South Africa projects lower growth and more borrowing
This week, South Africa’s medium-term budget update highlighted a worsening fiscal and growth outlook for the country. The growth forecast for 2018 was downgraded to 0.7 percent compared to 1.5 percent in February. Similarly, lower than expected revenue collection will push up the budget deficit to 4 percent of GDP from the 3.6 percent February forecast. The slower growth and larger budget deficits will have a knock on effect on the country’s debt, with the debt-to-GDP ratio expected to rise to 58.5 percent in 2021-2022 compared to earlier estimates of 56.2 percent. Moody’s, the only big three rating agency to rate South African debt as investment grade, called the budget update “credit negative.”
Addressing the updated budget outlook, Finance Minister Tito Mboweni, focused on the need to address the management of state-owned enterprises and the rising public wage bill. He called for greater private sector investment in infrastructure, noting, “Too often, government spends money on infrastructure when it could be better and more effectively done by the private sector.” Addressing the economy at an investor conference on Friday, President Cyril Ramaphosa called himself in “economic repair mode.” Since coming to office earlier this year, President Ramaphosa has secured commitments for $35 billion in new investments out of a goal of $100 billion over the next five years.
Ethiopia appoints first female president and gender-balanced cabinet
On Thursday, Ethiopia appointed its first female president, Sahle-Work Zewde, currently the U.N. undersecretary-general. Her appointment comes after President Mulatu Teshome resigned from his post a year before the end of his term. The presidency is a ceremonial post in Ethiopia. The appointment of Ethiopia’s first female president follows Prime Minister Abiy’s announcement of a gender-balanced cabinet last week. Women were appointed to key positions including the defense ministry and the newly created ministry of peace, which will oversee various security agencies. In the cabinet reshuffle, Ethiopia also reduced the number of cabinet positions from 28 to 20. Ethiopia is the third country in Africa, after Rwanda and Seychelles to have a gender-balanced cabinet.
In other news, Ethiopia signed a peace agreement with the Ogaden National Liberation Front (ONLF) this week. The ONLF was also removed from a list of banned groups by parliament earlier this year. The agreement requires the group to “pursue its political obligations through peaceful means.”
Cameroon President Paul Biya wins seventh term
On Monday, Cameroon announced official results following presidential elections held on October 7, 2018. Incumbent President Paul Biya won reelection with 71 percent of the vote. This will be his seventh term in office and will allow him to govern until 2025.