Posts Tagged ‘International Monetary Fund’

Ukraine leader vows to launch anti-corruption court

October 20, 2017


© AFP/File | Protesters have put pressure on Ukrainian President Petro Poroshenko to take anti-corruption measures, holding rallies in front of the parliament in Kiev

KIEV (AFP) – Ukrainian President Petro Poroshenko vowed on Friday to launch an anti-corruption court demanded by Kiev’s Western lenders and protesters camped out in a tent city near parliament.Poroshenko’s firmest commitment yet to a new judiciary body — aimed at fighting endemic state graft — comes against the backdrop of the first sustained wave of anti-government protests since Ukraine’s 2014 pro-EU revolution.

The Ukrainian leader left Kiev on Friday to meet soldiers and reaffirm his support for institutional changes he had originally promised when elected president in place of the Russian-backed regime of Viktor Yanukovych.

Poroshenko said that next year’s draft budget — yet to be approved by parliament — already earmarks money for an anti-corruption court.

“This testifies to the state leadership’s firm commitment to launching this vitally important judicial body next year,” Poroshenko said.

“The way I see and plan it, the timeline for the new court’s creation foresees the president’s signature on an anti-corruption law by the end of the year,” Poroshenko said.

“This is completely feasible.”

There was no immediate response to Poroshenko’s promise from Ukraine’s creditors at the International Monetary Fund (IMF) or protest leaders in Kiev.

Poroshenko’s critics and some Western economists have accused the Ukrainian leader of deliberately dragging his feet over the creation of an anti-corruption court in order to preserve the current political order.

Nearly 5,000 protesters rallied outside parliament on Tuesday demanding the court’s immediate introduction and the passage of a bill that would strip members of parliament of their immunity from prosecution.

The IMF has called the court’s launch a “benchmark” of Ukraine’s progress toward Western standards that would help ease the release of future loans.

Ukraine ranked 131st out of 176 countries assessed by Transparency International’s corruption perception index in 2016.


Spanish government and the IMF issuing dire warnings about Catalonia’s move toward independence

October 14, 2017
Catalan separatists continue their push for independence despite the Spanish government and the IMF issuing dire warnings about the nation’s finances.

AFP – SBS Wires
October 13, 2017

The International Monetary Fund and the Spanish government warned Friday the country’s economic growth could be dealt a blow if Catalonia’s drive to break away persists, just as the Catalan leader’s separatist allies pressed him to go ahead with independence.

The central government has given Carles Puigdemont until next Thursday to abandon Catalonia’s push for secession, failing which it may trigger unprecedented constitutional steps that could see Madrid take control of the semi-autonomous region.

Puigdemont’s separatist allies pressed him Friday to defy Madrid and declare independence.

But with dozens of companies having already moved their legal headquarters from Catalonia, concerns are rising that growth in the region could take a hit, and by extension that of Spain as a whole.

In Washington, IMF Europe Director Poul Thomsen said: “If there was prolonged uncertainty, that could weigh on growth, and obviously we want to avoid that.”

Spain’s deputy prime minister Soraya Saenz de Santamaria warned that if “there is no quick solution, we see ourselves having to lower economic forecasts for 2018”.

Spain issues Catalonia a deadline to clarify independence claim

‘Domino effect’

She accused Puigdemont of “seriously damaging Catalonia’s economic stability” as uncertainty over the fate of the region of 7.5 million people damages business confidence.

The eurozone’s fourth largest economy said in July it expected growth of 2.6 percent next year.

Spain’s Association of Registrars said Friday that 540 firms had sought to relocate their legal addresses from Catalonia from October 2-11.

Ratings agency Standard and Poor’s said the region’s economy risked sliding into recession if the crisis dragged on.

European Commission President Jean-Claude Juncker said Friday he was against Catalan independence because it could trigger a separatist domino effect in the EU.

