by glut of Chinese EVs

Thai subsidies for electric vehicles have resulted in an oversupply of cars that is threatening to devastate the country’s domestic auto sector, The New York Times reports. Bangkok introduced an EV subsidy regime in 2022, targeting Chinese manufacturers and prompting a flood of imports. Less than half of the 185,000 cars imported into Thailand since then have been sold, according to Nikkei. 

As the market has become increasingly crowded, several major Chinese automakers have cut prices, making it hard for other manufacturers to compete. Japanese firms still sell by far the most cars in Thailand, but sales are plunging, with Japan’s market share falling from 86% in 2022 to 75% last year.

Chinese automakers are also establishing factories in Thailand, many of which rely on Chinese suppliers for parts, further squeezing the domestic auto sector. 

Middle East 

Hamas leader’s assassination roils Iran’s market

The assassination in Iran this week of Hamas political leader Ismail Haniyeh has further raised tensions in the Middle East, sending political and economic shockwaves throughout the region. Haniyeh was killed by a remote-controlled bomb, believed to have been planted by Israel’s intelligence services.

Iran’s Supreme Leader Ayatollah Ali Khamenei reportedly issued an order for a direct attack on Israel. Iran’s state-media reports that the country’s Revolutionary Guard believes the US was also involved in the attack.

Iran’s stock market index TEDPIX  plunged by more than 2% on Wednesday and continued falling later in the week as the rial depreciated to over 600,000 against the US dollar. The precipitous drops in the country’s stock market and currency have prompted the government to take “special action” on market stabilization programs to prop up the financial sector.

Saudi Arabia’s economy shrinks for fourth straight quarter

Saudi Arabia’s GDP shrank 0.4% in annual terms last quarter as OPEC-imposed cuts on oil production dented revenues, Bloomberg reports. The slide marked the fourth straight quarter of economic contraction in the country, although forecasters expect it to return to growth in the coming quarters as oil demand picks up.

State-owned oil company Saudi Aramco, which has repeatedly cut prices over the past year expects to lift prices of exports to Asia in the coming months as demand recovers.

Despite the Kingdom’s expectations of an export boom to come, a historic heatwave in the region has forced the country to import record amounts of refined fuel from Russia and Kuwait. Domestic production of refined fuel has been crimped by maintenance needs at Aramco’s refineries. 

Europe

Azerbaijan comes under scrutiny as EU energy desperation subsides

As pressure on Europe’s gas supply continues to ease, a proposed plan to replace Russian gas flowing through Ukraine with Azerbaijani gas is facing growing concerns about potential hidden Russian exports, and about Azerbaijan’s actual capacity to meet European demand, the FT reports.

The country’s role as host of the upcoming COP29 climate summit has also focused attention on its environmental record, particularly in light of recent analysis by Global Witness that revealed gas flaring in Azerbaijan hit a decade high in 2023. This practice, which contributes significantly to greenhouse gas emissions, has increased at several facilities operated by BP and the state oil company Socar, despite pledges to eliminate it by 2030.

Azerbaijan’s ability to fulfill its agreement to double gas exports to the EU by 2027 is now being questioned. Without long-term contracts in place, Baku is struggling to secure the financing needed for deeper drilling in the Caspian Sea.

Turkish companies chafe against the pain of reform

Discontent is growing in Turkey’s corporate sector over the impact of President Recep Tayyip Erdoğan’s shift toward economic orthodoxy and moves to tighten monetary policy. Exporters are lamenting lost competitiveness due to currency appreciation, while domestic firms face cooling consumer demand and restricted access to credit, an FT op-ed argues.

With inflation still stubbornly high and the central bank vowing to maintain its hawkish stance, some businesses are running out of patience, expecting conditions to have eased by now. As Turkey’s economy navigates this challenging transition, the government faces a delicate balancing act between restoring macroeconomic stability and maintaining support from a business community accustomed to years of loose policy.

Latin America 

Venezuela’s Maduro wins tainted election

Venezuela’s incumbent President Nicolás Maduro claimed victory in last Sunday’s election, despite widespread allegations of fraud, the New York Times reports. Several countries and international bodies have rejected the official results, and the US formally recognized opposition candidate Edmundo González as the winner, the FT reports. 

