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If volatility spikes, positions are going to be reduced en masse. Or to put it another way and to borrow the lyrics from the Eagles Hotel California
A lot of risk calculations are based on Value at Risk (VAR).
Essentially, you overlay a volatility measure over the portfolio, and
you calculate how much money is on the line.
Central banks have suppressed volatility therefore in real terms;
investors are now holding bigger positions at these current
artificially suppressed levels. If volatility spikes, positions are
going to be reduced en masse.
Or to put it another way and to borrow the lyrics from the Eagles
Mirrors on the ceiling,
The pink champagne on ice
And she said “We are all just prisoners here, of our own device” Last
thing I remember, I was
Running for the door
I had to find the passage back
To the place I was before
“Relax,” said the night man,
“We are programmed to receive.
You can check-out any time you like,
But you can never leave! “
@Aiww What's in a Name? @aiww @aiweiwei_art
A name is the first and final marker of individual rights, one fixed
part of the ever-changing human world. A name is the most basic
characteristic of our human rights: No matter how poor or how rich,
all living people have a name, and it is endowed with good wishes, the
expectant blessings of kindness and virtue.
Arrogance, fanaticism and the prospect of a US-Iranian war @AJENews @marwanbishara
Law & Politics
Tensions between the United States and Iran have flared up since the
Trump administration withdrew from the nuclear deal with Iran last
year and began ratcheting up sanctions on the Islamic Republic.
Earlier this month, tensions turned into threats, as Washington
refused to extend sanctions waivers for buyers of Iranian oil,
designated Iran's elite Revolutionary Guards (IRGC) a terrorist
organisation, and began military preparations to deter Iran.
These measures are pushing the Iranian economy to the brink. Oil
exports, which have already dwindled from 2.5 million to less than 1.3
million barrels a day since last year, could drop even further,
crippling the state budget.
Ordinary Iranians, who are already suffering from the raging inflation
(currently at 40 percent) and skyrocketing prices of goods, will
likely bear the brunt of Washington's push to bring Iranian oil
exports to zero. And this is only the beginning.
The Iranian leadership has been defiant. Supreme Leader Ayatollah Ali
Khamenei has said this "hostile measure" will not be left "without a
response", while President Hassan Rouhani has threatened to disrupt
oil shipments from Gulf countries.
Foreign Minister Mohammad Javad Zarif has cautioned that Iran could
walk away from the nuclear deal and warned against a potential
escalation to war.
If the past three Gulf wars of the 1980s (Iraq-Iran), 1991
(US/UN-Iraq) and 2003 (US/UK-Iraq) are anything to go by, a
confrontation between the US and Iran would prove far more
So why are Washington and Tehran ignoring the lessons of war, and
marching eyes wide shut towards another armed conflict? And can anyone
Even before he was elected president, Donald Trump famously branded
the Joint Comprehensive Plan of Action (JCPOA) negotiated by the Obama
administration "the worst deal ever" and once he took office, he
embarked on dismantling it.
In May last year, his administration withdrew from the JCPOA and
issued 12 demands to Iran. It was one of those impossible lists,
designed to provoke and humiliate.
The US wants Iran to end all its nuclear and missile programmes,
withdraw its forces from Syria, stop its "destabilising" policies in
Iraq, Afghanistan and the Gulf, and cease its support for armed groups
like Hezbollah, Hamas, and the Houthis in exchange for negotiating a
new nuclear deal.
No one would have been more surprised than the US itself if Iran had
said yes to any of it. These demands basically constitute total
Iranian surrender, not only to the US but also to Israel and Saudi
Arabia, Trump's key regional partners and principle drivers behind the
new Iran policy.
National Security Advisor of the United States John Bolton made this
crystal clear on the sidelines of the UN General Assembly session last
September, when he said: "If you cross us, our allies, or our
partners; if you harm our citizens; if you continue to lie, cheat, and
deceive, yes, there will indeed be hell to pay."
