MEFMI TO HOST 2018 GOVERNORS FORUM IN BASEL

MEFMI is hosting a Forum for Governors of central banks in the MEFMI region. The event which will be held on Friday 22 June 2018 is being financed by Investec Asset Management. The event will be attended by 25 officials from the MEFMI region. The Forum is an annual event that is held back to back with the BIS Annual Meeting. The theme for the Forum is Trends in Sovereign Reserve Management. The topics for discussion are; 1) Sovereign Reserves: is the search for yield over? The presentation will be made by Johan du Plessis, Portfolio Manager at Investec Asset Management. The session will be moderated by the Governor of the Central Bank of Lesotho, Dr. Adelaide Mahlanyane. 2) Yield Trends and Implications for Sovereign Liabilities The presentation will be made by Anton De Klerk, Portfolio Manager at Investec Asset Management. The session will be moderated by Mr. John Rwangombwa, Governor of the National Bank of Rwanda. The 2007/8 global financial crisis posed a great challenge to official foreign exchange reserve managers. Most AAA-rated government bonds currently yield negative return, making it more difficult for central banks to preserve capital. As at the end of 2017, official reserves for most countries in the MEFMI region, stood barely at or below the traditional three months of import cover benchmark. This worrying position has necessitated that the issue of reserves management takes center stage amongst policy makers. On 29 and 30 May 2018, Deputy Permanent Secretaries in the Ministries of Finance and Deputy Governors in central banks in the MEFMI region also met in Harare Zimbabwe and held discussions under the same theme. What is clear is that the MEFMI region has foreign currency denominated public debt which continues to increase. As interest payments also increase countries move to more commercial sources of borrowing to meet their increasing appetite for infrastructure projects. According to Investec Asset Management, global debt to gross domestic product (GDP) is now 12% higher than in 2009. This could lead to supply and demand imbalances. Concern should not only be with the increasing volume but the quality of debt as hard currency corporate and sovereign debt issuance reached new highs in 2017. Current trends in reserves management indicate that countries should act on the implications and should have clear policy options to take. The magnitude and management of reserves can have profound effect on markets and central bank balance sheets. The bulk of reserves for most countries in the MEFMI region are invested in United States Dollars. MEFMI is a regional owned Institute with 14 member countries: Angola, Botswana, Burundi, Kenya, Lesotho, Malawi, Mozambique, Namibia, Rwanda, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. The Institute was established in 1994 as the Eastern and Southern Africa Initiative in Debt and Reserves Management (ESAIDARM) with a mandate to address entrenched problems that countries faced. This mandate was expanded in 1997 to include macroeconomic management, and broader aspects of financial sector and debt management, resulting in the birth of MEFMI. MEFMI mandate is to build sustainable capacity in identified key areas in the ministries of finance, planning commissions and central banks, or equivalent institutions. The Institute strives to improve human and institutional capacity in the critical areas of macroeconomic and financial management; foster best practices in related institutions; and bring emerging risks and opportunities to the fore among executive level officials. It also seeks to achieve, within its member states, prudent macroeconomic management, competent and efficient management of public finances, sound, efficient and stable financial sectors and stable economies with strong and sustained growth. The long-term objective is to contribute to the poverty reduction process among people in the MEFMI member countries.