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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. 

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

Africa

Namibia extends voting in presidential election 

Election authorities in Namibia extended voting in the country’s presidential election, prompting the opposition to complain about voting irregularities, AP reports. Early results placed the ruling SWAPO party’s candidate, Vice President Netumbo Nandi-Ndaitwah, in the lead with 53% of votes counted by Friday.  

If she wins, Nandi-Ndaitwah, who has promised to create more than 500,000 jobs and tackle the 20% unemployment rate in the next five years, would become the country’s first female president. 

The candidates need to win more than 50% of votes to avoid a runoff.

SWAPO, which has held power in Namibia since its independence from South Africa in 1990, has been declining in popularity in recent years, in part because of growing weakness in the economy. In 2019, it lost its parliamentary majority for the first time since 1994. 

DRC and Rwanda sign peace deal

The Democratic Republic of Congo and Rwanda on Monday agreed to the terms of a key peace document, according to negotiators from Angola who are helping the two nations end a simmering conflict in eastern DRC. Under the agreement, Rwandan troops would “disengage” from Congolese territory where they have been supporting the M23 rebel group in a conflict that has displaced thousands and triggered a humanitarian crisis, France24 reports.

In August, Angola also helped broker a cease-fire that stabilized the front line for a few weeks, but by October, the M23 began advancing again. Then in November, the two countries agreed to launch a committee to monitor truce violations. 

None of the governments immediately provided further details on this week’s agreement. A previous draft of the plan set out to dismantle a militia known as the Democratic Forces for the Liberation of Rwanda, created by former Hutu ethnic leaders, that has fought alongside the Congolese army, as a precondition for Rwanda withdrawing its troops.

Zimbabwe hosts creditors to draw up new IMF deal 

Zimbabwe’s President Emmerson Mnangagwa is renewing efforts to restructure the country’s $12.7 billion external debt, Africa News reports. At a meeting with creditors and finance executives this week Mnangagwa said he is working on a staff-monitored program (SMP) with the IMF to chart a path for policy reform. 

Zimbabwe’s debt pool represents 81% of its GDP, and clearing this debt would be a major breakthrough. While the SMP does not include financial aid from the IMF, analysts say that establishing the program would indicate the government’s determination to return to stable economic policies.

Asia 

Pakistan’s opposition defies protest ban

Mass protests erupted this week in Pakistan’s capital Islamabad, with demonstrators led by jailed former Prime Minister Imran Khan’s wife calling for his release.

The protests took place in spite of a newly imposed ban on large gatherings. They ended on Thursday after three days of clashes between civilians and police resulted in at least two deaths and almost 1,000 arrests, Dawn reports. Khan’s party, Pakistan Tehreek-e-Insaf (PTI), said security forces had pushed one man off a shipping container to a 30-foot plunge, BBC reports.

Amnesty International denounced the detentions, decrying a “pattern of intolerance.” But the crackdown’s effectiveness at dispersing protesters proved disappointing to some supporters of Khan, whose wife Bushra Bibi had earlier pledged to continue demonstrating until her “last breath,” the New York Times reports. Amid the crackdown, she fled to the neighboring province of Khyber Pakhtunkhwa, a PTI stronghold.

Sri Lanka eyes rating upgrade after bond swap

A string of Sri Lankan debt maneuvers set the stage this week for an expected upgrade by credit ratings firm Moody’s.

On Tuesday, Sri Lanka began swapping out $12.6 billion worth of defaulted, dollar-denominated debt with new bonds that carry longer maturities, Bloomberg reports. The next day, the country’s central bank cut interest rates, replacing twin borrowing and lending rates with a single 8% policy rate, Reuters reports. Those moves followed the IMF’s approval last week of a $333 million disbursement to the island nation.

The newly issued debt rallied this week, posting the largest gains across emerging markets, according to Bloomberg. Moody’s assigned a provisional rating to the bonds, an indication that it could soon review the country’s credit rating for an upgrade.

Afghanistan wins pledge of stronger ties from Russia

A top Russian defense official told his Taliban counterparts in Kabul on Monday that Russia wants to develop a stronger dialogue with Afghanistan. 

Sergei Shoigu, the head of Russia’s Security Council, called for a “constructive political dialogue“ with the Taliban, Reuters reports. The Islamic fundamentalist group responded with requests to ease financial pressure caused by US sanctions, Russian media reported.