The message was certainly heard loud and clear in Tehran, which has
accused the so-called B-team (Bolton, Israel's Benjamin Netanyahu,
Saudi Arabia's Mohammed Bin Salman and the UAE's Mohammed Bin Zayed)
of pushing Trump to seek regime or war with Iran.
But it is not only the US and Iran who have engaged in religious
fanaticism. Israel and Saudi Arabia have done so as well, and so have
various non-state actors such as the Islamic State of Iraq and the
They have all assumed their own versions of "manifest destiny",
claiming they were divinely ordained to conquer and occupy and willing
to use God's name in vain in order to advance their narrow political
I am not convinced that either Trump or Rouhani wishes for a war.
There doesn't seem to be a decision or a plan to go to war, yet - not
today, not tomorrow.
But what about next year? Trump's 12 demands have left Tehran with no
option for an honourable exit and set it on the path towards an
economic disaster. Feeling anxious about an implosion from within, it
will have to devise a plan to respond.
Meanwhile, the US will continue to strangle it economically,
destabilise it politically and undermine it regionally. It will pursue
various containment strategies like "offshore balancing", but if those
fail, military intervention will be a viable option.
Washington's aggressive approach will likely weaken Iranian
pragmatists like Rouhani, and empower hardliners. This will cause Iran
to abandon diplomatic efforts to contain the crisis and seek to quit
the nuclear deal and perhaps even the Nuclear Non-Proliferation Treaty
altogether, rile up its Gulf neighbours, and undermine the US presence
in Iraq and Afghanistan.
This would inevitably evoke a sharp reaction from Washington, which
may lead to war or wars by proxy throughout much of the region.
Foreseeing such developments, the Trump administration is already
preparing the public for possible escalation.
Like the Bush administration, it is repeating the same false claims
that paved the way for the invasion of Iraq - that there are weapons
of mass destruction (WMD) threat and support for terrorism.
Clearly, some in Washington have forgotten the Iraq debacle, and
continue to believe in limited wars and regime change.
Exclusive: China backtracked on nearly all aspects of U.S. trade deal - sources @Reuters
Law & Politics
The document was riddled with reversals by China that undermined core
U.S. demands, the sources told Reuters.
In each of the seven chapters of the draft trade deal, China had
deleted its commitments to change laws to resolve core complaints that
caused the United States to launch a trade war: theft of U.S.
intellectual property and trade secrets; forced technology transfers;
competition policy; access to financial services; and currency
U.S. President Donald Trump responded in a tweet on Sunday vowing to
raise tariffs on $200 billion worth of Chinese goods from 10 to 25
percent on Friday – timed to land in the middle of a scheduled visit
by China’s Vice Premier Liu He to Washington to continue trade talks.
The stripping of binding legal language from the draft struck directly
at the highest priority of U.S. Trade Representative Robert Lighthizer
- who views changes to Chinese laws as essential to verifying
compliance after years of what U.S. officials have called empty reform
Lighthizer has pushed hard for an enforcement regime more like those
used for punitive economic sanctions – such as those imposed on North
Korea or Iran – than a typical trade deal.
“This undermines the core architecture of the deal,” said a
Washington-based source with knowledge of the talks.
Spokespeople for the White House, the U.S. Trade Representative and
the U.S. Treasury Department did not immediately respond to requests
Chinese Foreign Ministry spokesman Geng Shuang told a briefing on
Wednesday that working out disagreements over trade was a “process of
negotiation” and that China was not “avoiding problems”.
Geng referred specific questions on the trade talks to the Commerce
Ministry, which did not respond immediately to faxed questions from
Lighthizer and U.S. Treasury Secretary Steven Mnuchin were taken aback
at the extent of the changes in the draft.
The two cabinet officials on Monday told reporters that Chinese
backtracking had prompted Trump’s tariff order but did not provide
details on the depth and breadth of the revisions.
Liu last week told Lighthizer and Mnuchin that they needed to trust
China to fulfil its pledges through administrative and regulatory
changes, two of the sources said.
