We assess Ghana’s external financing risk as low compared to regional peers. Eurobond issuance and multilateral support help offset impact of COVID-19. As a result, we estimate only moderate reserve losses of $800 mn in 2020. External debt amortization appears manageable this year and over 2021-22. Outflows could be triggered if deficits grow and/or are financed by the BOG.

Shocked by COVID-19 and the plunge in oil prices, the six GCC states will experience their worst recession in history. However, most GCC public sectors and banks are well positioned to absorb the shocks due to their large buffers and aggressive fiscal adjustments. 

We now expect an even deeper output contraction of 5.7% in the CEEMEA region. Effects of the COVID-19 shock are increasingly visible in the data for March-April. We downgrade growth in South Africa, the Czech Republic, Ukraine, and Russia. The fall in activity prompted authorities to implement fiscal stimulus measures. Together with cyclical revenue weakness, additional spending will widen deficits. CEEMEA central banks cut rates and some began government bond purchases.

Capital inflows to the MENA region will remain high despite the global backdrop. We expect the plunge in oil prices and widening fiscal deficits will lead to a decline in private non-resident capital flows to oil importers, but will be partly offset by higher official flows. 

Russia’s assets are stabilizing, and investors are showing renewed interest. The “Fortress Russia” strategy has reduced macroeconomic vulnerabilities. We expect both the fiscal and monetary policy responses to remain modest. As the economy is set to reopen, COVID-19 infections continue to spread.

Zambia’s external financing picture will continue to deteriorate in 2020. Sharply lower commodity prices will be a drag on the current account. At the same time, external debt repayments are set to increase markedly. As a result, already low foreign reserves are likely to fall even further. Additional external support of $0.5-1.0 bn would likely stabilize reserves.

China’s rising CPI, elevated debt, and deteriorating external positions prevented strong credit stimulus in 2019. Policy impulses came mainly in the form of fiscal spending in 2018 and tax cuts in 2019. Stimulus in 2020 requires better coordination among fiscal, monetary and credit policies.

Pressure on SSA assets has intensified due to COVID-19 related shocks. In this note, we analyze the composition of external flows to the region. SSA has become more globally integrated and reliant on portfolio flows. This makes the region more exposed to swings in investor sentiment.

Lebanese authorities have developed a five-year comprehensive reform program, which could be supported by the IMF’s Extended Fund Facility. If implemented effectively we expect the macroeconomic situation to stabilize and an orderly debt restructuring, though significant challenges remain. 
 

COVID-19 has increased external funding challenges despite moderate borrowing needs. Notwithstanding oil price relief, collapsing remittances and tourism will weigh on current account receipts. While some countries have tapped global debt markets, uncertainty over financing sources remains.