“I wouldn’t like to have a European Union which consists of 98 states in 15 years’ time,” he said during a speech in Luxembourg. “It’s already relatively difficult at 28, no easier at 27 (after Britain leaves), but at 98, that seems impossible.”

The Mobile World Congress, the phone industry’s largest annual trade fair held every year in Barcelona, said it would hold its 2018 in February as planned, after media reports suggested it was considering delaying.

A spokeswoman told AFP “we are continuing to monitor developments in Spain and Catalonia and assess any potential impact.”

Meanwhile Spain’s CEOE business lobby group said this week that Catalonia was already “seriously affected” by the crisis.

Ricardo Mur, vice-president of the Aragon Business Confederation said the region, which borders Catalonia, had seen a surge in activity.

“Industrial estates are almost full due to the transfer of Catalan businesses,” he told AFP.

Catalonia’s separatist push has ended

Pressure to break away

But Puigdemont is also under pressure from his separatist allies who feel that any decision to back down would infuriate hundreds of thousands of Catalans who voted to split from Spain in a banned referendum.

On Friday, the far-left CUP party, an ally of his coalition government, said in an open letter that “only by proclaiming a republic will we be able to respect what the majority expressed in the polls.”

The referendum took place on October 1 despite a court ban that ruled it unconstitutional, and regional authorities say 90 percent chose to split from Spain in a vote marred by police violence.

Turnout was 43 percent, they say, but the figures are impossible to verify as the referendum was not held according to official electoral standards.

Adding to pressure, Catalonia is deeply divided over independence, and those who want to stay in Spain are increasingly making their voices heard, having staged two mass rallies in just five days.

Puigdemont had pledged to declare independence if the “yes” vote won, but on Tuesday he gave an ambiguous statement.

Saying he accepted a mandate for “Catalonia to become an independent state,” he immediately suspended the declaration, calling for more time for talks with Madrid.

Prime Minister Mariano Rajoy retorted that Puigdemont had until next Monday to clarify whether or not he would press ahead with secession and then until next Thursday to reconsider, otherwise Madrid would act. He rejected any form of mediation.

Apart from the CUP’s open letter, the Catalan National Assembly, an influential pro-independence association whose followers are ready to take to the streets, also called on him to lift his suspension of the independence declaration.

IMF raises China growth forecast for 2017 to 6.8 pct

October 10, 2017


© AFP/File | The International Monetary Fund raised its growth forecast for China but again warned of risks stemming from the build-up of debt
BEIJING (AFP) – The International Monetary Fund raised its growth forecast for China on Tuesday but again warned of risks stemming from the build-up of debt in the world’s second largest economy.The fund’s latest World Economic Outlook gives President Xi Jinping a boost but also a warning as he prepares to accept a second five-year term as general secretary of the Communist Party at a major congress next week.

The report also projects strengthening economic growth across most of Asia, raising its forecast for Japan but reducing it for India.

The fund expects China’s economy to expand by 6.8 percent this year, up from its previous estimate of 6.7 percent, due to stronger recorded growth in the first half.

If realised, the growth rate will outdo last year’s 6.7 percent, which was China’s slowest pace of expansion since 1990.

For 2018 the IMF raised its estimate to 6.5 percent from the 6.4 percent forecast in its July World Economic Outlook.

In raising the growth targets, the fund said it expects authorities to maintain a high level of investment-fuelled growth “to meet their target of doubling real GDP between 2010 and 2020”.

The uptick in growth will result in greater debt levels over the long term, the IMF said in the report, raising the prospect of a “sharp growth slowdown in China”.

The fund urged authorities to intensify efforts to rein in the expansion of credit.

Its latest World Economic Outlook predicts strengthening economic growth globally, building on healthy data from the first half of 2017.

China’s booming economy continues to propel Asia and drive worldwide economic growth.

– Debt concerns –

But despite the rosier near-term outlook, the fund is concerned about growing debt in the country.

China’s slower transition from an investment-based economy to a consumption-based one, the report said, “comes at the cost of further large increases in debt”.