Both Mnuchin and Lighthizer considered that unacceptable, given
China’s history of failing to fulfil reform pledges.
One private-sector source briefed on the talks said the last round of
negotiations had gone very poorly because “China got greedy”.
“China reneged on a dozen things, if not more ... The talks were so
bad that the real surprise is that it took Trump until Sunday to blow
up,” the source said.
“After 20 years of having their way with the U.S., China still appears
to be miscalculating with this administration.”
The rapid deterioration of negotiations rattled global stock markets,
bonds and commodities this week. Until Sunday, markets had priced in
the expectation that officials from the two countries were close to
striking a deal.
Investors and analysts questioned whether Trump’s tweet was a
negotiating ploy to wring more concessions from China.
The sources told Reuters the extent of the setbacks in the revised
text were serious and that Trump’s response was not merely a
Chinese negotiators said they couldn’t touch the laws, said one of the
government sources, calling the changes “major.”
Changing any law in China requires a unique set of processes that
can’t be navigated quickly, said a Chinese official familiar with the
The official disputed the assertion that China was backtracking on its
promises, adding that U.S. demands were becoming more “harsh” and the
path to a deal more “narrow” as the negotiations drag on.
Liu is set to arrive in Washington on Thursday for two days of talks
that just last week were widely seen as pivotal – a possible last
round before a historic trade deal.
Now, U.S. officials have little hope that Liu will come bearing any
offer that can get talks back on track, said two of the sources.
To avert escalation, some of the sources said, Liu would have to scrap
China’s proposed text changes and agree to make new laws.
China would also have to move further towards the U.S. position on
other sticking points, such as demands for curbs on Chinese industrial
subsidies and a streamlined approval process for genetically
engineered U.S. crops.
The administration said the latest tariff escalation would take effect
at 12:01 a.m. Friday, hiking levees on Chinese products such as
internet modems and routers, printed circuit boards, vacuum cleaners
The Chinese reversal may give China hawks in the Trump administration,
including Lighthizer, an opening to take a harder stance.
Mnuchin - who has been more open to a deal with improved market
access, and at times clashed with Lighthizer – appeared in sync with
Lighthizer in describing the changes to reporters on Monday, while
still leaving open the possibility that new tariffs could be averted
with a deal.
Trump’s tweets left no room for backing down, and Lighthizer made it
clear that, despite continuing talks, “come Friday, there will be
tariffs in place.”
09-JUL-2018 :: a "Chickie Run." Both race stolen cars towards the edge of a cliff. The first to eject out of his car is branded a "chickie.".
Law & Politics
James Dean was an iconic American actor, who tapped into the universal
yearning and angst of nearly every adolescent human being with a raw
connection that has surely not been surpassed since.
In one of his most consequential films, Rebel without a Cause, two
players (read, teenage boys) decide to settle a dispute (read, teenage
girl) by way of near-death experiences.
Each speeds an automobile towards a cliff. A simple rule governs the
challenge: the first to jump out of his automobile is the chicken and,
by universally accepted social convention, concedes the object in
The second to jump is victorious, and, depending on context, becomes
gang leader, prom king, etc.
Buzz, the leader of a local gang, agrees to a “Chickie Run.” Both race
stolen cars towards the edge of a cliff. The first to eject out of his
car is branded a “chickie.”
Seconds into the race, Buzz discovers that his jacket is stuck on the
door handle, making jumping out of the car so- mewhat difficult.
Jimmie jumps out an instant before the cars reach the edge of the
Buzz, still unable to free his jacket from the door handle, fails to
escape. While he won’t be branded a “chickie,” he suffers a worse
@Uber's Long Road to an IPO Is Ending at a Less-Than-Ideal Moment @business
When you’ve waited a decade to go public, it’s natural to want the
best possible conditions to make an entrance. In that regard, 2019
hasn’t been kind to Uber.
After 10 tumultuous years as a private company, the most highly valued
startup in the U.S. is finally ready to make its market debut.
