Dear Reader,

Welcome to the latest edition of Frontier Markets News. As always, I would love to hear from you at [email protected] with news ideas, feedback and anything else you find interesting. 

Dan Keeler will be at the Milken Global Conference next week in Los Angeles moderating what promises to be a fascinating panel focused on innovative financing solutions for African infrastructure. Feel free to get in touch if you plan to be there.

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

Africa

Burkina Faso, Mali and Niger to seek trade through Moroccan ports 

Foreign ministers of Burkina Faso, Mali and Niger said on Monday that they endorse an initiative offering them access to Morocco’s ports on the Atlantic Ocean, Africa News reports. The three junta-led states have been looking for ways to circumvent trade limitations resulting from their withdrawal from the regional Economic Community of West African States (ECOWAS) bloc.

Morocco is already a major investor in West Africa’s financial and agricultural sectors, and announced its own trade access initiative there in late 2023. That move came after ECOWAS looked to impose trade restrictions on the three countries following the military takeovers.  

Morocco hopes its latest move will help it continue to strengthen its influence in the Sahel region. Shortly after the three junta-led states announced their withdrawal from ECOWAS, Niger indicated it would be exploring a strategic partnership with Morocco, and Morocco has financially supported Mali in its “reconstruction and stabilization.”

Telecom firm’s IPO flop casts shadow over Ethiopia’s privatization plans

The Ethiopian government’s attempt to sell off a 40% share of state-owned telecoms firm Ethio Telecom saw disappointing results this week as investors bought only a tenth of the shares on offer, Semafor reports.

Addis Ababa had hoped the Ethio IPO would bring a much-needed investment boost for its struggling economy. Other efforts to revive growth, including floating the local currency and attempts to liberalize the banking sector have had mixed results. At the beginning of this year, Ethiopia launched its first stock market in five decades to open the market up to more private investment.  

Last year, the country’s Prime Minister Abiy Ahmed said the government planned to retain majority holdings in some strategically important businesses but would consider selling significant stakes in everything else, from hotels to sugar farming to cement production. Ethio Telecom is one of the government’s most profitable enterprises, along with Ethiopian Airlines—although there have been no reports that Ethiopia plans to sell off the airline. 

DRC makes progress in push to deepen investor pool in mining sector

The Democratic Republic of Congo is making strides to draw more investment into its mining sector, in part to reduce reliance on China. This week, Belgium’s foreign minister said during a visit to DRC that the European nation aims to strengthen its engagement in DRC mining. 

Belgium’s move comes as the DRC is looking to strike a deal with the US government through which Washington would gain access to the mining sector in exchange for security support. 

The US private sector is also pushing to grow operations in DRC. KoBold Metals, a mining start-up backed by US tech billionaires Bill Gates and Jeff Bezos, this week said it hopes to develop a lithium deposit in DRC that is currently the subject of a legal dispute between Australia’s AVZ Minerals and China’s state-backed Zijin Mining. 

Asia

Pakistan looks to China for cash as India tensions worsen

Pakistan is looking to increase the size of its swap line with China by a third, Reuters reports. According to finance minister Muhammad Aurangzeb, the South Asian country is seeking an additional 10 billion yuan ($1.4 billion) and is planning to issue a yuan-denominated bond in China’s domestic market.

The fundraising comes as tensions with India worsen. Pakistan’s information minister Attaullah Tarar said on Wednesday that the country had “credible intelligence” that India would soon launch a military strike, the BBC reports.

That has not happened as of this writing, but India has reportedly asked the IMF on Friday to review its funding for Pakistan, and plans to request that Pakistan be placed on the Financial Action Task Force’s terrorist funding watchlist.

IMF and Sri Lanka move toward deal

The IMF and Sri Lanka have come to terms on a staff-level agreement, a step that clears the way for the island nation to receive $344 million under its $3 billion loan program. 

The lender had previously delayed the disbursement after US President Donald Trump announced 44% tariffs on Sri Lanka as part of his now-paused “reciprocal” measures. The IMF did not specifically warn of risks related to the reimposition of tariffs, but noted that “global trade policy uncertainty poses significant downside risks to Sri Lanka’s economy.”

