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U.S. Government Posts Widest Deficit Since 2012

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U.S. Government Posts Widest Deficit Since 2012

The U.S. government closed the 2018 fiscal year $779 billion in the red, its highest deficit in six years, as Republican-led tax cuts pinched revenues and expenses rose on a growing national debt, according to data released on Monday by the Treasury Department.

New government spending also expanded the federal deficit for the 12 months through September, the first full annual budget on the watch of U.S. President Donald Trump. It was the largest deficit since 2012.

The data also showed a $119 billion budget surplus in September, which was larger than expected and a record for the month. A senior Treasury official said the monthly surplus was smaller when adjusted for calendar shifts.

Economists generally view the corporate and individual tax cuts passed by the Republican-controlled U.S. Congress late last year and an increase in government spending agreed in early February as likely to balloon the nation’s deficit.

Trump and his fellow Republicans have touted the tax cuts as a boost to growth and jobs.

“America’s booming economy will create increased government revenues – an important step toward long-term fiscal sustainability,” Office of Management and Budget Director Mick Mulvaney said in a statement accompanying the data.

The deficit in the 12 months through September was $113 billion – or 17 percent – bigger than in the same period a year earlier. Adjusting for calendar effects, the gap was even larger, the Treasury official said.

The Bipartisan Policy Center called the report “a wake up call” for policymakers to turn things around. “The fact that our government is closing in on trillion-dollar deficits in the midst of an economic expansion should be a serious issue for voters and candidates,” William Hoagland, its senior vice president, said of next month’s U.S. congressional elections.

Much of the widening of the deficit came from more spending on interest payments on the national debt. Borrowing has increased over the past year, partially to make up for slower growth in tax revenues because of the tax cuts, while military spending has also risen.

Adding debt servicing costs, the U.S. Federal Reserve is raising interest rates roughly once per quarter in the face of a hot labor market and some signs of inflation. Some Fed officials have warned that rising U.S. deficits could hamper any U.S. fiscal response to a downturn.

Trump has in turn criticized the Fed’s monetary tightening, saying last week that the central bank had “gone crazy.”

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IATA Forecasts Airlines Will Generate $3b More In 2019

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IATA Forecasts Airlines Will Generate $3b More In 2019

The International Air Transport Association (IATA), which represents most global carriers, has forecast airlines will generate $3 billion more in total profits in 2019. The industry realized $32 billion this year. IATA says although airlines face increased taxes, they will carry more passengers next year that would boost industry profits.

Iata says airlines in North America are performing the best, but Africa remains the weakest region for aviation.

Net profits for airlines across Africa are expected to fall, for the fourth consecutive year next year by three-tenths of a percent.

Losses for carriers across Africa have widened as fuel costs have increased.

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Business News

CBN And MTN Plan To Settle $8b Rift Out Of Court

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CBN And MTN Plan To Settle $8b Rift Out Of Court

It seems as though the Central Bank of Nigeria and telco giant, MTN, are trying to find ways of resolving the $8 billion rift between them. One of MTN’s lawyers is quoted as saying they are making moves toward an out-of-court settlement.

Meanwhile, counsels for both parties have secured another adjournment until late January.

Another $2 billion case involving MTN and the Nigerian attorney general’s office was adjourned as well last week until early January.  This case is related to alleged back taxes owed by MTN.  The telco giant has denied it owed the taxes.

The $8 billion case was a result of a charge against MTN for allegedly violating Nigeria’s extant laws.  In August, Central Bank of Nigeria sanctioned MTN Nigeria for allegedly using irregular certificates of capital importation to transfer $8.1 billion to South Africa on behalf of its offshore investors.

MTN is being asked to return the $8.1 billion to Nigeria.

Mtn group’s Nigerian operations account for one-third of its entire African market share.

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Moody’s Tags Namibia Risky For Investment

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Moody's Tags Namibia Risky For Investment

Instead of Namibia regaining a positive investment grading, Moody’s rating agency has declared the country as speculative.  The rating agency says, although there are improving prospects for economic growth, it is still risky to lend to the country.

So, Moody’s has affirmed the ba1 rating of the country, maintaining a negative outlook.

The ba1 rating reflects Namibia’s gradually improving medium-term growth prospects and moderate wealth levels that support the economy’s capacity to absorb shock.

In an announcement on its website, moody’s also projected a three and a half percent growth in gross domestic product and a GDP growth of one percent next year.  It says these growth projections are supported by developments in the diamond industry, the tourism sector, and logistics.

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