The pace of China’s credit growth has alarmed analysts in recent years.

Since the global financial crisis in 2008 its debt load as a percentage of gross domestic product has grown more than 10 percent per year on average, according to IMF estimates, which assessed the ratio had ballooned to 234 percent of GDP by 2016.

Earlier this year ratings agencies Standard and Poor’s and Moody’s cut their sovereign rating on China, with both citing rapidly accumulating debt.

Analysts will look for signals about China’s future economic and financial policies during the week-long Communist Party congress which starts on October 18.

The government will publish third-quarter growth data on October 19.

Elsewhere in Asia, the fund raised Japan’s growth forecast to 1.5 percent this year from 1.0 percent last year.

But it was less optimistic on the country’s long-term prospects, citing the shrinking Japanese labour force.

In India, the “growth momentum slowed” due to the impact of a currency exchange initiative and the launch of a nationwide goods and services tax.

The IMF lowered India’s forecast growth to 6.7 percent from the 7.2 percent predicted in July.

Strong global demand has also been a boon for the rest of Asia, where the fund forecasts sustained growth.

“In the rest of emerging market and developing Asia,” the fund wrote, “growth is expected to be vigorous”.

The economics of Catalan secession — The legal uncertainties that businesses flee from

October 6, 2017

Image may contain: 4 people, crowd and outdoor

By Mehreen Khan in Brussels
Financial Times (FT)

Catalonia’s crisis is beginning to bite.

The second-largest bank based in the region will move its legal HQ out of Catalonia in the wake of Sunday’s renewed push for independence. Banco de Sabadell’s decision follows that of biotech group, Oryzon which confirmed its relocation from Barcelona to Madrid earlier this week. The board of CaixaBank, Spain’s third-largest lender, will meet on Friday to discuss redomiciling. Markets have responded by sending the share prices of all three companies surging.

Image result for Sabadell, building through trees, photo

High-profile relocations have the potential to humble Catalonia’s pro-independence government. In its headlong rush for secession, the region’s leadership has long championed the unique strengths of the Catalan economy, which is the same size as Portugal’s and makes up a fifth of Spanish GDP.

There is certainly a case to be made for Catalonia’s economic exceptionalism: the economy is more business-friendly industrialised, and internationalised, than most of the rest of Spain.

Artur Mas, Catalonia’s former president, often extolled the region’s virtues as the “Denmark” of southern Europe. This pitch — that Catalonia is almost Germanic in economic character — has been put to its continental neighbours as a reason to let any independent nation seamlessly join the EU and eventually the eurozone.

Yet the instability unleashed by the weekend’s events will have economic consequences. The prospect of a unilateral declaration of independence conjures up visions of capital controls, parliamentary shutdowns and legal uncertainties that businesses flee from. Germany’s EU commissioner warned on Thursday that the situation could descend into “civil war”.

“Investment had been dropping before the vote and even more after it — lots of projects are on hold,” says Miguel Otero, analyst at the Elcano Royal Institute in Madrid.

The secessionist threat will also shine a light on just what kind of economic policies any independent region would pursue, given the disparate groups that back independence, from anti-capitalist anarchists to centre-right nationalists.

“The liberals want less bureaucracy, the middle class wants less regulation and the anarchists want a socialist dream of a leftist participatory democracy,” adds Mr Otero.

And for all its perceived economic divergence from the rest of Spain, Catalonia is hardly immune from deep-seated structural issues that have beset the country as a whole. As this data crunching from the FT shows, inequality and unemployment may be lower than the national average, but are far from solved. Catalonia’s youth unemployment engulfs over a third of its young people.

In the words of one bank official: “Money and fear don’t go together”.

Catalonia’s economy has tended to grow at a faster rate than that of the Spanish economy as a whole but Spain overtook it this year for the first time since 2010.

