Ghana successfully concluded its 2007 Article IV consultation with the IMF. The IMF noted positively an improvement in the country’s fundamentals, its external public debt down to 22% of GDP in 2006 and forecasted growth of 6.3% in 2007 compared to 6.2% in 2006. But the IMF cautioned the county needs to improve its public financial management and highlighted its fiscal vulnerability due to the country’s high dependence on aid flows. The IMF also advised that while “risks to Ghana’s external debt distress are moderate”, the government needs to sustain a good policy performance in order to gain investor confidence for its planned Eurobond issue.
Russia’s central bank has suggested that it may allow the appreciation of the rouble later this year on the condition that inflation continues its upward trend or oil prices stay at high level. The CBR Governor Ignatiev also confirmed the prevailing market view that interest rate increases are unlikely despite the inflation pressures and stated a wave of short-term capital inflows was undesirable.
Colombia announced its intention to pay $500mn to the IFIs in advance, buoyed by higher than expected tax revenues. The government expects to save $185mn in interest payments by prepaying loans that mature between 2009 and 2017. Analysts expect such move is designed to ease the appreciation pressure of the peso through curbing net dollar inflows into the economy as the government spent $750mn in the FX market last week using its “excess” cash.
Gulf states now have around $1600 billion in foreign assets against China’s $1100 billion, according to a report released by the Institute of International Finance. The UAE, Saudi Arabia and Kuwait hold $1,550 billion in foreign asset holdings. The report noted that investments in the future is likely to be diversified away from US securities and into the Middle Eastern domestic markets as well as East Asia.