IMF Latest: Up to Eight African Nations Need Debt Restructuring

Africa needs international relief from a vicious funding squeeze that have left as many as eight of its countries requiring debt restructuring, an International Monetary Fund official said.

(Bloomberg) — Africa needs international relief from a vicious funding squeeze that have left as many as eight of its countries requiring debt restructuring, an International Monetary Fund official said.

“That’s where we’re working to try to mobilize more resources for countries,” IMF Director of the African Department Abebe Selassie said Thursday in Marrakech, Morocco, referring to nations facing debt pressures including Ghana and Zambia.

Guardians of the world economy are gathering here for the annual meetings of the IMF and World Bank to discuss challenges that include poverty reduction, climate change and lifting the debt burdens of the poorest nations. The ongoing Israel-Hamas war has added additional uncertainty to the global outlook.

World Bank Group Governors Adopt Lending Reforms, Germany Says (2:40 p.m.)

Changes include lowering the minimum equity-to-loan ratio to 19% from 20% and the use of hybrid capital, German Development Minister Svenja Schulze tells reporters in Marrakech.

She says the role of the International Finance Corp., the World Bank Group’s lending arm for the private sector, will be increased. Other changes include Climate Resilient Debt Clauses, whereby loan repayment can be suspended in case of natural disasters.

Sri Lanka Nears IMF Deal on Funding While Debt Talks Proceed (1:36 p.m.)

Sri Lanka is likely to clinch an agreement in the next several days that would help it tap more funds from the IMF even though it’s still trying to firm up negotiations with creditors on debt restructuring. 

Officials from the South Asian nation and the IMF are close to reaching a staff-level agreement following talks in Morocco this week, according to people involved in the discussions, who asked not to be identified because the matter isn’t finalized yet. Only a few outstanding issues remain, one person said, declining to provide more detail.

Egypt, IMF Hash Out Date to Talk Key Review After Progress (12:57 p.m.)

The IMF is in “close engagement” with Egypt to set the dates for discussing a much-delayed review of a $3 billion rescue program, citing recent progress on reforms.

“Our discussions are very much focused on making sure that Egypt succeeds,” Managing Director Kristalina Georgieva told reporters Thursday at the lender’s annual meetings in Marrakech.

Roubini Says Markets Discounting Risk of Major Mideast Conflict (11:22 a.m.)

Global financial markets are discounting the risk of a “massive conflict throughout the Middle East for now,” economist Nouriel Roubini said.

Investors expect Israel “has no choice but go into Gaza and get rid of Hamas,” Roubini told Bloomberg Television. Markets are pricing in a baseline scenario in which “Israel occupies Gaza, it’s going to get ugly, but the conflict remains contained.”

Europe’s Weak Economy Faces Inflation, Oil Risks, Gentiloni Says (10:40 a.m.)

Europe’s economy faces continued headwinds from inflation as well as the risk of an impact on oil prices from the conflict between Israel and Hamas, according to European Union Economy Commissioner Paolo Gentiloni.

“We have a weak economy, but we’re not in recession, and this is mixed news,” he said in a Bloomberg Television interview in Marrakesh. “If we think to what we were expecting one year ago, we were expecting a worse situation than the one we’re in.” 

Georgieva: Very Closely Monitoring Events in Israel-Hamas War (9:33 a.m.)

IMF chief Kristalina Georgieva says the ongoing conflict after Hamas attacked Israel is a “new cloud” over the global economy, but it’s too soon to judge the fallout.

“In terms of economic impact, we are very closely monitoring how the situation evolves, how it is affecting especially oil markets. It is too early to say,” she tells a press briefing in Marrakech. “Very clearly this is a new cloud on not the sunniest horizon for the world economy.”

ECB’s Centeno Says Current Stance Will Bring Inflation to Target (9:04 a.m.)

European Central Bank Governing Council member Mario Centeno said he’s confident that current monetary-policy settings will bring inflation back to the target.

“With the current level of interest rates, we will be making a substantial contribution to the 2% objective,” the Portuguese central bank governor told Bloomberg TV. “We will get there with continuing this monetary-policy stance, holding on for a while until we are totally sure that inflation is coming down.”

African Markets Shrink as Investors Flee Growing Uncertainty (9:00 a.m.)

African capital markets are smaller than they were a year ago after uncertainty triggered by Russia’s war in Ukraine, the steepest rise in global interest rates since the inflation shocks of the 1980s and currency depreciation led to investor flight.

The flight to safety pushed up the cost of debt and shrank the continent’s pension assets, foreign-exchange, stock and bond markets, according to Absa Group Ltd.’s latest Africa Financial Markets Index report, which evaluates the financial development of 28 countries.

Bank of Korea Warns of Potential Oil Impact from Conflict (8:49 a.m.)

Bank of Korea Governor Rhee Chang-yong said any potential widening of the Mideast conflict that spurs oil prices sharply higher could weigh on the bank’s growth forecast, but it’s too soon to gauge the impact at this point.

“If this issue will go beyond regional and across the whole Arab region, then that’ll have a large impact,” Rhee told Bloomberg TV’s Francine Lacqua.

Sri Lanka, China Agree to Restructure $4.2 Billion of Debt (6:44 a.m.)

Sri Lanka and China agreed to restructure $4.2 billion of debt, putting the South Asian nation closer to securing more funds from the International Monetary Fund.

The agreement reached “on the key principles and indicative terms of a debt treatment,” constitutes a key step toward restoring Sri Lanka’s long-term debt sustainability and economic recovery, the nation’s finance ministry said.

IMF Talks on Debt Deadlock Stuck Between China, Private Lenders (Oct. 11, 7:49 p.m.)

Global creditors are increasingly at odds over how to level the playing field among lenders when governments default, jamming up efforts led by the International Monetary Fund to expedite sovereign debt restructuring. 

Talks set for Thursday at the IMF’s annual meeting in Marrakech, Morocco, between various groups involved in restructurings — including China and private creditors — are unlikely to produce any breakthroughs, according to people who will be attending the session.

–With assistance from Martha Beck, Adelaide Changole, Sam Kim, Alexander Weber, Ekow Dontoh, Eric Martin, Jana Randow, Christopher Condon and Mirette Magdy.

(An earlier version of this story corrected spelling of Israel in headline)

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