• Public debt interest dwarfs Sri Lanka’s investment budget (Sunday Times) 

In a statement on the agreement, the IMF praised Sri Lanka’s economic and fiscal performance, highlighting progress in “revenue mobilization, reserve accumulation and structural reforms” and noting that “the government remains committed to program objectives.”

Sri Lanka’s dollar bonds surged following news of the deal, Bloomberg reports, reaching their highest level since April 2. 

Malaysia and Vietnam exports to US spike in rush to beat tariffs 

Exports from Southeast Asia’s manufacturing hubs surged in March, with American consumers and businesses scrambling to buy products before new tariffs levied by the Trump administration kicked in. 

Malaysia recorded 51% year-on-year growth in exports to the US in March, and Vietnam recorded 32% growth. Thailand’s total exports that month reached an all-time high. A handbag maker in Myanmar told Nikkei that he needed to “rush out” products before tariffs set in. 

Southeast Asia is facing some of the highest tariffs, with many of its export-dependent economies facing rates upwards of 30%, a level at which economists say their products will lose their competitive advantage.

Middle East

Gulf sovereign bonds and sukuks shrug off global turmoil

Undeterred by the market turmoil triggered by the US tariff announcement last month, sovereign and state-owned issuers in the Gulf Cooperation Council have continued to successfully tap international debt markets with traditional bond and sharia-compliant sukuk issuances, Bloomberg reports. Saudi Arabia’s sovereign wealth fund the Public Investment Fund this week sold a $1.25 billion 7-year sukuk this week at a yield 35 basis points lower than expected, with book orders exceeding $8.2 billion indicating very strong demand.

• Saudi Arabia shifts toward lower medium-term oil price target (Reuters)

Also this week, the UAE’s state-owned port operator DP World drew some $3.6 billion in bids for a $1.5 billion 10-year sukuk, and Banque Saudi Fransi sold a $650 million Tier 1 note. Bahrain—which at B+/B2 is the lowest rated sovereign in the GCC—this week successfully issued a $1.75 billion 8-year sukuk and a $750 million 12-year bond, both of which drew lower market yields and stronger demand than expected.

GCC issuers’ success this week builds on a recent trend of outperformance in demand for sukuk financing, driven by large pools of Islamic-finance-managed-capital in the region and a relative shortage of sharia-compliant instruments available. 

Syria’s Kurds call for ‘decentralized’ government

Leaders of Syria’s Kurdish parties this week called for a “decentralized democratic state” with constitutional recognition of Kurdish identity and civil rights, Al Monitor reports. Primarily located in the resource-rich northeast, Syria’s Kurdish minority—backed by the US—have largely enjoyed semi-autonomy in governing their region, which the newly-formed central government in Damascus is reluctant to embrace.

Syria’s President Ahmed al-Sharaa, former leader of the HTS militant coalition that toppled the Assad regime last December, explicitly rejected the Kurds’ proposal, stating that “the unity of Syrian territory and its people is a red line” for his government.

Turkey’s President Recep Tayyip Erdoğan, a key backer of the HTS coalition who has increasingly taken on the role of security guarantor for the nascent government, this week also rejected the decentralization proposal, arguing that an autonomous Kurdish region would be a threat to his country’s security.

Europe

Ukraine seals critical minerals deal with US 

The US and Ukraine have signed an agreement granting Washington access to Ukraine’s critical minerals and natural resources after weeks of tense negotiations, the FT reports. The deal creates a “reconstruction investment fund” demanded by US President Donald Trump as repayment for American aid, though it excludes retroactive compensation for previous military support—a key victory for Ukraine’s President Volodymyr Zelenskyy. 

The agreement establishes a jointly managed fund that will invest in critical minerals, oil and gas extraction along with related infrastructure, with all profits being reinvested in Ukraine for the first decade. Ukraine will maintain full ownership and control of its resources.

