Taiwo Adekeye, FMVA

March 1, 2024

Oil prices declined on Thursday driven by U.S. inflation data suggesting a slowdown in the world’s largest economy and an increase in OPEC production exerted further downward pressure on prices. Crude inventories in the U.S., the world’s top producer, have risen for a fifth consecutive week, increasing by 4.2 million barrels, exceeding forecasts of a 2.7 million-barrel build. Brent futures for April delivery settled at $83.62 a barrel, down by 6 cents while U.S. crude settled at $78.26 a barrel, losing 28 cents.

South Africa’s rand strengthened against the USD on Thursday as investors processed a varied set of data, comprising producer inflation and trade balance figures. Producer inflation rose to 4.7% year on year in January from 4.0% in December while a budget deficit of 54.66 billion rand was recorded in January, compared to a deficit of 78.63 billion rand in the same month a year earlier. The rand traded at 19.1850 against the U.S. dollar, 0.4% stronger than its previous close while South Africa’s benchmark 2030 government bond was marginally weaker, with the yield up by 1 basis points closing at 10.140%.

Zambia, Africa’s second-largest copper producer has put up plans to import and ration electricity as a devastating drought impacts its hydropower generation, the country’s main source of power. The prolonged dry spell, which has already been declared a national disaster, would have a negative effect on food production which has already destroyed about 1 million hectares of the 2.2 million planted crop and also having negative effect on the mining sector. Additionally, the South African nation defaulted three years ago and is trying to rework its debt under the G20 Common Framework, a programme framed to ensure swift and smooth debt overhauls for low-income nations.

Ghana’s state-run electricity supplier, ECG, briefly puts down power supplies to the parliament building on Thursday in a bid to prompt the legislature to honor its 23 million Ghanaian cedi ($1.8 million) debt. This strategy was put in place as the West African country’s power sector grapples with widespread unpaid debts that have led to a sharp increase in outages amid a standoff between power producers and the government. However, the government has been seeking to restructure the power sector and seal a debt deal with independent power producers (IPP) as it grapples with its worst economic crisis characterized by double-digit inflation and surging public debt.

 The Indian nation, the fifth largest economy in the world has hiked its windfall tax on petroleum crude to 4,600 Rupees ($55.51) a metric ton from 3,300 rupees with effect from March 1.  There was also a cut on the windfall tax on diesel to zero from 1.50 per litre effective March 1, while the tax on petrol and aviation turbine fuel will continue to be nil. On Feb. 16, the government increased the windfall tax on petroleum crude to 3,300 rupees a metric ton from 3,200 rupees and hiked the tax on diesel to 1.5 rupees a litre from zero. India introduced a windfall tax on crude oil producers in July 2022, extending the levy to exports of gasoline, diesel, and aviation fuel. This decision was prompted by private refiners seeking to capitalize on strong refining margins by selling fuel internationally rather than domestically.

Hong Kong announced its measures to bolster its flagging real estate market by scrapping all tightening measures for residential properties, aimed at helping the city’s economy which is expected to grow at 2.5%-3.5% this year. All forms of additional stamp duties on transactions imposed in the past decade in a bid to boost the city’s depressed real estate market would be cancelled.  This includes the elimination of extra stamp duties for both foreign buyers and those acquiring second properties. Additionally, measures restricting the sale of flats within two years of purchase, which were implemented in the decade leading up to the current economic downturn to temper one of the world’s most expensive property markets, are also being lifted.