Twitter: @mehreenkhn

Saudi Arabia raises $1.87 bn in Islamic bond issue — Saudis experiencing worst growth since 2009

September 19, 2017


© AFP/File | Saudi Arabia is suffering from a sharp slide in oil revenues since crude prices plummeted in mid-2014, forcing Riyadh to cut subsidies and delay projects

RIYADH (AFP) – Saudi Arabia has raised $1.87 billion in a new Islamic bond issue as the kingdom bids to finance a budget deficit resulting from low oil prices.Demand was strong for the third sale of Islamic bonds, known as sukuk, this year with orders exceeding 24 billion riyals ($6.4 billion), the finance ministry said in a statement cited by the SPA state news agency.

The first two issues were made in April and July and were worth a total of $13.5 billion. The kingdom had also issued conventional domestic and global bonds.

The largest Arab economy is suffering from a sharp slide in oil revenues since crude prices plummeted in mid-2014, forcing Riyadh to cut subsidies and delay projects.

The kingdom has forecast a budget deficit of $53 billion this fiscal year, down slightly from last year’s shortfall.

Riyadh has also withdrawn more than $230 billion from its fiscal reserves since the end of 2014 to finance the budget deficit. Its reserves now stand at just over $490 billion.

Economic growth in Saudi Arabia is expected to hit just 0.1 percent this year, according to the International Monetary Fund.

That would be the country’s worst growth since 2009, when its economy contracted by 2.0 percent as oil revenues slumped following the global financial crisis.

IMF’s Lipton Says Ukraine Risks Going Backwards — Corruption, graft

September 15, 2017

KIEV — Ukraine risks reversing progress made under a $17.5 billion aid-for-reforms programme from the International Monetary Fund, IMF first deputy managing director David Lipton was quoted as saying on Friday, urging the government to improve anti-graft efforts.

“There are risks of going backwards,” Lipton told online newspaper Ukrainska Pravda in an interview during a visit to Kiev to meet Ukrainian authorities.

“We certainly agree that the creation of an anti-corruption court is an important next step. We encourage the government to do that.”

(Reporting by Alessandra Prentice; Editing by Alison Williams)

Shanghai Stock Exchange Confusion Over China United Network Communications Sale Involves Tencent and Alibaba

August 17, 2017


© AFP/File | Unicom Group was among six SOEs chosen by Beijing last year for a pilot programme to funnel private capital into state firms

SHANGHAI (AFP) – A plan under which big Chinese companies led by Tencent and Alibaba would invest $11.7 billion in the country’s second-largest wireless carrier was cast into confusion on Thursday — just a day after it was announced.China United Network Communications Ltd, the Shanghai-listed arm of China Unicom, was to receive the infusion under a deal announced Wednesday, part of the Chinese government’s push to overhaul inefficient state-owned enterprises (SOEs) by luring in private capital.

The investors were to include internet titans like Tencent, Alibaba, and, taxi-hailing service Didi Chuxing and several other firms.

However, confusion subsequently emerged over exactly which companies would be involved, with China United Network Communications withdrawing a statement to the Shanghai Stock Exchange about the agreement just hours after submitting it on Wednesday.

Meanwhile, plans to lift suspensions on China Unicom-related shares, were subsequently reversed.

China United Network Communications said Thursday in Shanghai that its shares, suspended since April, would remain so for several more days pending further announcements.

“There’s been confusion right to the very last moment — they shouldn?t be rushing ahead to make the announcements,” Francis Lun, Hong Kong-based chief executive officer of Geo Securities Ltd, told Bloomberg News.

“It shows their incompetency. The approval process has to be called into question when they deliver misleading messages like this.”

The fiasco may raise questions over China’s plans to reform SOEs while waging a parallel campaign to crack down on runaway credit in the private sector.

China’s ballooning debt prompted a warning Tuesday by the International Monetary Fund that the country was on a “dangerous trajectory”.

Unicom Group was among six SOEs chosen by Beijing last year for a pilot programme to funnel private capital into state firms, which has seen Unicom-related shares soar this year.