Ride-hailing giant Uber Technologies Inc. is due to price shares in
its long-awaited initial public offering after the market closes
While the listing is still expected to be the largest in the biggest
year for technology IPOs since 2014, it’s unlikely to hit the highs
that were first expected.
Uber last raised money from Toyota Motor Corp. in August, at a
valuation of about $76 billion.
The San Francisco-based company is now considering pricing shares at
the midpoint of the marketed range or slightly below, according to a
person familiar with the matter.
That could see the company debut with a market value just above that
of its most recent funding round, at about $79 billion.
Last year, bankers jockeying to lead the offering told Uber it could
be valued at as much as $120 billion in an IPO.
This year, widely expected to be the busiest for mega U.S. tech
listings this century, started with a partial government shutdown that
shuttered the agency that approves IPO documents for 35 days, all but
killing activity in the first quarter.
After submitting its confidential filing in December, Uber -- along
with rival Lyft Inc. and a host of other hopefuls -- was left sitting
on the sidelines while U.S. stocks enjoyed the best start to a year in
at least a decade.
Today, the picture looks very different. Companies have been rushing
to market, with Lyft, Pinterest Inc. and Tradeweb Markets Inc. all
raising more than $1 billion each since late March.
Markets, meanwhile, aren’t looking so hot. U.S. stocks fell for a
third day Wednesday as trade tensions escalated between the U.S. and
China, extending the 2% loss that started the week.
“They’re looking at the market as well as what’s happened to Lyft,’’
Wedbush Securities analyst Dan Ives said. Shares of Uber’s biggest
competitor tumbled to a record low on Wednesday after it disclosed a
steep loss in its first quarterly earnings report as a public company.
The stock closed 26% below the IPO price of $72, valuing Lyft at just
$15.1 billion -- exactly the valuation it garnered in its last private
funding round in 2018.
However, because Lyft is focused on the domestic ride-sharing market,
Ives said the company is a “one-trick pony” compared to Uber, a
“three-headed value monster.”
That’s certainly how the company’s executives and their advisers have
been pitching Uber to potential investors in cities including New
York, London and San Francisco.
On the roadshow, Uber touted its plans to expand in logistics and
other transportation businesses, including scooters, autonomous
driving and mass transit, a person familiar with the matter has said.
The company aims to become a one-stop shop for customers who would
only need to use one platform for multiple services.
Arun Sundararajan, a professor at New York University’s business
school, said that while going public will give Uber money to capture
more of the transportation market, it could also push it to put
quarterly targets ahead of its broader ambitions.
“The trillion dollar valuation will come if they can spend the next
five to 10 years getting to that place where more is spent on Uber
than on any other form of transportation,” Sundararajan said.
“The trouble is that’s going to require keeping investors at bay who
are putting pressure on Uber to deliver earnings.”
“The freedom to play the long game gets significantly reduced when you
go public even when the resources to do so are increased,” he said.
Like many of the IPO class of 2019, Uber is deeply unprofitable. It
lost $3.04 billion last year on an operating basis on revenue of $11.3
billion, bringing total operating losses over the past three years to
more than $10 billion, according to filings.
Uber has been working with Morgan Stanley to lead its IPO plans,
alongside Goldman Sachs Group Inc. -- once the company’s go-to bank --
and Bank of America Corp. Its shares are set to trade on the New York
Stock Exchange under the ticker UBER.
Uber has long been Silicon Valley’s wunderkind, with a cavalcade of
elite venture investors betting on the ride-hailing business from the
start. Blue-chip investors First Round Capital and then Benchmark led
the earliest rounds, cutting checks to the startup that could soon
prove to be extremely lucrative investments.
Over multiple funding rounds its valuation soared: from $60 million,
to $3.7 billion, to $42.8 billion, to -- in 2016 -- $62.5 billion when
Saudi Arabia’s Public Investment Fund wrote the company a $3.5 billion
check, sent in a single wire transfer.
