In recent updates from the International Monetary Fund (IMF), the global economic outlook has revealed a slowdown in the pace of recovery with growing disparities. This development comes amidst various economic challenges and debt distress issues faced by countries, particularly in East Africa. CNBC Africa spoke with Daisy Anthea Nitwe, Lead Derivatives and Structured Solutions for Global Markets at Stanbic Bank Uganda, to gain insights into the current economic landscape. Daisy provided a comprehensive analysis of the IMF’s World Economic Outlook for July 2023, shedding light on growth prospects for sub-Saharan Africa and the East African region. She highlighted that while the global growth rate has dipped to 3% this year, sub-Saharan Africa is expected to achieve a growth rate of 3.3% in the same period, projecting an improvement to 4% next year. East African nations like Tanzania, Uganda, and Kenya are expected to outperform global trends, benefiting from diverse economies that mitigate risks in different sectors. Despite the positive outlook, the region faces challenges related to foreign exchange vulnerabilities and debt sustainability. Countries like Kenya, Tanzania, and Uganda are grappling with liquidity issues and currency depreciation, which could impact their growth trajectories. Kenya’s upcoming Eurobond maturation in 2024 poses a significant debt risk, with implications for its economic stability. Daisy emphasized that Kenya has options to manage the situation, including repayment, refinancing, and seeking support from multilateral organizations and bilateral lenders. The market response to Kenya’s debt distress has been cautiously optimistic, with investors closely monitoring developments. Regarding Uganda, recent deliberations with the World Bank have prompted a recalibration of funding options following the suspension of $5 billion in projects due to an anti-gay bill. The World Bank and the Ugandan government have reached a consensus to continue their partnership, focusing on inclusivity measures. Despite uncertainties surrounding the funding scenario, the market has remained relatively stable, indicating confidence in the ongoing dialogue between the parties. Daisy’s insights underscore the importance of collaborative efforts between governments, financial institutions, and international bodies to address economic challenges and foster sustainable growth in the region. As East Africa navigates through complex economic landscapes, proactive measures and strategic decisions will be crucial in mitigating risks and unlocking new opportunities for development.
Global economic outlook in the face of debt distress – CNBC Africa
