Frontier Markets News, June 24th 2023
Africa
Zambia restructuring deal offers hope for other debtors
After months of negotiations, Zambia’s creditors have agreed to restructure the country’s almost $13 billion in external debt, the WSJ reports.
Under the agreement, Zambia’s bilateral creditors will extend the maturities on $6.3 billion in debt by more than 20 years, with a three-year grace period on interest payments. The country will restructure an additional $6.8 billion in debt owed to private creditors. The deal, reached at a climate summit in France, will also allow Zambia to resume accessing a $1.3 billion loan from the IMF, which required debt restructuring as a condition for disbursement.
Zambia’s deal with creditors should enable it to unlock a $1.3b IMF bailout. Photo: Waldo Swiegers/Bloomberg
Zambia defaulted on its external debt in 2020. Debate among China and its Western creditors over how to restructure the debt hung over other lower-income countries, many of which have also defaulted in the past three years. This week’s deal could raise the hopes of Ethiopia and Ghana, both of which are in restructuring talks led by China, FT reports.
Video: Zambia’s President Hakainde Hichilema discussing the urgent need to address climate change in tandem with debt reduction.
Senegal snags $2.7b energy transition partnership
A group of G7 countries agreed on Thursday to provide Senegal $2.7 billion in financing to assist its transition away from fossil fuels. The Just Energy Transition Partnership (JETP) aims to enable Senegal to increase renewables to 40% of its energy mix by 2030.
Senegalese President Macky Sall said renewable energy already accounts for 31% of the mix, Bloomberg reports. The JETP includes Canada, France, Germany, the UK and the EU.
Workers install solar panels in Senegal. Photo: European Investment Bank
Wealthy countries hope JETPs will enable lower-income countries to stop using fossil fuels, which are relatively inexpensive but harmful for the planet. Over the past two years, Indonesia, South Africa and Vietnam have signed JETP agreements; all three of those countries count coal as a major contributor to their energy mixes. Mongolia is reportedly considering a similar agreement.
Tanzania teams up with China’s CNOOC on gas project
The national oil company of Tanzania signed a deal on Thursday with state-owned Chinese oil and gas firm CNOOC to work together on deepsea blocks owned by Tanzania, local outlet The Citizen reports.
Photo via The Citizen
The deal follows an agreement between Tanzania and three large Western oil companies—Equinor, ExxonMobil and Shell—to develop an LNG terminal near the offshore blocks. Only 30% of the area with potential for oil and gas discoveries has been explored, Bloomberg reports.
European states are increasingly looking to Africa to help them decrease their dependence on Russian oil. Africa currently accounts for about 20% of Europe’s gas imports, but many would-be exporters, including Tanzania, lack the infrastructure required to scale up deliveries. As a result, countries already selling to Europe, such as Algeria, Angola, Egypt and Nigeria, are poised to benefit the most, according to GIS Reports.
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Asia
Pakistan cedes port terminals to UAE
Pakistan, whose premier Shahbaz Sharif was in Paris this week attempting to revive a stalled $6 billion IMF bailout, has agreed to lease four of the 33 terminals at its Port of Karachi to the United Arab Emirates in exchange for $220 million, AFP reports.
The deal, expected to be completed by the end of June, will give the UAE’s Abu Dhabi Ports Group access to the terminals for the next 50 years, creating faster and less costly shipping routes for the Emirates. UAE plans to invest heavily in increasing the capacity of the port.
The Port of Karachi, Pakistan’s largest, is located across the Arabian Sea from the UAE. Photo: Karachi Port Trust
Pakistan enacted legislation last year that paved the way for inter-governmental sales of national assets, Nikkei reports. However, relatively small transactions like the port deal may not be enough to stave off default, Economic Times reports. The county’s struggling economy has been in need of a cash infusion since its IMF program stalled last November.
World Bank to fund Sri Lanka
The World Bank is set to approve a $700 million loan to Sri Lanka next week, Reuters reports. The majority of that funding, about $500 million, will come in two tranches of budgetary support.
The first tranche could be disbursed immediately after a World Bank board meeting on June 28, with the second potentially coming in October. An additional $200 million will be earmarked for programs that help those living in poverty.
A worker carries sacks of vegetables at a wholesale market in Colombo. Photo: Dinuka Liyanawatte/Reuters
The funds provide another lifeline for the embattled South Asian economy, which received a $3 billion bailout from the IMF in March. Sri Lanka expects that deal could spur an additional $4 billion in loans from multilateral lenders including the World Bank and the Asian Development Bank.
Middle East
Kazakhstan to stop hosting Turkey-Syria normalization talks
Kazakhstan announced on Wednesday it will stop hosting multilateral talks aimed at resolving the long-running Syria conflict, Al Jazeera reports. Kazakhstan’s Ministry of Foreign Affairs had hosted talks in Astana since 2017, but now says that continued talks—which include Syria, Russia, Iran and Turkey—are unnecessary given Syria’s emergence from isolation, and that “the initial goals, including the creation of de-escalation zones, ending the bloodshed and reducing the number of casualties, have been fully implemented.”
Syria peace talks have been held in Astana, Kazakhstan for several years Photo: Mukhtar Kholdorbekov/Reuters
Russia, Turkey, and Iran were reportedly surprised by the decision, and have decided to continue with a meeting later this year in a different venue. Russian negotiator Alexander Lavrentyev told Reuters that they “cannot say that the Astana process is over” and expects talks to continue with Kazakhstan.
On Friday, Russia’s security council condemned the decision, and accused “The United States and their allies” of driving a wedge between Russia and Kazakhstan, which Russia has long considered to be in its sphere of influence. Earlier this month, Kazakhstan’s President Kassym-Jomart Tokayev made headlines when said he would not attend an annual economic forum in St Petersburg, Russia.
