Aurelia Butler

DAR ES SALAAM (Reuters) -U.S. Vice President Kamala Harris announced plans to boost trade with and investment in Tanzania during a visit there on Thursday, part of an African tour aimed at strengthening ties with a continent where China and Russia increasingly hold sway.Harris started her trip on Sunday in Ghana before flying late on Wednesday to Tanzania’s commercial capital Dar es Salaam, where she met President Samia Suluhu Hassan on Thursday.The two women gave short statements to the media before going into a longer session of private talks.”Working together, it is our shared goal to increase economic investment in Tanzania and strengthen our economic ties,” Harris said, listing a number of initiatives.They included a new memorandum of understanding between the Export-Import Bank of the United States (EXIM) and the government of Tanzania.That will facilitate up to $500 million in financing to help U.S. companies export goods and services to Tanzania in sectors including infrastructure, transportation, digital technology, climate and energy security and power generation.Harris also mentioned a new partnership in 5G technology and cybersecurity, as well as a U.S.-supported plan by LifeZone Metals to open a new processing plant in Tanzania for minerals that go into electric vehicle batteries.”This project is an important and pioneering model, using innovative and low-emission standards. Importantly, raw minerals will soon be processed in Tanzania, by Tanzanians,” she said, adding that the plant would deliver battery-grade nickel to the United States and the global market from 2026.China has invested heavily in Africa in the last two decades, and last November the Tanzanian president met China’s President Xi Jinping during a state visit to Beijing. Trade and investment featured heavily on their agenda, with the leaders agreeing to “elevate two-way trade and further expand the trade volume” and China saying it would explore providing market access to more Tanzanian goods.POLITICAL RIGHTSOn Thursday, President Hassan said her “most important request” was to improve the visa process between the U.S. and Tanzania, as both countries would benefit from a “long duration visa” that would increase trade and tourism.Under Hassan, Tanzania has returned to international engagement after a period of isolationism enforced by her predecessor John Magufuli, who cancelled all his ministers’ foreign trips and discouraged travel.She has won praise internationally for restoring political rights suspended by Magufuli, who died in office in 2021.”Madam President, under your leadership Tanzania has taken important and meaningful steps and President Joe Biden and I applaud you,” Harris said, standing alongside Hassan.Magufuli had banned political rallies by anyone other than elected officials, cracked down on Tanzania’s LGBT community and arrested scores of opposition supporters. He had also rejected COVID-19 vaccines and urged Tanzanians to put faith in prayer and treatments such as steam inhalation.Hassan reversed the policies upon coming to power and earlier this month, Tanzania passed the milestone of fully vaccinating 50% of its population against the coronavirus. But human groups say violations continue, including government targeting of online media outlets. Hassan’s education minister also banned a series of children’s books from schools last month for allegedly promoting homosexuality.Harris, the latest of several high-profile figures from the U.S. administration to visit African countries in recent months, is due to stay in Tanzania until Friday, when she will depart for Zambia, the final stop on her tour. More