But while Uber was coming of age as a Silicon Valley success story,
behind the scenes it was struggling to grow up. Co-founder Travis
Kalanick resigned in 2017 when early investors pushed for his ouster,
after a series of controversies including allegations of sexual
harassment inside his company and the use of software to bypass
Kalanick had long refused to hire an experienced chief financial
officer or chief operating officer, both seen as key steps to moving
the company toward the public markets.
Neither Kalanick nor his co-founder Garrett Camp will be invited to
Friday’s bell ringing ceremony at the New York Stock Exchange, a
person familiar with the matter said, though both are set to be
multi-billionaires after the offering.
Instead, standing center stage will be Chief Executive Officer Dara
Khosrowshahi, who joined Uber from Expedia Group Inc. with the express
mandate to take the company public.
His compensation post-IPO will reward him handsomely if he brings
Uber’s public valuation to $120 billion over a 90-day span.
Uber’s offering is set to be among the 10 largest U.S. IPOs of all
time and the biggest on a U.S. exchange since Alibaba Group Holding
Ltd.’s $25 billion global record holder in 2014, according to data
compiled by Bloomberg.
Other high-profile startups with plans to go public, or considering
it, include Slack Technologies Inc., Postmates Inc., Peloton
Interactive Inc. and Airbnb Inc.
With large institutional investors, plenty of debt and a history of
releasing quarterly financials, Uber already has some of the
characteristics of a public company.
Soon, it will also experience the changing whims of Wall Street --
with the eyes of the next crop of IPO hopefuls firmly fixed on how it
Africa's current population:1,314,952,231 as of Wed, May 8, 2019, based on UN estimates. @jmollel
Africa #population is 16.64% of total #world population and density is
45 per Km2; median age is 19.4 years.
total land area: 29,648,481 Km2
41 % is urban (541,028,160 people in 2019)
.@BarrickGold Could 'Force' Resolution to @AcaciaMining's Troubles, CEO Says @markets
Barrick Gold Corp.’s Mark Bristow said the company may have to “force”
an end to stalled talks with Tanzania over the fate of its subsidiary
Acacia Mining Plc -- but not yet. Shares of the unit pared gains.
Acacia has been at odds with Tanzania’s government since July 2017,
when the state handed the London-listed gold producer a $190 billion
tax bill, saying it falsely declared bullion exports.
Bristow became Barrick chief executive officer in January, and the
following month the Toronto-based miner said it had reached a
settlement proposal with the government. Yet so far, no final deal
with the government has been signed.
“We would definitely at a point intervene and force the process, but
right now it’s not a constructive way to try to solve this problem,”
Bristow said in an interview in Toronto Wednesday.
Acacia said on Thursday that it was seeking clarification from Barrick
on Bristow’s comments that weren’t consistent with its own
understanding. The company said it has not yet received the proposed
“It’s a tragedy; what we’re dealing with is a complete breakdown of
relationships,” Bristow said Wednesday, noting that the Tanzanian
government refuses to deal with Acacia. Bristow declined to provide
more details on what an intervention would look like.
“There’s a way where we could get involved in wrapping up the business
going forward and then deal with the assets ourselves,” Bristow said.
“Or there’s a way where we could cooperate with the Acacia board and
we could look at strategic options and realize the assets in a
different way. Those are the options that we have.”
Later on Wednesday Bristow, who is known for speaking plainly,
revisited his frustration during the first-quarter earnings call.
“At this stage, almost any solution is better than none,” he told
analysts, noting that the protracted dispute “has already destroyed a
great deal of value.”
@CyrilRamaphosa Faces Moment of Truth as South Africa Counts Votes
While opinion polls all point to a sixth outright national election
win for the African National Congress, the margin of victory will be
crucial for Ramaphosa after he scraped through a party leadership vote
in December 2017. With about 14% of ballots counted by 7:52 a.m. in
Pretoria on Thursday, the ANC had secured 54.8%. The final outcome is
expected by Saturday.
