Cote d’Ivoire’s Restive Reconciliation Pose
Cote d’Ivoire bonds looked to resume momentum after 2012’s tear as local elections were held under heavy security after launch of a national reconciliation commission, and annual GDP growth could again be at 8-9 percent as half of outstanding external debt arrears comes due after a $10 million down payment last December. Foreign commercial obligations to Standard Bank and Sphynx instrument holders were again restructured after the HIPC completion point was reached a year ago. Another stab at cocoa sector reform resulted in a new minimum price and stabilization fund replenishment as the government otherwise plans to reduce company ownership by one-quarter through consolidation and privatization including in key banks. This year mining and hydrocarbons should join agriculture commodities in a 5 percent export rise although the current account deficit will slightly worsen. Inflation will double to 3 percent on a 12 percent credit jump as the primary budget balance also turns negative. Domestic borrowing through the regional bourse will help cover projects like a hydroelectric dam already getting Chinese loans once arrears there are likewise settled. A new mining code is under preparation, as the harmonization of trade and transparency rules proceeds in the CFA Franc zone. A medium-term debt strategy will be presented in the coming months which will emphasize concessional and internal reliance and critical infrastructure needs. Insurers and cross-border investors will be targeted for higher allocation after Chinese Ex-Im Bank agreed to finance port and electric grid rebuilding. The area progress came as Mali now facing its own civil war received the first installment of international aid and Tuareg fighters in the north struck a tentative accommodation with the Bamako authorities. The French began to withdraw anti-terrorist troops but left open a return option as fresh elections are to be attempted in the near future.
Anglophone neighbor Ghana has long been courted by China and other big emerging economies like Brazil and Turkey but recently reacted to popular backlash with the arrests of hundreds of individual gold miners. It hired underwriters for a $1 billion second-time sovereign bond but the World Bank’s IFC arm postponed a local cedi issue as short-term interest rates skyrocketed on the 12 percent of GDP budget overrun. The current account hole is of equal magnitude and the currency has retreated against the dollar for over a year as reserves are below the sensitive 3 months import threshold. Fuel subsidy paring will aggravate 10 percent inflation as offshore oil production lags original projections and overseas partners balk at rule changes. ECOWAS power Nigeria plans its own $1 billion Eurobond as the Finance Minister embarked on a June roadshow with global investors still overweight domestic paper following incorporation into benchmark indices. Enthusiasm has however been muted by brutal attacks from the Boko Haram as well as renewed threats by MEND insurgents following demobilization to attack pipelines and publicize corruption and poverty wounds.