By Fergal Smith and Molly ConeTORONTO (Reuters) – Canadian Finance Minister Chrystia Freeland’s promise of a fiscally prudent budget in the face of high inflation has disappointed some strategists who had hoped for spending restraint from the Liberal government.Increased spending in the budget leaves the government with less in reserve to deal with a possible economic downturn and it could forestall a shift to interest rate cuts by the Bank of Canada, analysts said.The worry is that the deficit, estimated at C$43 billion ($31.7 billion) in 2022-23, or 1.5% of GDP, is wider than it should be at this point of the economic cycle, with the economy running hot, unemployment at a near record low and inflation elevated, analysts said.”A lot of folks would have liked to have seen a little bit more fiscal restraint … just to reserve spending power in case we do go into a deeper recession than people are predicting,” said Francis Fong, senior economist in charge of ESG research at TD Economics.Freeland repeatedly promised in recent weeks that the budget would not make the Bank of Canada’s job harder to fight inflation, but the government projected C$43 billion of net new spending, while the six-year forecasting horizon no longer shows a return to balance.Earlier this month, the central bank paused its tightening campaign after eight consecutive rate hikes to tackle price pressures. Money markets are betting it will shift to cutting interest rates over the coming months after recent stress in the global banking sector raised prospects for a credit crunch.”It probably puts a little bit of impetus on the Bank of Canada to think about not cutting rates if they were thinking about cutting rates towards the end of 2023,” said Jules Boudreau, a senior economist at Mackenzie Investments.Initiatives aimed at accelerating the transition to a low-carbon economy were welcomed by economists.Still, green investment should have been anticipated and planned for, while program expenses as a share of GDP, estimated at 15.9% in 2023-24, remain far above the pre-pandemic level of 14.6%, Cynthia Leach and Josh Nye, economists at RBC, said in a note.”(The budget) delivers mostly against expectation in the sense that it delivers yet another fiscally expensive budget,” said Rebekah Young, head of inclusion and resilience economics at Scotiabank.”Some big ticket items in there, most of which were expected, but then a little bit of a slippery slope with more added on.”The budget projects that economic growth will slow to 0.3% this year from 3.4% in 2022.As revenue growth slows, new policy items would not only threaten progress on reducing deficits “but could give a push to inflation in what is for now a fully employed economy,” Avery Shenfeld, chief economist at CIBC Capital Markets, said in a note.Taking account of tax hikes and other offsets in the budget, Shenfeld doesn’t expect the overall implication for inflation to be enough to sway the BoC. ($1 = 1.3569 Canadian dollars) More

German consumer prices, harmonised to compare with other European Union countries, rose by a more-than-anticipated 7.8% on the year in March, preliminary data from the federal statistics office showed on Thursday.Compared to February, prices increased by 1.1%, it added. Analysts had expected harmonised data to increase by 0.8% on the previous month and grow by 7.5% on an annual basis. According to non-harmonised standards, German consumer prices rose 7.4% on the year in March and 0.8% on the month. This follows an inflation rate of 8.7% in February and January.Food prices continued to show above-average growth. They were up 22.3% year-on-year. The decline in the inflation rate was entirely driven by a slowdown in energy prices, which rose only 3.5% compared with March 2022, when energy prices soared following Russia’s invasion of Ukraine. Apart from this base effect, which is due to the high index level of March 2022, the measures included in the German government’s third relief package also contributed to the decline in headline inflation, the statistics office said. Inflation is now dropping rapidly across the euro area as high energy costs get knocked out of year-earlier figures, but underlying price growth, which filters out volatile food and energy prices, appears to be stubbornly high.     This is raising worries at the European Central Bank that sky-high energy costs have seeped into the broader economy via second-round effects, making it difficult to root out because it is fuelling cost increases across the board.     While energy prices have fallen back to their pre-war levels, ECB board member Isabel Schnabel warned on Wednesday that the energy impact may not drop out of inflation completely because firms have boosted margins and workers are increasing their wage demands.     Europe’s labour market is so tight that workers have gained bargaining power, and wage growth is now at between 5 and 6%, its highest in decades.     Still, the ECB sees overall inflation under 3% by the end of the year and hopes this rapid fall will also moderate wage demands, easing overall pricing pressures. More