Unicom’s net debt has risen by 20 percent in the last five years to 150 billion yuan ($22 billion), according to Bloomberg, as it spent on mobile network upgrades and plans an expensive 5G rollout expected to benefit the Chinese tech giants.

Greece’s former chief statistician was found guilty of breach of duty on fiscal data — Displayed “substantial moral disdain” for truth in Greek fiscal data

August 1, 2017

ATHENS — Greece’s former chief statistician was found guilty on Tuesday of breach of duty for failing to inform the statistics agency’s board of his actions on fiscal data.

An appeals court handed Andreas Georgiou, a former International Monetary Fund economist, a two-year suspended sentence for sending EU statistics agency Eurostat 2009 Greek fiscal data without telling the board.

Image may contain: 1 person

Former Hellenic Statistical Authority (ELSTAT) Chief Andreas Georgiou

The prosecutor said Georgiou’s actions displayed “substantial moral disdain.” Georgiou, who stepped down in 2015 after five years running ELSTAT through the height of the Greek and euro zone debt crisis, has denied the charges.

Georgiou was charged in 2013 with inflating figures on the 2009 budget deficit. Those charges, which he also denied, were dropped in May but a Supreme Court prosecutor has proposed that the case be reopened.

His case has seen fellow senior economists and statisticians from around the world rally behind him. Some are helping to pay for his defense costs.

The statistician has denied suggestions by politicians, including from the current left-wing government, that he may have helped Athens’ foreign creditors, including his former employer the IMF, by exaggerating Greece’s public debt problems.

The case surrounding Georgiou has long been a source of concern for Greece’s international lenders who have extended three bailout loans to Greece since 2010.

Georgiou’s accusers maintained his re-calculation of deficit data helped creditors, and weakened Greece.

Discrepancies in the way the budget deficit was calculated before 2010 — which angry euro zone partners say concealed the extent of the deficit — helped trigger the financial crisis that subsequently engulfed Greece and the euro zone.

(Reporting by Constantinos Georgizas; Writing by Karolina Tagaris; Editing by Catherine Evans)

IMF says global economic recovery on firmer footing with improving growth in China, Europe and Japan to offset downslide of U.S., Britain

July 24, 2017

Image may contain: outdoor

China — New cars are seen in a parking lot of the Brilliance factory in Shenyang, in China’s northeast Liaoning province on Jul 17, 2017. (Photo by AFP)

WASHINGTON: The global economic recovery is on firmer footing as improving growth in China, Europe and Japan offset downward revisions for the United States and Britain, the International Monetary Fund said on Sunday (Jul 23).

However, wage growth remains sluggish which risks increasing tensions that have pushed some countries toward more anti-global policies, while efforts to erode financial regulations put in place since the 2008 crisis could erode stability, the IMF warned.

“The recovery in global growth that we projected in April is on a firmer footing; there is now no question mark over the world economy’s gain in momentum,” IMF chief economist Maurice Obstfeld said.

Presenting the latest update of the World Economic Outlook (WEO), he said “recent data point to the broadest synchronised upswing the world economy has experienced in the last decade.”

The fund still expects the global economy will grow by 3.5 per cent in 2017 and 3.6 per cent in 2018, the same as in the April WEO.

However, the unchanged forecast masks some significant revisions, including in the United States where the IMF downgraded its growth estimate last month after judging that spending plans promised by President Donald Trump that had been expected to provide a boost to the economy were stuck in limbo.

The US estimate was cut to 2.1 per cent for this year and next, down 0.2 points and 0.4 points, respectively, from the more optimistic forecast in the last report.

The outlook for the British economy also was revised down by 0.3 points to 1.7 per cent this year on weaker-than-expected activity in the first quarter, while the impact of Brexit “remains unclear.”


But those downward revisions were offset by the improving outlook in key economies, including the euro area where growth prospects have improved in France, Germany, Italy and Spain.

