Oil Declines, Kenya Implements IMF Guidelines, Ghana's Expenditure Drops, Nigeria's Naira Depreciates, Egypt's Central Bank Maintains Interest Rates

Oil dropped for a second day on Friday and was heading for a weekly decline, as a UK interest rate hike added to concern over economic growth that outweighed lower U.S. crude stocks and other signs of tighter supplies. Brent crude slipped $1.21, or 1.6%, to $72.93 a barrel at 0810 GMT, while U.S. West Texas Intermediate (WTI) crude was down $1.31, or 1.9%, at $68.20

KENYA: MPs Approve Transition to Debt Anchor, Aligning with IMF Guidelines

Kenya has cleared the final hurdle to conform with international standards supported by the IMF as Members of Parliament (MPs) voted in favor of converting the country's debt ceiling to a debt anchor based on a percentage of GDP. The Public Debt and Privatisation Committee endorsed a debt anchor threshold of 55% of GDP, with a small allowance of up to 5% to accommodate the existing debt-to-GDP ratio of 60%. Notably, the committee eliminated a provision requiring the Treasury Cabinet Secretary to justify excessive borrowing to Parliament if the debt anchor is breached.

GHANA: Government Expenditure Drops in Q1 2023

In Q1 2023, the government's spending showed significant decreases across various categories, except for employee compensation, which increased. The Bank of Ghana's May 2023 Monetary Policy Report attributed this expenditure pattern to reduced debt service resulting from a debt restructuring program. Despite some revenue shortfalls, the government successfully adhered to its spending targets. Total expenditures, including arrears clearance and discrepancies, amounted to GHS 32 billion, falling short of the ￠52 billion target (representing 4.1% of GDP). Employee compensation reached GHS 12 billion, surpassing the ￠11 billion target, constituting 47.1% of domestic revenue. The Central Bank acknowledged the positive impact of these developments on the local economy but stressed the importance of sustained commitment to policy implementation and structural reforms.

NIGERIA: Naira Depreciates in Forex Markets; Transaction Volume Improves

The Nigerian naira experienced depreciation in both the Investors and Exporters (I&E) window and the parallel market. In the I&E window, the indicative exchange rate increased from N763.17 to N765.13 per dollar, resulting in a depreciation of N1.96 for the naira. In the parallel market, the exchange rate rose from N758 to N772 per dollar. However, there was a positive development as the transaction volume on Thursday improved compared to the previous day, exceeding $90 million. Additionally, the naira also weakened against the British Pound Sterling, closing at N980/GBP. The I&E window facilitates trading between Authorized Dealers, Clients, and the Central Bank of Nigeria, involving dollars from autonomous sources.

EGYPT: Egypt's Central Bank Maintains Interest Rates Unchanged, Projects Lower GDP Growth

In its final meeting of FY2022/2023, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided to maintain interest rates at their current levels. The overnight deposit rate, overnight lending rate, and the rate of the main operation remain unchanged at 18.25 percent, 19.25 percent, and 18.75 percent, respectively. The discount rate was also kept steady at 18.75 percent. The decision was based on the CBE's assessment of inflation and real GDP growth. The CBE noted that economic growth moderated in Q4 2022, primarily driven by net exports, while private sector activity, trade, agriculture, and construction continue to support GDP growth. The CBE expects real GDP growth to be lower in FY2022/2023 compared to the previous fiscal year but anticipates a recovery in the future. Furthermore, the unemployment rate slightly decreased to 7.1 percent in Q1 2023 from 7.2 percent in the previous quarter