The 66-year-old lawyer and former labor-union leader is looking for a
decisive win to quell opposition in the faction-riven ANC to give him
the clout to push through reforms needed to spur growth in Africa’s
most-industrialized economy. A narrow victory could embolden his
critics and may force the party into coalitions to retain control of
some provinces, limiting his policy options.
“Ramaphosa is weak and vulnerable inside the ANC, but strong in the
government and protected by society,” said Xolani Dube, an analyst at
the Xubera Institute for Research and Development in the eastern city
of Durban. “He needs to navigate how to serve the interests of two
masters -- the ANC constituency that reluctantly placed him into power
and society at large, which holds the key to keeping him safe from the
wolves of his own party.”
The ANC share of the vote has declined from a peak of more than 69% in
2004, when the economy was expanding at about 5% a year and the
government was cutting taxes. Its support plummeted to 54.5% in 2016
municipal elections when its supporters shunned the ballot amid weak
economic growth and allegations of graft and misrule during Jacob
The ANC forced Zuma to resign in February last year, but after initial
euphoria when Ramaphosa took over, confidence has slumped and is now
at multi-year lows. The rand is more than 20% weaker against the
dollar over that period. The currency gained for a second day on
Wednesday as the vote proceeded peacefully. The equity and bond
markets were closed for the election-day holiday.
Investors are expecting Ramaphosa to use a strong mandate to implement
structural reforms to lure investment and spark an economy that has
expanded by less than 1.5% for the past four years. He would still
face an unemployment rate of more than 27%, persistently high
inequality and ballooning debt. The government has failed to close a
yawning fiscal gap despite tax hikes over the past five years.
The election will allocate seats in the 400-member National Assembly
and nine provincial legislatures to parties based on the proportion of
the vote they win. A first meeting of the new parliament has been
provisionally set for May 22, where the president is due to be
Also at stake in this election is the ANC’s majority in the province
of Gauteng, which includes the capital, Pretoria, and the economic hub
of Johannesburg. The ruling party lost both cities in the 2016
municipal election, with the Democratic Alliance taking control with
support from smaller parties.
The ANC’s main challengers among 48 parties contesting the national
vote are Mmusi Maimane’s center-right DA and the populist Economic
Freedom Fighters, led by former ANC youth-wing leader Julius Malema.
Angolan president sacks chair of state energy firm Sonangol @ReutersAfrica
Angola’s President João Lourenço on Wednesday sacked Carlos Saturnino
as chair of state energy firm Sonangol in the midst of one of the
worst fuel shortages to hit Africa’s second-largest crude producer in
Sebastiao Gaspar Martins will replace Saturnino as chair of the oil
producer, a statement from the president’s office said.
The statement did not give a reason for the change, but it comes a day
after Lourenço promised a rapid resolution to the shortage of fuel
that is plaguing the capital of Luanda and cities across the southern
Angola, despite producing around 1.5 million barrels of oil per day,
relies on imports for 80 percent of its demand for refined products
such as petrol and diesel.
@IMFNews Warns Uganda Debt Metrics Are Weakening @business
Uganda’s public debt may expand to 50.7 percent of its gross domestic
product as the nation borrows for infrastructure investment ahead of
planned oil production and in a bid to become a middle-income economy
by 2040, the International Monetary Fund said.
The debt may rise to that level by the end of June 2022 from a
projected 42.2 percent of GDP in this financial year, the
Washington-based lender said in an Article IV report on Uganda’s
economy. Obligations to external lenders may account for more than a
third of GDP from 27.7 percent this year, the report said.
“While Uganda’s debt level remains at low risk of debt distress,
directors cautioned that debt metrics had weakened, some investment
projects may not generate the envisaged return, and interest payments
are rising,” the IMF said.
Uganda’s debt climbed 22 percent to 44.7 trillion shillings ($11.9
billion) in the fiscal year to end-June 2018 as the country borrowed
to build roads and hydroelectric dams.
Interest payments are projected to take as much as 20 percent of
revenue in 2019-20, a level typically only associated with countries
at high risk, or in debt distress, the IMF said. Tax cuts and
exemptions would hamper revenue collection, the lender said.