KYIV (Reuters) – Ukraine’s central bank is pressing on with reforms to fully digitalise the financial sector despite Russia’s invasion, and is about to make a “once in a generation” change to improve its electronic payment system.The bank and the government have faced huge challenges to keep the economy afloat and maintain financial stability since Russia launched its full-scale invasion on Feb. 24 last year. But National Bank of Ukraine deputy governor Oleksiy Shaban said the central bank had started planning for the various contingencies it might face during a war as long ago as 2014, when Russia seized and annexed the Crimea peninsula.He told Reuters in an interview that scenarios the bank had planned for included problems related to cyber security, currency support and banking stability, and as a result efforts to digitalise the financial sector were advanced.”The central bank’s system of electronic payments (SEP) is moving to a new standard from April 1,” Shaban said of plans to migrate to the ISO 20022 global standard for financial information on Saturday.ISO 20022 sets a new international standard for sending enhanced data and is intended to create a single common language for most payments globally.”Imagine, the country, which is in the active phase of the war, will move to a new payment standard,” Shaban said.”It’s something that happens once in a generation. We are doing it and we are certain that we will succeed. I mean ‘we’ as the central bank and the entire banking system.”FIRST DAYS OF THE WARIn the first few days of Russia’s war in Ukraine, the central bank had to ensure there was enough monetary liquidity because demand for cash surged because of the uncertainty.”From late February to early March (2022), we put about 57 billion hryvnias ($1.56 billion) into circulation, which represents about 65% of the cash amount that we put into circulation during the whole of 2022,” he said. “But by the beginning of March, the situation began to change for the better.”Moving on to this year, Shaban said the central bank withdrew 37.3 billion hryvnias from circulation in the first two months of 2023. Central bank data showed the amount of cash in circulation at the end of March was 679.5 billion hryvnias, and the monetary base stood at 874.2 billion hryvnias as of March 28.Another threat to the financial system has come from Russian air strikes on energy infrastructure. The central bank reacted by creating a “power banking” network to unite branches of banks able to operate when electricity and the internet are disrupted. Shaban described the power banking network as “our armour” and said it had been an important factor in boosting confidence, improving sentiment and ensuring business continuity. Most Ukrainian banks have joined the project — 2,341 bank branches, or about a half of all branches, are part of the network. “During the war we are devoting more resources to increasing the resilience of the (financial) system, given the current challenges. But the processes are underway,” Shaban said.”In addition to the fact that we are moving to the ISO 20022 standard, the SEP will work round the clock. This standard is the foundation for further changes to the payment infrastructure.”The central bank and commercial banks are also working towards the introduction of ‘open banking’ in 2025 — under which banks and other traditional financial institutions will give customers and third parties easy digital access to their financial data. Shaban said this would help develop more fintech services in Ukraine, create better access and provide cheaper services. More

German inflation fell less than expected in March despite a steep drop in energy costs, curbing hopes of a rapid easing in wider price pressures across the eurozone. The 7.8 per cent year-on-year rise in harmonised German consumer prices compared with the previous month’s rate of 9.3 per cent, but was higher than the 7.5 per cent forecast by economists polled by Reuters. The figures came hours after Spain’s annual inflation rate almost halved to 3.1 per cent for March, from 6 per cent the previous month.The European Central Bank is considering whether to pause interest rate increases when it next meets in May. Eurozone inflation numbers are out on Friday.German government bonds sold off after the country’s inflation figures were published. Yields on interest rate-sensitive two-year debt rose 0.08 percentage points to 2.7 per cent as investors bet that borrowing costs in the eurozone would have to rise further. The main factor in the fall in the German consumer price index was a drop in energy inflation from 19.1 per cent in February to 3.5 per cent in March, according to Destatis, the federal statistical agency. This was partly offset by a slight acceleration in food inflation to 22.3 per cent and services price growth to 4.8 per cent.But the 3.1 per cent year-on-year rise in harmonised Spanish consumer prices was below consensus estimates of a 4 per cent increase.Spain served as a leading indicator during the gas-driven rise in prices in Europe last year, as its energy prices responded faster to wholesale market moves than other countries. However, Spain’s core consumer price inflation — which excludes energy and fresh food prices and is seen as a better indicator of underlying price pressures — remained stubbornly high at 7.5 per cent year on year. The ECB has raised interest rates swiftly in response to a surge in inflation over the past year, raising its benchmark deposit rate by 3.5 percentage points to 3 per cent. Some members of the ECB’s governing council have called for the bank to adopt a more cautious approach after raising interest rates by half a percentage point this month.

The turmoil in the banking sector has also opened up the prospect of a potential credit crunch that could slam the brakes on both inflation and growth in the coming months.However, some council members argue that the ECB needs to discount the sharp swings in energy prices and focus on underlying price pressures. Isabel Schnabel, the most hawkish member of the ECB executive board, told an event in Washington late on Wednesday that core inflation had proved more sticky than expected and this “causes some headaches for central bankers”. Additional reporting by George Steer More