Protests broke out in the wake of the election, but despite mounting international pressure, including calls for detailed vote breakdowns and the release of arrested protesters, Maduro appears unlikely to cede power. The regime possesses even tighter control of key institutions than during the last election crisis in 2018, limiting avenues for challenging the results domestically.

A decade of sanctions has undermined the Venezuelan economy, driven destabilizing migration, and pushed Caracas into the arms of alternative allies including Russia and Iran. This time around western pressure is likely to be more rhetoric than reality, a sentiment was immediately reflected in the US announcement that it was not planning to revoke existing licenses for companies including Chevron to operate in Venezuela.

Paraguay cuts borrowing despite attaining investment-grade rating 

Paraguay’s quiet economic strength got another boost this week as ratings firm Moody’s upgraded the country’s debt to investment grade, Latin Finance reports. Rather than borrowing more, though, the current government immediately proved why it deserves the rating, announcing fiscal consolidation and a reduction in borrowing in a broader pivot toward private-sector-led growth.

President Santiago Peña’s administration views the upgrade as a catalyst for corporate expansion which could drive diversification and resilience against commodity price fluctuations. Rather than juicing the economy with cheap borrowing the government is pursuing structural development and sustainable growth.

This conservative stance is intended to position the country for further rating upgrades and OECD membership, potentially unlocking more-significant long-term economic benefits. 

Global 

Macroeconomic strength boosts major EMs

Ratings firm Fitch has raised its growth projection for emerging markets (excluding China) in the wake of a welter of reforms in key economies. The uptick was partly driven by significant forecast revisions for India, Turkey and Indonesia, reflecting progress on reforms and improved economic outlooks.

Argentina, Egypt, Nigeria and Turkey are all experiencing lower credit stress. Egypt and Nigeria have seen their sovereign rating outlooks revised to positive, while Turkey received an upgrade to ‘B+’ with a positive outlook.

The improvements are cascading through various sectors, with Egyptian banks and Turkey’s banking sector outlook also benefiting.  

What We’re Reading

National protests over cost-of-living break out in Nigeria (NPR)

Fighting in Mali kills dozens of government fighters and Russian Wagner mercenaries (RFE/RL)

World Bank leak deals a blow to Gabon as IBRD suspends funding (The Africa Report)

UN ends arms embargo for Central African Republic (AP)

Turkey approves two-year military deployment to Somalia (AfricaNews)

New mpox strain infects 130 children at DRC displacement camps (The Telegraph)

Pakistan’s banks reap rewards from high government debt (FT)

Myanmar military extends emergency rule for the sixth time (The Irrawaddy)

Vietnam’s LNG price cap puts gas-fired power target at risk (Reuters)

India and Vietnam to enhance defense cooperation (Nikkei)

Malaysia applies to BRICS (The Diplomat)

SE Asia ‘to outpace China’s GDP growth and foreign investment’ (Nikkei)

SE Asia pushes back on cheap Chinese imports (Nikkei)

Japan plans Central Asia summit (Nikkei) 

Turkey threatens to ‘enter’ Israel to protect Palestinians (Politico) https://www.politico.eu/article/turkey-nato-tayyip-erdogan-threatens-enter-israel-help-palestinians/

Abrupt cut in Iranian electricity exports to Iraq triggers blackouts (Middle East Monitor)

Iran claims trade with Iraq growing at rate of $150 million per month (Rudaw)

BP buys 49% stake in Oman’s giant Hyport Duqm green hydrogen project (Hydrogen Insight)

EU tells Hungary and Slovakia to wean themselves off Russian oil (FT)

US outlines plan for Ukraine’s economic recovery (Radio Free Europe)

Ukrainian bank ratings ‘not directly affected’ by Eurobond restructure (Fitch)

Argentina will use AI to ‘predict future crimes’ but experts worry for citizens’ rights (The Guardian)

Bolivians strike and block roads over fuel shortages (Reuters)

Anger mounts over environmental cost of Google datacentre in Uruguay (The Guardian)

Peru returns to global market with dollar debt issue (Latin Finance)

Almost 90% of the Cuban population lives in ‘extreme poverty’ according to new study (El Pais)

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