The euro area now is projected to see economic growth of 1.9 per cent this year and 1.7 per cent in 2018.

Japan also is seeing improved growth prospects, with an expansion of 1.3 per cent this year expected, although that is seen slowing sharply to 0.6 per cent in 2018.

Meanwhile, China continues to be a major engine of global growth, expanding by 6.7 per cent this year, and 6.4 per cent next, driven by economic policies in Beijing.


The forecast for 2017 was revised up by 0.1 percentage point, “reflecting the stronger than expected outturn in the first quarter” which the IMF said was underpinned by Beijing’s “supply-side reforms.”

The 0.2-point upward revision for 2018, however, was the result of the expected delay in the “needed fiscal adjustment,” which could cause risks down the road.

China’s “higher growth is coming at the cost of continuing rapid credit expansion and the resulting financial stability risks,” Obstfeld warned in his prepared statement.


But within the mostly upbeat forecasts, the IMF once again sounded the warning on the growing anti-global sentiment, which could leave all economies worse off.

That has been fuelled in part by the fact the benefits of increased growth have not been broadly shared.

“Even as unemployment is falling, wage growth still remains weak,” Obstfeld said.

That “not only holds back the improvement of living standards, but also carries risks of exacerbating social tensions that have already pushed some electorates in the direction of more inward-looking economic policies.”

While the report does not specify any country, it comes amid Brexit talks and the Trump administration’s continuing focus on “America first” policies, including cutting bilateral trade deficits and backing away from free trade agreements.

The report warned that “policies based narrowly on domestic advantage are at best inefficient and at worst highly damaging to all.”

Obstfeld said, “Strengthening multilateral cooperation is another key to prosperity.”

Finally, the IMF cautioned that “a broad rollback of the strengthening of financial regulation and oversight achieved since the crisis” – something the Trump administration is pushing – could increase the risk to global financial stability.

Source: AFP/ec


Mideast Growth to Dive as Saudi Economy Stagnates Amid Qatar Stand-Off

July 24, 2017


© AFP/File | In its World Economic Outlook update, the IMF lowered economic growth of Saudi Arabia, the world’s top oil exporter, to just 0.1% in 2017, down 0.3% on its April projections

DUBAI (AFP) – Economic growth in the Middle East and North Africa is forecast to slow considerably over oil prices as the Saudi economy slides, the International Monetary Fund said on Monday.After a better than expected performance with five percent growth in 2016, the economies of countries in the Middle East and North Africa as well as Pakistan and Afghanistan will subside to just 2.6 percent growth this year, it said.

Last year’s healthy regional economic performance was mainly attributed to Iran’s strong growth estimated at above 6.5 percent because of higher crude production, the IMF said.

In its World Economic Outlook update, the IMF lowered economic growth of Saudi Arabia, the world’s top oil exporter, to just 0.1 percent in 2017, down 0.3 percent on its April projections.

This will be Saudi Arabia’s worst growth since 2009 when its economy contracted by 2.0 percent on the slump of oil revenues following the global financial crisis.

“The recent decline in oil prices, if sustained, could weigh further on the outlook for the region’s oil exporters,” the IMF said.

After recovering to over $55 a barrel following a production reduction agreement by producers, oil prices receded on strong inventory levels and a pickup in supply.

The IMF projected that regional growth will rebound to 3.3 percent in 2018, however.

Saudi economic growth is also forecast to rebound to 1.1 percent next year, down 0.2 percentage points on April projections, it said.

Saudi Arabia’s economy, the largest in the region, grew by 4.1 percent and 1.7 percent in 2015 and last year respectively.

MENA oil exporters have lost hundreds of billions of dollars since the mid-2014 crash in crude prices, transforming huge surpluses into shortfalls.

They have since implemented some economic reforms that have included raising fuel and power prices.

Gulf states, which earn more than 70 percent of their revenue from energy, have been posting budget deficits since oil prices fell.