The Editorial Team |

Bailey Hints at More BOE Easing to Help Shoulder Virus Costs

LONDON (Capital Markets in Africa) — Bank of England Governor Andrew Bailey offered another hint that more bond purchases are on the way after figures showed a deep contraction at the end of the first quarter. He said it’s “pretty clear” investors expect more quantitative easing from the bank and that policymakers have kept the option open to do more than the 200 billion pounds ($240 billion) they announced in March. Investors have already stepped…

Why the U.S. Has Shunned Negative Interest Rates: QuickTake

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NEW YORK (Capital Markets in Africa) — Investors have speculated that the U.S. Federal Reserve may push its benchmark overnight interest rate into negative territory to help offset the economic devastation of the coronavirus pandemic. President Donald Trump has said doing so would be a “Gift” to the U.S. economy. Fed officials led by Chairman Jerome Powell have consistently opposed it. What are markets saying? Implied yields on futures contracts linked to the federal funds…

Powell Warns of Broad Virus Danger, Bats Down Negative Rates

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NEW YORK (Capital Markets in Africa) — The U.S. economy faces unprecedented risks from the coronavirus if fiscal and monetary policymakers don’t rise to the challenge, Federal Reserve Chair Jerome Powell said while pushing back against the notion of deploying negative interest rates. “The recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems,” Powell said Wednesday in remarks to a virtual event hosted by the Peterson…

Kenya—a Two-Fold Approach to Covid-19: Tax Insight

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NAIROBI (Capital Markets in Africa) — Following presidential directives to the National Treasury to put in place various tax and fiscal measures to cushion Kenya’s economy from the adverse effects of the Covid-19 pandemic, the Tax Laws Amendment Act 2020 (TLAA) was assented to by the President of Kenya on April 25, 2020. Kenya has adopted a two-fold approach, not only introducing relief measures but also measures to maintain tax revenue. This Insight will analyze…

Citigroup Turns to Mediating Cheap Loans as African Deals Dry Up

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LAGOS (Capital Markets in Africa) — Citigroup Inc. is stepping up its role as a mediator between borrowers in sub-Saharan Africa and institutions such as the World Bank and International Monetary Fund to provide access to cheaper financing in markets hit by the coronavirus pandemic. The importance of multilateral lenders, including others like the African Development Bank and Overseas Private Investment Corp., is growing as lockdowns to contain the spread of Covid-19 slow economic growth,…

Zambia’s Debt Burden Hinders Access to IMF Coronavirus Funds

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LUSAKA (Capital Markets in Africa) — Zambia’s request for emergency coronavirus funding from the International Monetary Fund may be scuppered because of the southern African nation’s growing debt burden. The Washington-based lender last year cautioned that the nation’s borrowing was on an unsustainable path. And now, even as the fund makes as much as $100 billion available to member countries, the IMF warned it won’t lend money to governments if it’s not sure it will…

France Stands by Valuation of African Euro-Pegged Currencies

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ABIDJAN (Capital Markets in Africa) — France will continue to guarantee the euro peg of the west and central Africa’s common currencies and sees no need to devalue the units. The coronavirus outbreak has limited inflows of hard currency to the monetary blocs of mostly former French colonies that are struggling with the collapse of oil prices, lower trade, and the flight of investors to safe havens. “We do not see a need for adjusting…

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