2024-10-28 15:30:00
• A forecast down compared to the liftings of the 3e quarter
• Between debt management and rising interest rates
• Focus on the performances of AES countries
Aafter raising 1,870 billion FCFA on 3e quarter, UEMOA countries plan to mobilize a total of 1,382.74 billion FCFA by 4e quarter 2024, marking a relative decline. This reduction can be explained by several factors. After an intense period of financing in 3e quarter, some countries have likely covered most of their urgent fiscal needs, reducing the need to raise as much funds in the last quarter. This strategy allows you to better manage cash flow. Debt management and refinancing strategy may be the second reason. “WAEMU governments are seeking to avoid an accumulation of debt in the short term, which could put pressure on their public finances in terms of repayment. Raise less funds in 4e quarter can be a way of managing future maturities in a more prudent manner and reducing costs linked to debt service,” explained a source consulted by L’Economiste, a financial market specialist.
The 3e The reason for this decline stems from an observation. For some countries, we are seeing interest rates rise regionally, making securities issuance more costly for governments. Not to mention, the last quarter of the year may present specific economic challenges, including budget adjustments or limitations due to the end of the fiscal year.
Burkina Faso: Debt under control but…
Of the 1,870 billion FCFA raised on 3e quarter, the three countries of the Alliance of Sahel States (AES) – Burkina Faso, Mali and Niger – mobilized 521 billion FCFA. While Burkina Faso mobilized nearly 295 billion FCFA, Mali and Niger raised 178 and 48 billion FCFA respectively. These levies aim to meet crucial budgetary needs, but they are also accompanied by an increase in the national debt.
Burkina Faso raised 294.79 billion FCFA on 3e quarter 2024, while continuing to finance its existing debt. The amounts raised show a diversification of financing sources, but the debt remains high, with a constant financing need to honor short and medium-term obligations. Projections for the 4the quarter suggest that the country is seeking to raise an additional 225 billion FCFA, further increasing the pressure on its public finances.
Mali is banking on the short term
Mali, with a debt mainly concentrated on short-term securities, mobilized 178.36 billion FCFA as of 3e quarter 2024. This approach, although allowing flexibility in terms of rates, exposes the country to the risks of regular refinancing and the volatility of interest rates. Mali is still seeking to raise 150 billion FCFA on the 4e quarter, highlighting a relative dependence on borrowing for its immediate financial needs.
Niger: A measured debt
Niger raised 47.92 billion FCFA on 3e quarter, mainly through issues of short-term securities. While the public debt has remained relatively stable, the country plans additional issues of 80 billion FCFA by the end of the year, to finance its current projects. This cautious approach demonstrates careful management of resources, but also highlights the budgetary constraints Niger faces.
The amounts raised by these countries reveal financing strategies adapted to their budgetary constraints. Burkina Faso stands out for its greater use of medium-term issues, while Mali and Niger opt for shorter instruments. These amounts show the ambition of AES countries to secure funds to support their budgets, despite already high debt levels. They continue to diversify their strategies between short-term Assimilable Treasury Bonds (BAT) and longer-term Assimilable Treasury Bonds (OAT) to attract diverse investors.
NK
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Li relies heavily on short-term securities, putting it at risk of refinancing challenges. Niger, on the other hand, exhibits a careful approach to debt management, focusing on stability while still addressing its current project financing needs.
As Burkina Faso continues to face pressure on its public finances, the increasing debt level raises concerns about long-term sustainability. Innovations in fundraising and diversifying financial sources are critical as the country aims to meet essential budgetary needs while managing its debt responsibly.
In contrast, Mali’s strategy of relying on short-term instruments may provide flexibility but could also expose it to higher risks associated with fluctuating interest rates and the need for frequent refinancing. This dependence on short-term borrowing could limit Mali’s financial stability and capabilities in the long term.
Niger’s measured approach to debt reflects a prudent management style, although it also points to the financial constraints the country must navigate. Raising funds through short-term securities indicates a focus on immediate financing needs, yet the stable public debt level suggests that Niger is balancing short-term needs with long-term fiscal responsibility.
Ultimately, while the mobilization of funds is crucial for meeting urgent financial obligations, the strategies employed by Burkina Faso, Mali, and Niger reveal distinct challenges and opportunities that will significantly influence their respective economic futures.