Kuwait forms fifth government and cabinet in less than a year
Kuwait swore in a new government this week after a snap election called by the Emir Nawaf al-Ahmad al-Jaber Al Sabah, Al Jazeera reports. The Emir’s son, Sheikh Ahmad al-Nawaf al-Ahmad Al Sabah, was reappointed as prime minister, and four other royals were appointed to other key cabinet positions.
Kuwait’s parliament. Photo: Stephanie McGehee/Reuters
With the new government facing an opposition-controlled National Assembly, the appointment of five royals to the cabinet suggests a push by the royal family to assert power and project a unified front. Kuwait’s opposition held its ground in the election but a significant number of neutral lawmakers could now tilt the balance of power towards a reform-committed government, Reuters reports.
France’s Engie and South Korea’s Posco and Samsung to partner on $7 billion Oman ammonia plant
An international construction consortium led by Engie, Posco and Samsung was formally awarded a land parcel in Oman to begin construction of a $7 billion integrated renewable ammonia plant, Reuters reports. The plant will comprise 5 GW of new wind and solar power, hydrogen production equipment and an ammonia production facility with an anticipated annual capacity of 1.2 million tons for export by the mid-2030s.
Ammonia is a renewable source of energy that can be substituted as zero-carbon fuel for shipping and heavy industry. Engie’s head of flexible power generation for Asia, Africa and the Middle East Frédéric Claux says the Oman plant is the company’s biggest hydrogen project so far, and already has buyers lined-up in Asia, primarily in South Korea.
Europe
Putin at risk of losing iron grip on power
Russian President Vladimir Putin’s hold on power appeared to be at risk of crumbling on Saturday morning as the powerful Wagner mercenary group mounted an armed rebellion inside Russia, CNN reports. After claiming his forces were targeted by Moscow’s military, head of the Wagner group Yevgeny Prigozhin called for an armed rebellion. His troops took control of the military headquarters in key Russian city, Rostov-on-Don, the Independent reports.
Wagner fighters on Saturday spoke with a Russian service member near the headquarters of the Southern Military District in Rostov. Photo: Reuters
Putin ordered his military to crush the rebellion, which he called an act of treason, but the Wall Street Journal reports the takeover of Rostov-on-Don encountered almost no resistance from the regular armed forces.
Wagner also sent columns of troops northward toward Moscow, as the Russian army rushed to cut off highways and defend the capital city.
Later on Saturday, Al Jazeera reported that Belarusian President Alexander Lukashenko had brokered a deal with the head of Wagner, Yevgeny Prigozhin, to halt the rebellion. Prigozhin ordered his troops to return to field bases in Ukraine, AP reports.
Latin America
Beijing reportedly plans new training facility in Cuba
China and Cuba are negotiating to establish a new joint military training facility on the island, sparking alarm in Washington that it could lead to the stationing of Chinese troops and other security and intelligence operations just 100 miles off Florida’s coast, Warren P. Strobel, Gordon Lubold, Vivian Salama and Michael R. Gordon write in the Wall Street Journal. According to current and former U.S. officials, discussions are at an advanced stage.
The Biden administration has contacted Cuban officials to try to forestall the deal, seeking to tap in to what it thinks might be Cuban concerns about ceding sovereignty. The news follows an earlier WSJ report that China is setting up a new communications listening station on the Caribbean island.
China and Cuba already jointly run four eavesdropping stations on the island, according to US officials. Photo: Yander Zamora/Shutterstock
At a press conference in London, US Secretary of State Antony Blinken said he’d told Chinese officials during his meetings this week in Beijing that the US “would have deep concerns” about China increasing its intelligence or military activities in Cuba, CNN reports.
Dengue fever crisis forces Peru minister to resign
Peru’s health minister, Rosa Gutiérrez, has resigned after facing a no-confidence vote over her failure to devise an effective strategy to control a dengue fever outbreak, the BBC reports. The outbreak is the worst the country has experienced, with at least 248 people dead and reported cases surpassing 146,000.
A worker fumigating a cemetery in Lima, Peru, in an effort to stem the spread of dengue virus. Photo: Reuters
Under pressure over her handling of the crisis, Gutiérrez announced her decision to stand down on Thursday. She had previously claimed that the virus would be contained within 15 days, Peruvian media reported.
What we’re reading
Sovereign wealth funds expected to ramp up Africa investments (Construction Week)
Bangladesh formally applies to join BRICS (Silk Road Briefing)
Bangladesh signs another deal with Oman to import more LNG from 2026 (Dhaka Tribune)
Cambodia seeks to sink joint ASEAN naval drills (Asia Times)
US expands sanctions against Myanmar junta (CNA)
Myanmar could become frontline of a new cold war (Foreign Affairs)
Bahrain tightens grip on McLaren with purchase of Saudi stake (FT)
Saudi Arabia flexes muscles with launch of new Gulf airline Riyadh Air (The Guardian)
Saudi Arabia invites Iranian president to visit in latest sign of rapprochement (FT)
Iran has talks with EU’s Mora amid efforts to save nuclear pact (Reuters)
India and Iran agree new $80 million funding to develop Chabahar Port (Silk Road Briefing)
Lira slump deepens as Turkey insists on gradual changes (Bloomberg)
Moldova makes ‘good progress’ in EU accession process (Romania Insider)
Bulgaria’s new defense minister signals possible tack to help arm Ukraine (Radio Free Europe)
How Poland snagged Intel’s multi-billion dollar investment (Reuters)
Thousands take to streets in Colombia to protest leftist government’s reforms (Reuters)
Chile government faces backlash after U-turn on copper mine (Mongabay)
Ecuador oil vote could mean loss of $1.2 billion, says minister (Reuters)
Argentines rush to spend pesos as inflation skyrockets (NY Times)
