MEFMI Hosts Webinar On Impact of COVID-19 On Reserves Management

The impact of the COVID-19 pandemic is still unfolding and is being felt in both developed and developing countries. The challenges facing all parts of the economy in dealing with the economic, humanitarian and social consequences of this crisis are historic. The global shutdown has left many countries struggling with portfolio outflows, falling hard-currency export revenues and collapsing tourism industries. In addition, increased market volatility, thin liquidity and disorderly markets have adversely affected reserves management. For African economies some of the traditional reserves accumulation strategies especially through exports and from tourism are being and will continue to be hampered. Implementation of reserves management strategies and rebalancing of portfolios face heightened pressure due to the volatility in the financial markets.

The market outlook is projected to be gloomy. The Organisation for Economic Co-operation and Development (OECD) projects the recovery from the impact of the COVID-19 pandemic to be slow and uncertain and the very low Fed Funds rate in US (the major market for most of regional members) is expected to be held until 2022. These developments are expected to elevate pressure on reserves management objectives because the current and unforeseen volatilities in the financial markets will most likely lead to reduced benefit from diversification..

As part of MEFMI efforts to assist member countries to address the challenges caused by the pandemic, the Institute hosted a webinar on the Impact of COVID-19 pandemic on reserves management in central banks on 12 June 2020. The main objectives of the webinar were to discuss and create awareness on the impact and implications of the COVID-19 pandemic on reserves management processes through identifying insights in the global investment environment; assessment of United States Dollar (USD) liquidity pressures and subsequent key drivers of major variables that affect reserves management process. This is among a series of webinars organised by MEFMI and reflects the Institute’s dynamism to adopt new modes of delivering services to its member countries.

As a key output, the webinar enhanced knowledge of MEFMI member country officials and other stakeholders on the impact of COVID-19 on reserves management and its implication on the reserves management process. MEFMI expects the reserves managers to use the acquired knowledge to develop and implement investment strategies to support the objectives of managing reserves during crises. Going forward, the Institute plans to support countries in priority areas that were identified from the feedback received at the end of the webinar

A total of 49 participants attended the webinar. Out of 49 participants, 30 were drawn from seven (7) of the 14 MEFMI member countries (i.e. Angola, Eswatini, Malawi, Mozambique, Namibia, Rwanda, Uganda and Zambia). International consultants from the United Kingdom, officials from MEFMI Secretariat and other institutions such as …….. made up the rest of the participants.

The resource persons were Mr. Michael Naameh, Director, Reserves Management Organisation and former staff member of Crown Agents and Mr. Elias Kasozi who is a MEFMI Accredited Fellow and former IMF Afritac advisor. Mr. Patrick Mutimba from the MEFMI Secretariat, moderated the event.

Prepared by Irene Nyamanza