Tensions between Russia and Afghanistan have been easing for months. Last month, Russia’s foreign ministry announced it would remove the Taliban from a list of terrorist organizations, and in May, Russian Deputy Prime Minister Alexey Overchuk said Moscow would help build a trans-Afghanistan railway.

Middle East

Ceasefire enables displaced Lebanese to return to their homes

Hezbollah and Israel agreed this week to mutually withdraw from southern Lebanon, enabling the Lebanese National Army (LNA) to take over its side of the border, the New York Times reports. The US-brokered truce is designed to create a buffer zone, and leaves Israel with options to engage in further military action if it is violated. 

In his first speech since the ceasefire was effected, Hezbollah’s leader Naim Qassem promised the group would coordinate with the LNA on its implementation, the FT reports. Although Israeli forces carried out some strikes on alleged militants near a rocket facility after the ceasefire was implemented, the agreement still appeared to be holding at the time of writing.

Over a million Lebanese who had been displaced by the fighting, many of whom had fled into neighboring Syria, are now reportedly returning to their homes.

Saudi spending deepens expected fiscal deficit for 2025

Saudi Arabia this week announced it is expecting a $27 billion fiscal deficit for 2025, about 2.3% of GDP. The deficit will be driven largely by increased spending to meet Vision 2040 megaproject commitments, some of which have been delayed and scaled back due to a shortfall in expected FDI, construction management difficulties, and cost overruns.

Saudi officials expect to tackle the funding shortfall by issuing more sovereign debt on international capital markets and increasing the dividends paid by national oil company Aramco.

This week the Riyadh Metro, a Vision 2040 megaproject costing some $22 billion, finally launched after cost overruns and delays. Vision 2040 is designed to be a long-term state-directed investment plan to diversify the Saudi economy away from oil and gas, for example by investing in metal mining and refining projects, for which some $9 billion in commitments were reached this week with Chinese and Indian companies.

Europe

Pro-Russia candidate notches surprise win in first round of Romania’s presidential election

A pro-Russia independent candidate this week won the first-round in Romania’s presidential election with 23% of the vote, the FT reports. Călin Georgescu, who has previously praised Vladimir Putin and questioned Romania’s NATO membership, will face liberal challenger Elena Lasconi in a December 8 runoff after she narrowly edged out incumbent Prime Minister Marcel Ciolacu.

The surprise result prompted intense scrutiny of the voting process, with Romania’s Constitutional Court ordering a full recount amid allegations of irregularities. The European Commission is also facing pressure to investigate TikTok’s role in the election after claims emerged about potential platform manipulation and undisclosed political advertising that may have contributed to a late surge in Georgescu’s popularity.

• Bucharest market down as investors grapple with election result (Romania Insider)

Market observers warn that a Georgescu victory could trigger significant political and economic instability, potentially pushing Romania’s budget deficit above 7% and forcing new tax measures. A win for the ultranationalist candidate might also complicate relations with the EU and NATO, while his potential obstructionist approach to government formation could lead to prolonged political gridlock.

Latin America

Nicaragua makes sanctions enforcement illegal for domestic banks

Nicaragua’s banks have been ordered to ignore international sanctions after the country’s parliament passed a low on Monday criminalizing compliance with foreign sanctions within the country’s borders, Reuters reports. The law forces domestic financial institutions to maintain services for sanctioned individuals or face penalties including fines, operational suspensions and potential treason charges.

The move could heighten operational risks for Nicaragua’s financial sector, potentially disrupting international credit lines and relationship with correspondent banks that manage critical trade relationships.

The new law comes amid broader changes, including a constitutional reform expanding presidential powers and formally establishing President Daniel Ortega’s wife, Rosario Murillo, as co-president. 

Panama debt cut near junk as deficit grows

Ratings firm S&P this week downgraded Panama’s credit rating to BBB-, its lowest investment grade, citing deteriorating government finances and weakening fiscal flexibility. The move follows fellow ratings firm Fitch’s earlier downgrade to junk status in March.

Just one more downgrade from either S&P or Moody’s could trigger forced selling of Panama’s sovereign bonds by investment-grade funds.

The downgrade comes as Panama grapples with a widening fiscal deficit, which reached 7.1% of GDP in the first nine months of 2024. President Jose Raul Mulino’s administration has disappointed investors with a $30.1 billion budget for 2025 that relies on optimistic revenue projections, including an anticipated 47% increase in tax collections, despite the country’s declining tax base.

Adding to pressure on Panama’s finances is last year’s closure of the Cobre Panama copper mine, which previously contributed about 5% of Panama’s GDP. The country’s bonds have suffered the worst performance among emerging market peers this quarter, losing 5.6%.

