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The Daily Roundup

Alfonso Prat-Gay replaced by Luis Caputo as Argentina’s new Finance Minister – Oil prices continue recovery on the back of multilateral production cut agreement – Mozambique’s US$850bn “tuna bonds” investigated by the SEC – Indonesia’s government terminates all business ties with JPMorgan Chase & Co following recent downgrade – Gazprom loans €310mn to subsidiary to finance new South Stream pipeline

Jan 3, 2017 // 6:34PM

MIDDLE EAST & TURKEY

Turkey’s consumer price inflation climbed more than expected in December with annual inflation rate reaching 8.53% last month, compared with 7% in November. Some of the biggest jumps were seen in prices of food products, as well as tobacco and alcohol.

Oman's government revised its 2017 budget deficit projections down, with overall spending expected to total OMR11.7bn (US$30.4bn) and revenues OMR8.7bn, resulting in a deficit of OMR3bn deficit. The plan included fresh austerity steps and tight curbs on spending because of low oil prices, which are hurting state revenues.

Oil prices, which hit their lowest level in 12 years in early 2016, continued their recovery on the back of the multilateral production cut agreement to the $55.6 per barrel mark. Bank of America Merill Lynch expects oil to hit $70 in the near term, although Goldman Sachs anticipates more modest growth, with Brent prices expected to peak at US$59.

AFRICA

Mozambique’s “tuna bonds” issued via sales arranged by Credit Suisse, Russian bank VTB and BNP Paribas, are being investigated by US Securities and Exchange Commission, as well as French and British authorities. The SEC wrote to bondholders in late 2016, demanding information about the US$850mn bond sold in 2013.

The South African government said a recent visit to Taiwan by mayor Tshwane Mayor Solly Msimanga, from the main opposition Democratic Alliance party, breached foreign policy and was “highly regrettable”, going South Africa’s commitment to “One China” policy.

AMERICAS

Brazil posted its largest trade surplus on record in 2016 as a continued recession slashed imports, while a weaker Real boosted export. The Latin American country recorded a trade surplus of US$47.7bn in 2016, above the previous record of US$46.5bn in 2006.

Alfonso Prat-Gay has been fired as Argentina’s Finance Minister, after just one year in the role. The ministry will now be split into two, with Luis Caputo, former finance secretary, taking over the new Finance Ministry and Nicolas Dujovne overseeing the Economy Ministry.

The Central Bank of the Dominican Republic left its monetary policy rate at 5.5%, saying economic activity was improving with solid macroeconomic fundamentals that are creating favourable conditions for accumulating international reserves and promoting a stable exchange rate. The CBRD also said the growth rate of public spending had slowed markedly in the second half of the year.

ASIA

Indonesia’s government said it terminated all business partnerships with JPMorgan Chase & Co. after the U.S. bank downgraded its assessment of Southeast Asia’s largest economy following Donald Trump’s election win. The finance ministry will stop using JPMorgan as a primary dealer and as an underwriter of its sovereign bonds, Robert Pakpahan, the ministry’s director-general for budget financing and risk management told reporters on Tuesday.

Indian sovereign bonds extended Monday’s biggest rally in six weeks after the government unexpectedly lowered its borrowing target for the financial year. The administration will sell notes worth INR660bn (US$9.7bn) through six equal weekly auctions in the period through March 31, the Reserve Bank of India said in a statement - INR180bn less than what was planned earlier.

RUSSIA, CIS & EUROPE

Russia’s Gazprom has agreed to lend €310mn to its subsidiary South Stream Transport B.V, which has been tasked with financing the new South Stream pipeline project. The loan, due in June 2020, will cover expenses, including costs of supplying equipment and raw materials, as well as construction, maintenance and administrative fees.

Poland's KGHM, one of the world's biggest copper producers, should not sell its foreign assets, Polish minister Henryk Kowalczyk said on Tuesday. The state-run and Poland-focused company invested overseas for the first time in 2011 when it bought Canada's Quadra FNX, for US$2.14 billion, the largest ever foreign acquisition by a Polish company. But the expansion has since been questioned by the conservative party PiS, which was elected in 2015. 

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