Economy
Argentina’s interest rate hits roof as economic woes deepen
Argentina’s Central Bank hiked its benchmark interest rate from 45 to 60 per cent in a bid to shore up the peso, which plunged to a record low against the dollar. Despite the bank’s extraordinary measure to impose one of the world’s highest benchmark rates, the currency lost a further 13.5 percent by the close — its biggest daily loss of the year. The Argentine currency has now lost 53 percent of its value since the beginning of the year, to trade at 39.87 to the dollar. It was worth around 18 to the dollar at the start of the year. Earlier Marcos Pena, President Mauricio Macri’s cabinet chief, was forced to deny the government was facing an economic disaster.
“We are not facing economic failure,” said Pena. This is a transformation, not failure. In that transformation there are difficult moments,” he said. Ratings agency Moody’s said the Central Bank’s move “is a clear signal that economic policy approaches have not been sufficient to contain the financial pressures facing Argentina.” Crisis has gripped the South American giant’s economy over the previous 24 hours. Macri had on Wednesday unexpectedly requested an acceleration to the IMF funding of $50 million agreed in June. The government has already drawn down a first tranche of $15 billion — some of which has been used to try and prop up the peso. A statement from the president aimed at calming the markets appeared to have done the opposite after his request — effectively to get early access to the remaining $35 billion of the loan — sent the peso plummeting almost 7.0 percent by the close.
Despite explicit support from the International Monetary Fund for his policies, the peso opened a further 4.0 percent lower on Thursday — prompting the Central Bank’s intervention. The bank pledged to keep interest rates unchanged at 60 percent until at least December. IMF chief Christine Lagarde said Wednesday she had agreed to Macri’s request to speed up disbursement of the loan in a bid to shore up Argentina’s battered economy. In return for IMF support, the government has committed to reducing its budget deficit to 2.7 percent this year, from 3.9 percent in 2017, and to 1.3 percent of GDP next year. But analysts said the government needs to provide more detail about how it plans to achieve aggressive IMF fiscal targets, if markets are to be assuaged.
On top of that, the government faces a major obstacle in November, when a $7 billion foreign exchange debt repayment is due. “This will be a key flashpoint,” said Edward Glossop, Latin American specialist with Capital Economics. Regardless of what happens from here, the country’s weak balance sheets mean that Argentine markets will remain extremely vulnerable to swings in investor risk appetite,” added Glossop. Speaking at the opening of the Council of the Americas business chamber in Buenos Aires, Pena attributed the market volatility to Argentina’s recent history. “We are the country that has the most times violated its international contracts in the world, which has lied and cheated the rest of the time, and has shown again and again — until now — that it is not willing to seek fiscal balance and depend on its own resources,” he said.
He insisted the path taken by Macri, since he took office in December 2015 after the free-spending leftist government of Cristina Kirchner, is one “of fiscal balance, development and growth.” The current exchange turbulence was attributable to “structural vulnerabilities” following a massive drought that affected agricultural production, the main generator of foreign currency, and a “change in the financial and commercial context in the world, notably due to tensions between the United States and China,” Pena said. “There are no magic solutions, you have to go for the truth.”
Macri had sought to soothe the turbulence in a statement before markets opened on Wednesday, assuring Argentines that help is on the way. Over the past week, we have had new expressions of lack of confidence in the markets, especially over our ability to obtain financing for 2019,” Macri acknowledged. He said the IMF would provide “all the funds necessary to guarantee the fulfilment of the financial program next year.”
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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