Treasury Secretary Scott Bessent said the deal signified America’s commitment to “a free, sovereign and prosperous Ukraine,” while Ukrainian officials emphasized that the agreement preserves their European integration path and state ownership of key enterprises such as Ukrnafta and Energoatom. Although it secures continued US support, the deal notably lacks explicit security guarantees for Ukraine.

Romanian bond yields rise on election re-run risks

Romania’s borrowing costs this week surged to the highest levels in the EU, with 10-year bonds yielding around 7.5% amid uncertainty surrounding the presidential election re-run on May 4, Bloomberg reports. The nation faces a contentious ballot after a court annulled last year’s presidential election following the surprise victory of a pro-Russia candidate.

Another far-right contender now leads in polls. 

The political instability comes as the country grapples with the EU’s widest budget deficit, with the government avoiding unpopular fiscal measures ahead of the vote. Analysts warn that Romania’s elevated funding costs could persist until authorities present a concrete plan to address the fiscal shortfall. 

JPMorgan this week said “some candidates could shift policies in a market-unfriendly direction,” although a victory by coalition candidate Crin Antonescu or Bucharest mayor Nicusor Dan could trigger a “bullish” response in domestic bonds. Meanwhile, Romania’s euro-denominated 2029 bonds offer more than 280 basis points premium, exceeding spreads on similar securities from some non-EU countries with lower credit ratings.

Latin America

IMF blocks funding for Colombia

The IMF has cut Colombia’s access to an $8.1 billion credit facility that has served as a financial safety net for the country since 2009, Reuters reports. The multilateral is reportedly concerned about the growth in the Latin American nation’s public debt and the government’s fiscal management.

The decision reflects market concerns over Colombia’s growing fiscal challenges, with the IMF citing incomplete fiscal reviews as the primary reason for the suspension.

The impact of the decision was immediate, as Colombia’s borrowing costs surged. Its debt now trades at nearly four percentage points above comparable US securities, significantly underperforming Chile and Peru. The government faces mounting pressure to address its budget shortfalls, with independent experts suggesting an $11 billion adjustment is needed to meet fiscal targets.

Argentina drops longstanding export taxes on thousands of goods

Argentina’s government has eliminated export duties on more than 4,000 industrial products, a move economy minister Luis Caputo says will “make local industry more competitive and encourage exports.” The cuts, ranging from 3% to 4.5%, will immediately benefit nearly 3,580 companies representing about 40% of Argentina’s exporters, the Buenos Aires Times reports.

Products now exempt from these duties generated export revenue of $3.8 billion last year, although key sectors including steel, aluminum, petrochemicals and automotive will continue paying export taxes.

Caputo echoed longstanding criticism of the duties, arguing that they make “Argentine companies less competitive abroad and discourage them from exporting.” The reform represents a significant departure from decades of protectionist policies that prioritized domestic revenue generation over export growth.

What We’re Reading 

Kenya’s inflation reaches eight-month peak (Business Insider)

Zambia’s Q1 copper production up 30% y-o-y in the first quarter (Engineering News)

Botswana braces for deeper spending cuts amid diamond slump (Africa Mining Market)

IMF warns Egypt over lowering interest rates amid tariff turmoil (Bloomberg)

Meta faces a second set of lawsuits in Africa (The Guardian) 

Thailand prepares to match US tariffs (Reuters)

Cambodia begins building BYD car factory (CNEV Post)

Kazakhstan emerges as hub for cross-border investment (FF News)

Oman kicks off third auction for green hydrogen contracts (Zawya)

Lebanon says army has dismantled over 90% of Hezbollah sites on the Israeli border (L’Orient Jour)

Iran dangles ‘trillion dollar’ incentive for Trump in nuclear deal negotiations (Bloomberg)

Iran blames ‘negligence’ for port blast as death toll rises to 70 (BBC)

Georgia, Armenia and Azerbaijan hold trilateral talks in Tbilisi (Armenian Mirror)

Trump’s tariffs inflict political pain on Hungary’s Orban and other European far-right leaders (Reuters)

Ecuador sets sights on deforestation-free future (UNDP)

China’s Guangzhou port starts shipping route to Peru. (Reuters)

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