“Uganda’s external position is weaker than the level implied by
fundamentals and desirable policies,” the IMF said.
East Africa’s third-biggest economy, whose government projects oil
production will begin in 2022, may expand by 6.3 percent in the 12
months through June 2019 and 6.6 percent in 2023-24, IMF said.
Kenya to upgrade old rail track to deliver Uganda link @Reutersafrica
The development of Kenya’s railways has been part of China’s “One
Belt, One Road” initiative, a multi-billion dollar series of
infrastructure projects upgrading land and maritime trade routes
between China and Europe, Asia and Africa.
Kenya opened a modern railway linking the port of Mombasa with the
capital Nairobi in 2017 at a cost of $3.2 billion. This was then
linked with another new line, costing $1.5 billion and also funded by
Chinese loans, to Naivasha in the Rift Valley.
The Nairobi-Naivasha standard gauge rail (SGR) line, will be opened in
August but does not yet extend to Uganda.
“We need to make sure that when we commission the SGR in August, we
have connectivity to Uganda from the SGR so we have to rehabilitate
that line to make sure it is properly functional,” Kenyan transport
minister James Macharia told Reuters, adding that the work will take a
year to complete.
Macharia said that spending $150 million to rehabilitate a decades-old
line from Malaba on the border with Uganda and using the rest to build
another short track connecting the SGR at Naivasha would be a quicker
option than building another SGR.
A Chinese loan worth $3.7 billion for the extension of the SGR from
Naivasha to Malaba, which was last month reported by Kenyan media to
be imminent, did not materialise, with neither government offering any
“It is much faster to rehabilitate because the (Naivasha-Malaba) SGR
would take three to four years,” Macharia said, without commenting on
the potential loan that fell through.
“Eventually we will do the SGR anyway but for the time being it is
good to have something which is working,” the minister said, adding
that the funding will come from a private firm which will recoup its
investments by operating the line.
“We have got a private sector partner who will do this work. And then
for the recovery we have a PPP (Public Private Partnership)
arrangement with them,” he said.
Critics say Kenya is saddling future generations with debt from China,
while the government says borrowing to build the infrastructure will
spur economic development.
06-NOV-2018 :: The Shilling. @TheStarKenya
Today, if you scan Sub-Saharan Africa you will note many dual currency
regimes all of which are interfering with the free markets. Here in
Kenya, you can exchange your money at a 50 cents bid offer spread.
Sure, the Central Bank [and I rank their foreign exchange operations
as an ‘’Outlier’’ when you compare it to any other Central Bank on the
continent] probably smooths lumpiness but that is prudent and
sensible. If you are aware of a lumpy trade, it certainly makes sense
to spread it out because after all Participants have access to
enormous amounts of Leverage in the FX markets and Kenya does not fold
infinite FX reserves. I have always enjoyed parsing the linguistics
and in this respect the characterisation of “other managed
arrangement” is wrong on the facts as I see them.
The finding that the Shilling is 17.5% overvalued is also alarmist and
not borne out by facts. Such a devaluation would ‘’cry havoc’’ with
our debt-to-GDP ratios. The International Monetary Fund raised its
assessment of the chance of Kenya’s external debt distress to moderate
from low due to increasing refinancing risks and narrower safety
margins in East Africa’s biggest economy. The Washing- ton-based
lender estimates Kenya’s total public debt will peak at 63.2 per cent
of gross domestic product this year and gradually decline over the
medium term. This compa- res with 58 percent in 2017 and 53.2 per cent
in 2016, when the nation ramped up infrastructure projects. There is
an argument that we need to be tapping Euro denominated Eurobond
borrowing and not just dollar denominated debt.
The Central Bank is sitting on the highest hard currency reserves in
its history. Remittances have surged by 71.9% year on year to $266.2M
in June 2018 from $54.9M in June 2017. Remittances are the most
important source of forex bar none.