Uruguay set for continuity and stability with election of center-left president

Yamandú Orsi of the center-left Broad Front has secured Uruguay’s presidency with 52.1% of the vote, in an election that signals policy continuity, consultant FrontierView says. Orsi’s coalition won a majority in the Senate, but fell short in the lower chamber, necessitating cross-party cooperation that analysts say will reinforce Uruguay’s traditionally centrist approach to governance.

Ratings firm Fitch said this week the election result would ensure economic stability, but hinder the government from taking bold action to accelerate growth, which has averaged just 1.2% since 2019. Fitch expects government debt to rise steadily, but Orsi has ruled out tax increases, potentially limiting his government’s ability to address such fiscal pressures. 

Uruguay has made significant strides in controlling inflation, which currently stands at 5.0%, and the new administration inherits several positive developments, including improved domestic market funding capacity and the recent rejection of a contentious pension referendum that could have undermined fiscal sustainability. Orsi has promised to focus on expanding social programs and infrastructure investment while maintaining the country’s fiscal framework, prioritizing stability over radical reform.

Global

Trump dollar rally triggers EM fixed-income outflows

Investors have pulled nearly $5 billion from dollar- and local currency-denominated emerging-market bond funds since Donald Trump won the US presidential election, the FT reports. The exodus, which brings total outflows to $20 billion this year following withdrawals of $31 billion in 2023 and $90 billion in 2022, reflects growing concerns about the impact of Trump’s proposed policies on emerging markets.

Markets are reacting to expectations that Trump’s planned tax cuts and tariffs will fuel US inflation and drive Treasury yields higher, with the 10-year yield climbing to 4.39% while the dollar has strengthened more than 4% against a basket of currencies. The stronger dollar has particularly impacted emerging-market currencies, with South Africa’s rand falling nearly 4% and both the Mexican peso and Brazilian real declining about 2%.

Investment managers are reassessing their approach to emerging market debt, with Pimco suggesting that the era of consistent returns from macro bets on high-yielding countries may be over. The firm argues that emerging-market bonds should now be viewed primarily as a diversification tool rather than a broad source of high real returns. 

What We’re Reading

Angolan opposition stages first mass protest since disputed 2022 election (France24) 

Zambia and Zimbabwe suffer simultaneous power outage amid drought (Reuters)

Horn of Africa leaders gather in Djibouti for security forum (VOA) 

More than 700 trucks head to famine-stricken areas of Sudan (Reuters)

DRC’s ‘ambitious’ budget could provide opportunities for public sector suppliers (FrontierView)

Kenyan workers criticize ‘exploitative’ AI jobs (CBS)

Orange partners with Meta and OpenAI for African languages AI models (Semafor)

Interpol arrested 1,006 cybercrime suspects in Africa (AP) 

ICC seeks warrant for Myanmar general (Washington Post)

Fiji signs new defense deal with US (ABC)

Hong Kong PE firm Affinity scoops up $1.6bn worth of Southeast Asian companies (Reuters)

Saudi Arabia accused of modifying official COP 29 text (The Guardian)

Oman’s state-backed mining company replaces sanctioned Russian company’s stake in Angola diamond mine (Bloomberg)

Iran braces for Trump reset with economy buckling from sanctions (Bloomberg)

Iran declares it is doing more nuclear enrichment after I.A.E.A. rebuke (NYT)

Kuwait Petroleum plans $33bn investment to increase oil production (Offshore Technology)

Polish bank chief warns capital shortage will affect green transition (FT)

Poland backs French effort to kill Mercosur trade deal (FT)

Bulgaria eyes eighth back-to-back election as parliamentary crisis deepens (BalkanInsight)

Ruble slides as new sanctions on Russia stifle foreign trade (FT)

China’s support for Russia has ‘hurt its relations with Europe’ (FT)

El Salvador president proposes ending country’s metals mining ban (AP)

Venezuela braces for gas shortages as regime blames ‘terrorists’ (Bloomberg)

Fuel is rapidly becoming one of Bolivia’s scarcest commodities (AP)

Bolivia highlights gas pumping deal as a source of hard currency (Mercopress)

Peru Congress removes mining minister as small miners snarl roadways (Reuters)

Brazil and Argentina partner with Bolivia’s YPFB to transport Vaca Muerta gas (Offshore Technology)

Brazilian real hits all-time low as investors doubt cost-savings plan (FT)

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